 Good morning, and welcome to the 23rd meeting of 2023 of the Economy and Fair Work Committee. Our first item of business this morning is a decision to take items 5 and 6 in private. Our members are happy to do so. Our next item of business is our second evidence session, considering the general principles of the Bankruptcy and Diligent Scotland Bill. Today, we will hear from money advice and debt representatives, and I welcome Sarah Jane Dunn, Policy Manager for Financial Health, with the Citizens Advice Scotland, and we are joined online by Becky Stacey, Senior Research Officer, Money and Mental Health Policy Institute. As always, if members and witnesses can keep their questions and answers as concise as possible, that would be helpful. If I first of all want to come to Becky, so Becky, just to set some of the context for the bill, do you as an organisation identify people facing more problems with finances than with debt? You will know that there was a recent Parliament report called dropping Peter to pay Paul, and it looked at some of those issues. What is it? Could you give us an idea of what the current situation is? Yeah, absolutely. Thank you very much for inviting us to give evidence today. The Money and Mental Health Policy Institute is a research charity dedicated to breaking that vicious link between having a mental health problem and struggling financially. When we think about the context of the relationship between the two, we know that people with mental health problems are three and a half times more likely to be in debt, and that also half of people who are in problem debt are experiencing a mental health problem. And the more severe people's mental health problems, the greater it is that they are likely to be struggling with their finances. So a piece of protection that we campaigned heavily to be brought into place in England and Wales when the Standard Moratorium was introduced there was this mental health crisis breathing space, which was really important to recognise that those with mental health problems are going to face additional difficulties with their finances, and that some of those common symptoms associated with a mental health problem is going to mean they're really going to struggle to keep up with bills and payments and undertake quite simple financial management tasks. So we were really instrumental in calling for that protection to be in place, which is a great scheme, but we're really keen to see the lessons and learnings from its implementation down here in England and Wales to be incorporated into the implementation of a mental health moratorium in Scotland. Sarah-Jane, if I come to you, if you want to reflect on the previous committee's report that Owen Peter to pay Paul and give us an idea and an impression of where we are at the moment in terms of people experiencing financial problems in Scotland? Certainly. As you know, the City of the Vice Network across Scotland covers 59 bureaus and as a former money adviser myself, I was instrumental in working with the committee on the Robin Peter to pay Paul and bringing lived experience and hearing the voices of people who are in problem debt poverty and struggling with their mental health. As Becca pointed out, there are one in two people in problem debt who are also struggling with their mental health. In the current landscape with the cost living crisis, we are seeing people's budgets and household incomes being stretched beyond breaking point. That is having a significant impact on people's mental wellbeing, but those who have severe mental illness, as Becca pointed out, are already struggling. That was before the pandemic and before the cost living crisis, but they also struggled with the likes of being able to communicate with their creditors or with their priority bills. If they were struggling with their council tax, for example, which we see as being one of the highest debts that come to our network, in fact, in July this year it reached its peak. Somebody with mental health problems would struggle to communicate with their local council and we know that council tax recovery is one of the harshest points of recovery, so they can see their debt triple almost within a month and then they are then having to deal with that on top of the fact that they are suffering mental health issues. What we are hearing across our network is that this is getting worse and worse and worse, but what is happening is that money advisers do not necessarily have the tools and their toolkit to deal with it. The mental health moratorium could be the thing that could help them to deal with this situation, because when you have a client who has mental health issues or severe mental illness, dealing with their debt is the last thing on their mind and the last thing that they are able to do, they need to focus on their mental health recovery first, and that is where the mental health moratorium could be a very significant tool for a money adviser, because it means that that allows that person to get their mental health at a stage where they are then able to discuss their debts and decide what options they want to go down. As I said, the cost of living crisis is having a significant impact across all households, but those with severe mental illness are almost three or four times worse for somebody who also has mental health problems. You have talked a lot about the mental health moratorium, and that is the key policy area in the bill. However, there are other campaigners who are suggesting that the bill should be more robust at this stage, and that it should be more happening within the debt area. Mike Daly this week has talked about, I think, Alan Macintosh has done research into wage harassment, and we did see an increase in savings bank harassment. The threshold was increased in arguing that there should be an increase in that threshold for wages. There are other campaigners arguing for more measures to be taken to recognise the cost of living crisis that you have spoken about. Do you think that that is a fair assessment of the bill? Largely, the bill has been welcomed. Do you need to see more happening at this stage, or are you content with the Government's proposal, which will be in the next part of the review? It is one of those difficult things, because I can see the arguments on both sides. As I said, as a former money adviser, when you are seeing people struggling now, you obviously want action to happen now. However, at the same time, we have to be careful that we do not end up having unintended consequences by bringing things in too early or rushing to bring things in. That being said, I think that there are certain things that do not necessarily need to be brought in by this bill, but should be certainly looked at to bring in as soon as possible, and can be brought in through secondary legislation, such as the like, for example, of reducing the reapplication period of the minimum asset procedure bankruptcy. At the moment, it sits at 10 years before you can reapply for a map. We are now seeing many clients who are unable to reapply for the shorter, better bankruptcy for them because of this 10-year limit. We would say that reducing that down to five years so that it matches the full administration bankruptcy would mean that it would be able to help a lot of people who are struggling and who should not be going into a full administration bankruptcy just simply because they have had to reapply for debt solution. Due to the fact that it is probably not the other own fault, the fact that we have had to live through a Covid pandemic and a cost-of-living crisis, we are seeing more people with priority debt and more people who are struggling to just pay their actual bills. They are not taking out lavish holidays or running up credit cards. In fact, if they are using credit cards, it is to pay their bills. Things like that could be done, but it can be done through secondary legislation. What the bill is good at is focusing on the mental health moratorium. That is desperately needed, and we do not have that enforced in order to do through secondary legislation. If we were to put too much into the bill, we could end up losing that focus. As someone who has been working tirelessly on the mental health moratorium for three years, it would be good to see it come into fruition as soon as possible. Kevin Stewart, did you request that? Thank you very much for all of that, Ms Dunne. Obviously, you have highlighted the difficulties that there have been over the past few years with the Covid pandemic and the current cost-of-living crisis. There is no doubt that that has had a major impact on folks' mental health as well as on their finances. You talked about using secondary legislation. Is there a danger that, if we were to put too much into primary legislation, we would lose the flexibility that has been required to meet the demands of the likes of Covid and the current cost-of-living crisis? That is a fantastic point to put, Mr Stewart. That is one that I would agree with. It is certainly a lesson that we should be learning, as Beco was suggesting, from our counterparts down south. They put a lot of the respite and the mental crisis breathing space into primary legislation. That means that, when changes are needed and needed dramatically quickly, it is actually very difficult to do so. That is almost the beauty of the bill and the fact that it is providing an enabling power to the accounting and bankruptcy to be able to bring in secondary legislation that covers the regulations of how the mental crisis moratorium would work up in Scotland. What is good about that is that it is almost reflective of what we do in consumer credit. When something is to be changed in consumer credit, for example, the recent consumer duty, a bill is brought into place and it gives the Treasury a chance to put a policy statement out, and it is usually an enabling power. It then passes to the FCA to drive out the principles of business and the rules and regulations that will follow from that. It is almost reflective to me of that type of process. The beauty of that means that, when we bring something in like that into regulations, for example, the eligibility criteria, which I know can be quite a sticking point, especially because it might look like we have a narrow scope to begin with, it means that, as we look at things like the Scottish mental health law review recommendations coming into force, the recent mental health strategy that has just been announced into the delivery plan, which is still to be brought into place, when they start to work and practice, we can learn lessons for that. That means that we can then take those lessons, and if we need to adapt the mental health moratorium regulations, we can do so quickly. I think that what we learn from Covid is certainly, as you pointed out, we need to be able to be reactive sometimes, and if we put this heavily into primary legislation, that would stop us from doing that. Great points from you there. You talked about the mental health review and the Lord Scott report, which is huge, shall we say. I am probably one of very few folks who have read it cover to cover more than once because of previous role. There are legislative changes there, which are obviously going to have a lot of good coming out of them, but also, if we were to put too much into primary legislation, that might lead to a lot of bad. Do you think, as a former money adviser yourself, that you and your colleagues are listened to enough when it comes to the formation of legislation? Do you think that you guys should play a part in the formation to create secondary legislation that is flexible enough to deal with the challenges and changes that we have seen in recent times? Certainly over the past few years, working together during the Covid pandemic, we were right at the forefront of working with Scottish Parliament and Scottish Government in discussing changes to primary legislation, for example, the changes to the moratorium periods, increasing it to six months. We were listening to it, and I feel that we are continued to be listened to, but it is so important to have the voices of money advisers on those on the front line, especially as we are able to talk about the real-life experiences of our clients. We sit in a room with somebody whose whole life has fallen apart. I have had clients who have been suicided, and I have lost clients to suicide. It is a very difficult job that we do, but it is a job that we do because we want to help people and we want to see them be able to become debt-free. It is definitely fundamentally important to have money advisers' voices at the heart of whatever we do, especially when it is looking at things that provide tools to their toolkit, because unless you know how it works in practice and how it is going to work in practice, we could end up bringing in something that is counterproductive. Sarah-Jane might be able to give us an insight into when any future changes to bankruptcy reforms are going to come forward, because the Government has given us a fairly technical belt. It has the mental health moratorium, but the rest is quite technical. You have talked about the 10-year limit for minimum asset process bankruptcy. As I have mentioned, there are issues around investment of wages in other areas. Do you have an understanding of when the Government is going to bring forward, whether it is talking about secondary legislation or policy in this area? You have talked about the pressure on people now, so when are we actually going to see the other reforms that people are working on? As far as I am aware, with the mental health moratorium, I was a part of the working group that worked on the recommendations that have gone to the minister. As far as I am aware, we are hoping to have a wider consultation in the next few weeks, as soon as the bill allows us to do so. As far as I am aware that the county and bankruptcy is to do this as soon as possible and to lay in the regulation changes that they need to do, so for example the biggest one that we are looking forward to is the changes to the protected trust deeds and making the protocol that was brought in as a voluntary measure as a mandatory measure. I think that as soon as they can bring that in the better, especially with the fact that we have issues of many protected trust deeds being missold. In terms of the example that I brought with the minimum asset procedure bankruptcy, that is something that we are calling for alongside our colleagues at StepChange, Christians Against Poverty and Money Advice Scotland. We have not actually been able to get guarantees of it, but it is something that we have suggested that needs to be happening before the stage 3 review. In terms of the stage 3 review, as far as I am aware, we have just announced the independent chair who will be looking at taking that forward. There is a ministerial meeting next week, so I am hoping that we will get some further details. As much as possible, I would say that they are trying to go as fast as they possibly can. That is again the need for the bill to be brought into force as soon as possible, because then it allows us to focus on the detail that needs to be hashed out and wider consulted upon. Obviously, the recommendations from the working group that Bec and I were part of are just recommendations. We would obviously want to get the wider Money Advice and the health sector to give us their insights and views as well. Okay, thank you. Those are issues that we will take up with the minister once we have him at committee. Colin Smyth, you are followed by Maggie Chapman. Thanks, convener. Good morning to our panel. I kick off with some questions specifically on the mental health moratorium, particularly the eligibility criteria that you mentioned earlier, Sarah Jane. The mental health moratorium working group recommends that only people who are subject to compulsory mental health treatment should be eligible for the moratorium. That is quite a narrow definition, as you mentioned, Sarah Jane. It is obviously narrower than the criteria in England in Wales that covers non-compulsory crisis treatment. Is that definition that has been recommended by the working group wide enough to support those people who are facing mental health challenges when it comes to death? I can understand, obviously, your resonance. Certainly somebody who, as I said, has been working for the mental health moratorium for the last three years. I was actually part of the accounting and bankruptcy working groups that recommended that we got the mental health moratorium and then part of the mental health moratorium working group. We certainly, as the working group, rigorously looked at all sides to see what definitions and what eligibility criteria we could have. We were lucky to have Dr Roger Smyth from the Royal College of Psychiatrists, who were able to give us an insight into how the mental health sector works. That is how we came up with the definition and the eligibility criteria of compulsory treatment orders. Compulsory treatment orders can be for quite long-standing conditions. It is the compulsory part that is under the treatment. Treatment can cover anything from talking therapies to psychotherapy to CBT. It can be in-patient and out-patients. It can be in the community. It is a lot wider than you would first think. Obviously, you are saying that, down south, non-compulsory treatment is covered, but what they focus on is mental health crisis treatments. It is slightly different to what we are trying to focus on up here. We have tied it to the mental health care and treatment plan act, because it is very difficult. We would love to open up the wide net, but we need to make sure that that works in practice. That, again, has come back to what I was saying earlier about the fact that the beauty of it being in secondary legislation means that, as things such as the mental health law review changes come into practice, which will change things such as compulsory detention and move it to in-care community treatment. We can start to see how that works in practice and alignment with money advice and the money advice sector. As we understand those changes, we can look and we visit the eligibility criteria under the mental health moratorium, build that evidence base and widen it out. That means that it is fair and balanced for all parties, not just the person who troubles with their mental health problems and their money but also creditors, the economy, society and local communities. It makes sure that it works for everybody. It might be a narrow scope to begin with, but that does not mean that it is going to be that forever. It is certainly not something that we will be resting our laurels on. We will be making sure that it continues to work for those in practice, but we have to almost take our time with it. You mentioned earlier the timescales for the moratorium, although we had done moratoriums that were extended to six months. I think that my colleagues will probably have some specific questions on that, but there is obviously a fear that, if that is reduced, we will go back to the previous timescale. That means that a lot of people who do have mental health problems will struggle if they are not covered by the criteria. How many people will be covered by having a compulsory mental health treatment by the moratorium if they have debt issues? If you have done any modelling on when you discussed the criteria, what sort of numbers are you talking about? We are fortunate that it is not possible to assess how many numbers are likely to be in debt, but we can extrapolate the fact that, last year, there were roughly around 13,000 compulsory treatment orders across Scotland. If we were to take that as a number, we could say that it might not necessarily sound like a lot. However, it is about looking at the fact that we need to bring the mental health moratorium in to begin with. Because of the changes of health happening in the mental health sector, we do not want to widen the net too far. That ends up meaning that those who might have mental health problems might have a severe mental illness, but it is manageable, and they could be able to make making decisions with their debt or not to put into the wrong moratorium. That is why we are having things such as the money adviser being involved and other aspects to it. The idea of the mental health moratorium is to have what we would say two separate periods. Period 1 would look at the recovery of our mental health, allowing them that time, space and compassion to look at the fact that they need to focus on their mental health recovery. The second additional period, which we have always suggested, align with the standard moratorium, allows them to focus on their debts. In Scotland, we have a standard moratorium, which, at this present moment in time, is six months, and that is to reflect the current economic context and the fact that we are still in a midst of a cost-of-living crisis. However, if that gets reduced, it will not go back to six weeks. It will likely go to 12 weeks or more, because that is what we have discussed previously in the Covid recovery bills and the legislation and the consultations that we had around that. However, that could still be sufficient enough time for somebody, even with a mental health problem, to deal with their debts because we have that standard moratorium. However, the purpose of the mental health moratorium is to separate that out, to say that the first part is to look at your treatment, to make sure that you are in a position to then deal with your debts. That is why we are calling for the additional period to be aligned with the standard moratorium, to allow that period of time to focus on their debts. Down south, the mental health crisis is breathing space only for 30 days, and it is somebody who has worked with people with severe mental illness, who has been in and out of treatment and who has came out of psychiatric hospital, for example, or outpatient community care. When they come out of that, they are in no position to suddenly deal with their debts, so they need to make sure that the period that they get for that additional protection is sufficient enough to get them back on their feet in terms of their housing and their bills, but also then being able to make that decision around their debts and what solutions they want to go down. 30 days is not sufficient, so that is why we are calling for it to be aligned with the standard moratorium. I do not think that the standard moratorium will ever go back to six weeks. I could be wrong, but I am certainly not something that the money advice sector would call for. We would want a minimum of 12 weeks, and that should be sufficient for people to then deal with their debts. However, it is about having that balance of what is meant to help moratorium and trying to achieve. It is about allowing that time-space and compassion for somebody to focus on their mental health before they deal with their debts. Obviously, it could still be quite challenging within a 12-week period if somebody has a mental health problem. Can I bring in Beca? Beca, you mentioned the breathing space scheme in England and Wales and the organisational involvement in developing it. What lessons can we learn from that in terms of the eligibility criteria in Scotland? I think the key lessons that we take from England and Wales relate a bit more to implementation necessarily than to the eligibility criteria. As Sarah-Jane said, with the working group, the decision was made that focusing on those with the more severe mental illness, it is better to capture those potentially with compulsory treatment under the Mental Health Care and Treatment Act. I think money and mental health would probably suggest ultimately that both those receiving compulsory and voluntary treatment should be eligible. As Sarah-Jane said, the key aspect here is the fact that through secondary legislation, if upon implementation and after reasonable time it has been identified that a wider net needs to be cast to ensure that those who would benefit from its protections can be eligible for it, then that is a necessary step that should be taken. I guess the lessons really that we would take from England and Wales relate to its underutilisation. So we know that in 2018 23,000 people who were in hospital for their mental health problem were in problem debt. So there's a huge group of people who are in need of this support, but in the first 22 months of its implementation, so that's from May 2021 to March 2023, only 2,075 mental health crisis breathing space applications have been made down in England and Wales. So that's a severe underutilisation compared to the treasuries estimates of 27,500 mental health crisis breathing space applications in 2021 to 2022. And our argument isn't so much that it's an issue of eligibility. We agree that people who are in mental health crisis care should be eligible. It's more to do with the fact that it's not routinely offered to people in England and Wales. There's a lack of awareness about the scheme among healthcare professionals and mental health professionals and also challenges whereby approved mental health practitioners are the only professionals who can sign off someone's eligibility to that criteria. So for us, those are the learnings that we'd really like to see Scotland take on board. And that's why it's part of the mental health moratorium working group that Sarah Jane and I have been part of. We've really called for a routine offer to be made to people who are eligible for a mental health moratorium for a wider range of professionals to be able to sign off someone's eligibility and for the moratorium essentially to be developed in conjunction with healthcare professionals and money advisors so that awareness can be really developed from the beginning of the implementation process. That's very helpful. In terms of the eligibility criteria, you mentioned that you would support a slightly wider definition of that criteria. What would that definition entail? Would that be the same definition as England and Wales or are there particular challenges about how you then define something? Compulsive treatment is quite easy to define, but I suppose wider than it makes it more challenging. Exactly. I think that was the point that we as a working group landed on. It's especially for that bringing it into play, finding existing treatment that is easy to identify eligibility through and I think that's a really important part of the recommendations the working group put forward. I guess that Sarah Jane mentioned the context is slightly different whereby in England and Wales it's anyone receiving mental health crisis care and that can be compulsory or voluntary and we would ultimately like people receiving similar levels of care with a mental health crisis in Scotland to be that voluntarily or compulsory and under compulsion to also be eligible but I think the key point is that those who are as Sarah Jane said receiving it through compulsion are going to be the ones with the more severe mental illness so that approach will capture those with the most acute needs and the ones who are probably going to be or will be the most likely to benefit and be in demand of these protections the most but it's just having that built in recognition that similarly within England and Wales this is a new scheme and upon implementation if it's felt by mental health professionals or by many advisors that those who are needing that support aren't able to receive it, being proactive and responding to that and then bringing in again mental health professionals like Roger Smyth who Sarah Jane mentioned that we've been working with on the working group to identify where else under the legislation could we capture a slightly broader remit of people if necessary. Thanks very much convener and good morning Beccan Sarah Jane. Thank you for joining us today. If I can I want to carry on the theme of questioning that Colin started around the mental health moratorium and how how we can make it as effective as possible and what are the possible the potential challenges. Sarah Jane you mentioned the role the really vital role of money advisors and you obviously have that direct experience yourself. Just a couple of questions around that we know that and you've alluded to the increase in need for money advisors and I'm just wondering what your thoughts are around capacity of the money advice sector to to actually meet potential demand for this and what else what else needs to change alongside this legislation or what else needs to be brought in to ensure that the money advisors have the support the numbers and the resources to do to do this really really important advising work. I mean I could probably talk at length about this but I will try to be as concise as possible but yes you are correct in saying that obviously money advisors are very important and especially bringing around the mental health moratorium and effectively we are what some would say a dying breed and we certainly do needs and influx of resources and support that is needed for that but saying that still the money advice sector in Scotland will meet the demand that's at the door because we always have done and we always will do but it would be good to see extra resources brought in however in terms of this what I would say one of the things that we definitely to do and it has started already happening is as Marion the mental health support system with the money advice sector and actually working in conjunction. Now prior to becoming going to City of East Scotland and becoming the financial policy manager I actually was running the mental health and money advice service in Scotland and what I found as a money advisor and running the service that was the more joined up that a money advisor was with the clients mental health support network meant that things could get done quicker it meant things like getting that such as like the detrimental evidence form which is such a vital form in these situations to be signed and used and then being able to request things such as write-off from creditors is so valuable and being able to know for example that if you were working with their carer or their support worker or even having conversations with psychiatrists and psychologists and cpns it meant that we were able to then use that information to then discuss things with creditors especially priority creditors such as councils where we're able to then kind of give a more better understanding of that client situation and their mental ability to be able to then deal with certain debts for example. So one of the things that we've been trying to do in calling for it City of East Scotland is that joining up of mental health and money advice by embedding things like money advice in mental health settings so working with local community teams but also looking at training as well so a lot of our money advisors in City of East Scotland have taken steps to make sure that they're very scared almost to have these conversations around mental health because it takes a lot of understanding of how things like treatment or drug programmes or medication can impact on somebody for example I had a client who was a paranoid schizophrenic and had to take certain medication and I knew that don't talk to them in the morning because when they first take their medication they weren't able to even talk I had then had to make sure that appointments in the afternoon but I only had that learning because I was working in a service that was dedicated to working with people mental health and money problems so we've obviously put training in place to give our money advisors that support but at the same time as Bec had pointed out one of the reasons and one of the lessons that they've taken from down south is the fact that we need to bring the mental health sector along with us and they're equally worried at having discussions around money with clients and now under mental health care and treatment plan there is no requirement to discuss finances but a lot of people who are in that world are almost scared that they're going to open a can of worms if they ask somebody about debt financial worries so training mental health sector or giving them resources to then be able to have those conversations is also fundamental and one of the biggest things that have came out is the money and pension services money guidance programme and we've been working our pilot down in NHS borders where we've been working training using the money guidance programme to train mental health professionals in NHS borders but then also having them connected to the cab network so that if they did have a client or service user who did have financial problems and they did have those conversations they were then able to warm refer that person on to money advice support and that's where we need to also make sure that the system behind it is connected as much as possible and we can only do things by replicating things like the money guidance pilot that we did down in the NHS borders across all 14 NHS boards in Scotland. Thanks very much and I think you make the points of the needs for connections into the whole piece not just see the money advice as a single issue. We heard last week from people involved in the commercial money advice sector that they need to be involved in this as well and I just wondered if you could say briefly what kind of relationship you've had or citizens advice sees with a commercial sector and how is it that we make sure that there isn't a different approach, a different type of service being provided to people who seek support? The commercial sector we're almost a little bit lucky in the sense that with the financial conduct authority they have brought in certain rules and regulations that commercial firms have to follow such as the vulnerability guidance that they must do so somebody with a vulnerability characteristic they have to make sure that their processes and procedures take account of that and treat customers fairly because then just recently they've just introduced the consumer duty. The commercial sector is a little bit further ahead I would say the actual focus needs to be on the public sector and public sector debt so things like government overpayments of benefits, HMRC debts, you've got council debts like council tax rears rent rears. As I said before council tax recovery is one of the harshest forms of recovery you know within a matter of a month you could end up owning your full council tax bill and as somebody who's got severe mental illness you've gone from not missing one payment of say 130 pounds average council tax payment to now suddenly own 1,300. That's these are certain things that we need to bring in to place because the FCA heavily regulate the commercial sector and because of that regulation we have seen improvements now it's not perfect there are certainly things that they need to do better and we've brought out sits of i scotland and maps also brought out a version as well but we brought out our mental health and money guidance good practice guidance and we're hoping to work with the commercial sector and public sector on improving how do we handle things like disclosure of mental health and how can we support people with mental health and money issues better. Thanks very much Sarah-Jane Becker, if I could come to you I suppose following on from that a couple of questions just around money and mental health and the thinking around the support that money advisers get and the potential. Last week I used the phrase the term gate keeping have you experienced is there any sort of experience of mental sorry money advisers not referring or not supporting people in the way that we might wish especially under the mental health moratorium because they don't necessarily have the resources, the skills, the tools that they need. Do you have any experience of that from how things are operating elsewhere? A big piece of research looking at some of the common challenges people with mental health problems can face to engaging with their advice and I think the key point that came out of that was essentially money advisers are always going to want to do the best of their client but naturally because of some of the funding requirements or restrictions on them they often don't have the time or the space to give to clients with mental health problems that they would like to and I think that's often a frustration that they feel like they can't for example we know people with mental health problems are going to need longer appointment times probably when they're when they're seeing money advisers we know that they might need what was discussed written up afterwards due to difficulties with memory we know that it might be that they need instead of sort of one big advice slot sort of smaller chunks to address the fact that they might struggle with their concentration and I think a lot of that tailoring of money advice it's not a lack of want from money advisers to provide that it's a it's a constraint issue due to the funding remits within which they're working and as Sarah Jane was saying I think what's really positive when you see processes that try and join up mental health services and money advice is that sort of understanding of the client group and their needs that you're working with become more embedded in part of the service that's being delivered and I think a positive process in that is then better understanding how to respond to those people with mental health problems but similarly to what Sarah Jane was alluding to if if there is that expectation that yeah those people with more severe mental health problems in particular are going to have their needs met that needs to be accompanied by an understanding from funders that more time is going to be needed to be provided by money advisers in a different sort of more holistic support facilitated where it's not so much maybe on the quantity of people that you're able to see but acknowledging the fact that that might be of a lot more of an intense relationship and issuing of support thank that that's really helpful Becca just just a question on the role of of who refers so it's quite clear in the proposals that the application for the moratorium to apply will only go through a money advisor do you think that that's okay do you think that potentially um could could miss out to people who would be eligible but don't don't you know haven't found among the advisor or can't forward for their mental health crisis reasons are we missing potentially people who are who will fall through the through the net fall through the cracks here so i think the point to make and and that we discussed and put forward with the working group is it's a money advisor who in that initial initial instance is going to be verifying that someone is unable is going to be unlikely or able to pay their debts and almost sort of approve that someone is in the is in the level of debt or not even the level of debt is eligible for this scheme so it's less about someone having to go and physically or virtually access a money advisor it's about say for example of the route that they're coming through the mental health moratorium through is through their mental health professional mental health officer for example the mental health officer would routinely offer that there is this protection in place of you are struggling with your finances and that's been identified as a contributor or an issue that is exacerbating a mental health problem or something that you're struggling with that mental health officer or whichever mental health professional it is can then liaise with a money advisor who will verify financial side of someone's debts and therefore um be the second part of verifying someone's access to a mental health moratorium so absolutely i mean the the point that we've made being an issue with the standard mental with the standard breathing space down in england and wales is that that expectation that someone when they are struggling with their mental health to go in access and money advisor which is how you have to access the standard mental health the standard breathing space down in england and wales is unrealistic and especially for people who are going to be an inpatient care you that that's a complete barrier to access so what we also have with the mental health crisis breathing space here is the same as what we as a working group have recommended you need a debt advisor or a money advisor to verify someone's entry into that scheme but it wouldn't be until that second period once they have recovered or in the process of recovering from their mental health problem and that they are then in that sort of buffer period that they are then going to be looking to ideally engage with a debt advisor a money advisor to implement a debt solution thanks both that's that's really helpful and you've both I think indicated quite clearly the importance of post legislative scrutiny in in this to cover a whole range of different issues but I'll I'll leave it there thank you I've got a very brief supplementary if you don't mind about Sarah's comments if it's brief you mentioned the council tax scenario and how often that puts a great deal of grief on to clients do we have examples of councils that do this better than others in Scotland and would it be wise in your opinion to export that good practice right across the board yes that I could give a very short answer I know for a fact that the minister has actually been visiting in these areas I know he visited Fife for example I was used Fife as a very good example another would be Falkirk and Dumfries and Galloway they're all doing slightly different things but they're certainly a good practice that can be shared and was collated and the improvement services collaborative guide to a good practice for council tax which we would really encourage councils to adopt especially because it has been shown that when you adopt these good practices and you dot these collection methods it actually leads to better recovery money advisors will always try and prioritise council tax because it is a priority bill and it's not a much what we find it's not much of people not wanting to pay it's simply people cannot pay and certainly our research that we recently released around the drivers of council tax that was something that definitely called through but just to point out as becca was saying the fact that you know by having that routine question and having that routine offer built into the mental health moratorium will naturally as well build those links between mental health officers and mental health professionals with death advisors it means that it does just but even though that it might be a debt advisor who completes the form and the mental moratorium on behalf of that service user they might not necessarily use that debt advisor when they come out of that moratorium however that debt advisor is aware of their case and it's more likely because that connection has been made they will go and seek that debt advice and that's a fundamental important one other fact I would like to point out though is that most of the time is standard moratorium it's a money advisor that's making that application it's not even though it is available for the public to do so it's very unlikely that Joe public do apply for the standard moratorium on their own so this would allow by like we said by building in that routine questioning and allowing that those both routes if somebody goes through a money advisor first or goes to the mental health professional first they are able to access this moratorium but building those links between mental health sector and the money advice sector at the same time okay thank you Brian Whittle to be followed by Murdo Fraser thank you community good morning to the panel I think just to move up to to move the conversation along from what my colleagues have been discussing before around I'd like to discuss the practicalities of what we're discussing here I mean mental health is such a sliding scale and and what we're trying to do here is put it into almost a black and white box if you like about who is eligible we hear and it strikes me that to get to that stage you know in terms of mental health one you have to recognise you have a mental health issue two then you have to be prepared to go and ask for help and we know that access to mental health help at the moment in mental health care is you know difficult we have an NHS under extreme pressure especially mental health it's a section of that and then on top of that you then have to access money advisors so I'm wondering whether or not the decision in terms of who is eligible this is more around what is practically capable rather because of a limited resource or whether or not we'll be missing a section of people here who actually should be within within the moratorium and yeah and as I've said I think that's why we need that scrutiny of the of the once it's become implemented because I think only then once we actually have a system on which to play within we will know what actually the true landscape looks like at the moment we don't have anything so in actual fact we're losing we're lots of people are slipping through that net at this moment in time and you are right when someone is you know in that situation you're expecting them to do this but that is why we're trying to build a mental moratorium post-sys that wraps around them rather than expecting them to do it and that's why we came on to such things as compulsory treatment orders so somebody who's been had under a compulsory treatment order and they're having their treatment plan decided building that routine questioning and around their finances and seeing if then they do actually have debts that that then triggers the mental health officer not the client or the service user to then liaise with the money advice sector and get in the mental health moratorium in place that means that whilst that is running the mental health officer can focus on getting working through that treatment program with the service user and the service user will have been placed under compulsory treatment order and what is really good about our system which is different to England and Wales is the fact that we have a review process built into that system as well so they have to the mental health officer has to regularly go to tribunal to give reasons why that person has to be under compulsory treatment order and if they then find that that compulsory treatment is no longer needed now that doesn't mean treatment is no longer needed it's just the compulsory part of it they may continue to have a treatment care plan but they're no longer in under situations of clarity enough that needs the compulsory part of it they can then notify certain bodies under that to say that the compulsion has been lifted off that treatment order and what's good is that we can insert the likes of the counseling bankruptcy and what that does is that that inflags to the money advisor who has put through the mental health moratorium that the compulsory treatment order part has ended and that means that they're then moving into the additional period time so let's use an example we have a service user who goes into compulsory treatment he goes say they've went through it for six months after six months they're found out they no longer need that compulsory treatment they may continue to have medication and do other treatment that they do but the compulsion part has ended they're then because of the system that's built in the review process that time is flagged up through the system to the counter and bankruptcy which then through the moratorium system that is built and we've got the likes of basis and Eden and Astra already there they're going to flag the money advisor the money advisor can then contact the service user and say we understand that you've got that you know you've came out of this part of it you've got some debts here we would like to start supporting you to deal with those debts and this is you know your moratorium period will continue for another six months or whatever the length of time is at that point we would then like to take that time to build up that knowledge and start to look at your options around debt that means that we're actually having that wraparound system around that client right from the get go and we're capturing them as we go now there will be people that will slip through the net we know that unfortunately no system ever ever going to be perfect but it means that we can start to capture people and as we build that evidence as we hear from money advisors working in the sector or mental health professionals working in that field going we're not capturing a b n c because they're under that treatment we can then start to move and reflect and change the regulations to suit that but until we bring that into place we won't be able to do that okay thank you i bring back any of me i think that my concern here is is you know our money advisors in a situation where they can take this work corner me it almost seems to me is is that you know the way the system is set up is if you're in compulsory mental health treatment order then you know this this will kick in but as we've discussed there the way the way mental health works is not in a linear fashion and it might be for example that the money advisor themselves have concerns about the client in which they're working with are we are we suggesting here that the money advisors should have the capability of contacting mental health services to ask advice yeah and this was a really interesting conversation that we had as part of the moratorium working group in the fact that it might actually be a debt advisor or a money advisor who is the first point of contact for an individual and as Sarah-Jane was saying i think sometimes when you identify that someone is also really struggling with their mental health then it might be that they are the ones to sort of again in understand that they do need that wider wraparound support and that for various reasons a standard moratorium might not be suitable for them i guess particularly in the Scottish context maybe because they're not in a position to keep up with payments and charges on debts therefore that falls on interest in charges would be really key if that is part of the Scottish moratorium that's bought in place or the fact that their mental health problem through speeding to their wider network is identified as being sort of episodic or a current which is is quite a common thing and therefore you know this restriction that they can only apply for a standard moratorium once every 12 months is not going to be realistic and it might be that they need to be able to apply for those protections more regularly which is another reason why as part of the working group we called for no limit on how many times someone can apply for it so yeah we we did talk about the fact that it might be a money advisor who sort of identifies the need for that support i think the point that we also did make though was that it always needs to be a mental health professional who determines whether someone meets the eligibility criteria be that sort of compulsory treatment under the mental health care and treatment act and then obviously with the sort of authorisation given by the individual or if suitable and in place a third party acting on behalf of that individual so again i think the more as Sarah-Jane was speaking to that that interaction between money advisors and mental health professionals exists and that might in reality mean that sometimes that support has been instigated from a debt advisor or a money advisor initially um the more those interactions takes place the better and the more supportive that wraparound support for that individual and again it's not about them then having to sort of be the one to instigate engaging with both sources of support it's about that liaison happening on their behalf essentially by those who are involved in their care. Thank you um really helpful answer i think from a if you look at what from a practicality perspective um if if can i put a scenario together here that you know the debt advisor recognises potential issue with with the client and contacts mental health and there is a delay as there often is in accessing that sort of mental health help what happens in the interim in that period how do we deal with that period of time between the recognition there could be a problem and the diagnosis of the problem what do we do with that well i think at that point the that's where the benefit of having the standard moratorium because a person could have put you could put a standard moratorium in place it's a simple form you fill it in and then that kicks in during that diagnostic period and then they can move into a mental health moratorium um now the only difference would be obviously as Bec was put their certain protections under the mental health moratorium that we are recommended as a working group such as in freezing interest in charges however there are other mechanisms that we can use the money advisor can use for i've already mentioned it which is the debt mental health evidence form that has its own issues and that's why we we i'm at specific scotland and others are calling for the debt mental health evidence form to be built into the mental health moratorium as a trigger for the mental health moratorium alongside any statutory form that the that might be recommended and that is because a determinant of evidence form can do more than the standard moratorium it can request things such as debt right off and it can also request such things as interest in charges being frozen or other tailor support so if i was a money advisor in that situation that's how i would approach it i would apply for the standard moratorium to make sure that they have at least some form of breathing space but also look to get the debt mental evidence form in place so that they can look at things like freezing interest in charges however a mental health moratorium would be the benefit so once they are able to be eligible for that apply immediately for the standard in the mental moratorium because then that takes the pressure off the pedal it means that they can focus on their mental health these other options are dealing with debt that's not dealing with our mental health and we need this mental moratorium to give that recognition that what we need is a period of time for that person to go away recover as best as they can so that they're able to then come back and deal with their debt the the current tools that we have on our toolkit does not allow for that to happen and as a money advisor who's had to support many difficult clients and many clients with severe mental illness if we had had a mental health moratorium the amount of support and good that could have came from that would have been astronomical and it would have been it would have been such an important part of when I was working with clients and as Becca was saying the fact that money advice isn't a it's not a want for it and it's not a lack of want to support a client in that situation is sometimes we don't have what we need to do it and as much as you might want to as a money advisor if you don't have it then you can't do it money advisors are crying out for the mental health moratorium now as we say we could it would be great if we could get a perfect system that works right off the bat that would be amazing but that's not how reality works and sometimes it's better to start from a basic point and work our way out than to try and build that perfect system and not giving the support to now that's just how I would see it thank you very helpful thank you thank you we'll make some progress we've got a few other questions which I think will be focused more towards Sarah Jane so I'll go over to Murdo Fraser to be followed by Colin Beattie. Thank you Camila good morning I'm sorry to Becca Stacey but I think the question is going to ask her probably out with out with your remits so I'll just direct them to Sarah Jane and apologies you're on your own for this all right I just want to broaden the issues a little bit look at some of the other things that are in the bill or what maybe what's not in the bill and one of the one of the issues we've picked up in taking evidence is this question of the minimal asset process bankruptcy and as you know there are currently rules that say an individual can only apply for that once every 10 years and it's being suggested to us that this bill could be amended to say that that rule should be relaxed so I'm interested to get the perspective of citizens of the vice scotland on that particular issue certainly and it's something that we are hoping as I said alongside others such as step change Christians Against Poverty and Money Advice Scotland that we are calling for not necessarily needs to be in this bill it could be something that could be done after the the bankruptcy intelligence act because it's tied to the bankruptcy and debt advice scotland act so many so but it's something that is we would say is as needed when the money advice the minimal asset process bankruptcy was brought into play the 10 year rule was it was seen as a way to mitigate against abuse and to see people to repeatedly go bankrupt however it failed to recognise what the purpose of the minimal asset process bankruptcy was which is simply those who have no assets and cannot repay their debts can go into bankruptcy and the the full administration bankruptcy is to capture those who are able to make a contribution or have an asset but then added on this 10 year rule to say that you can only apply once every 10 years and maybe at the time when it was brought in it was just after the 2008 crash when the landscape of debt was very different to what we have seen but certainly due to the fact that the likes of what was talked about the pandemic and the current cost of living crisis people are falling into more and more priority debt and that means that its debt that is beyond their control we are seeing it certainly in citizens device scotland certainly in step change and christians against poverty that one in two of our debt clients have a negative budget that means they don't have enough income coming in to cover their bills and doesn't matter how much income maximisation a money advisor does that will not that has not changed and it means that such as putting them into a bankruptcy for 12 months rather than a minimum asset procedure which is six months you're merely just extending the delay of them getting debt relief and debt debt help for something that is beyond their control and their fault and we have put a paper together and presented it to the minister but one of the things that was clear in the first minister's recent speech was the fact that we're looking at to do as much as we can to be anti poverty to tackle poverty head on and yet we have this arbitrary rule of 10 years that is stopping someone getting the right solution at the right time that is right for them and we cannot see any argument of to why it needs to be 10 years now we're not even asking it to be less we're asking it to be the same as a full administration bankruptcy so that we can bring back those purposes that the minimum asset process is for people who have no assets they have no income in which to make a contribution but they need that debt relief and the full administration bankruptcy is for those who are able to pay something towards their contribution either through a contribution or through an asset and that is what the minimum asset and the full administration bankruptcies need to be about and having a 10 year rule does not do that. Okay thank you that's a very very clear answer. Do you think there are any risks at all in moving away from 10 years and I asked the question in the context I remember I was on the predecessor committee that dealt with the bankruptcy intelligence bill and we looked at I think that that's what introduced the policy in the first place and the 10 year rule and one of the issues that came up at that point if I remember correctly was the concerns that those who have very low income and very low assets if they weren't able to access mainstream lending in any form then that left them in the hands potentially of the illegal loan shark sector so do you think there might be some risk there if the 10 year rule was relaxed? Not in that sense no and I don't actually think there would be any risk simply because in order to access bankruptcy in Scotland you have to have mandatory debt advice so a money advisor and I'll borrow a word that Maggie used earlier it's almost gatekeeper in the sense that there is a gatekeeper at that door and that is a money advisor a money advisor will never put someone into a bankruptcy unless it is the best solution for them or it's an option that the client wishes to go down but they will usually make sure that they are applying for bankruptcy and it is used as a last resort actually at the moment a lot of money advisors are refraining to go down the statutory debt solutions route either because the 10 year rule is stopping them or because they recognise that bankruptcy isn't going to solve that person's problem because three six nine months down the line they're going to be back into debt so they're having to look at non statutory debt solutions so because a money advisor has to do that application and go through that process it almost removes the risk because a money advisor needs to be a trusted professional in this in this discussion and so we can either ask yourself do we trust our money advisors to follow the rules and do what they need to do to support clients and making sure they access the best solutions or do we not and the 10 year rule almost says to money advisors we do not trust you to put them into the best solution for them and we would argue that that we need to have a system that is fair but also accessible and the 10 year rule is stopping that from happening okay thank you that's that's very clear thank you and my final question is is simply is there anything else in terms of the bankrupt reform in this bill you would like to comment on or is there anything else that you think should be put into this bill that's not currently there that's a good question there's the the legislation that's being brought into place and into the bankrupts and diligence will make sense in the sense of it needs private legislation changes most of the changes like for example the protected trustee protocol can be done through secondary legislation so a lot of what we called for is already represented in the bill and the only thing that you know one of the things that we would definitely push for is this map for the 10 year rule and I think in terms of what needs to be in the bill I think one of the things that I pointed out is the mental health moratorium either in the bill or in the regulations we need to be building in the tools that already exist so the debt mental health evidence form is a form that is used routinely by money advisors and could be used as a trigger for the mental health moratorium the problem is is a lot of that comes with fees and charges if you go to a GP so by bringing it into the mental health moratorium we can winding that out and we can make it more accessible for other mental health professionals to complete the debt mental health evidence form for free which means that it then becomes accessible and the beauty of the debt mental health evidence form as I said it goes beyond just triggering a moratorium it can lead to credit or forbearance such as debt right off it's such an important form but it needs to be built in to this process and use more widely than it is currently thank you and do you think that would be necessary to put that in the legislation or would that just be part of the when you've been repeating together the guidance on what the I would probably say would just be a part of the regulations and guidance but it's I think it's definitely something that needs to be but you look for clarity from the minister that that is the approach that will be adopted yeah okay thank you thank you I'd like to ask a couple questions on diligence reform and again I think Sarah Jane I think you're front and centre there but Becca if there's anything that you would like to add then don't hesitate to come in first question is about calls to reform diligence against earnings taking for example to increase the amount which is protected from creditors or to building consideration of family size when calculating deductions and I can see issues around that particular one is this something that has an impact on your clients do you support the reform the diligence against earnings it is I think in line of the protective minimum balance that was brought in in regards to bank arrestments was sorely needed because it wasn't enough and I could be argued that a thousand pounds of protective minimum balance is still not enough especially in light of the current cost of the living crisis but diligence against earnings it's certainly something that is needs to be considered and especially in right regards to household composition so when you have a client who has an earnings arrestment and a set portion of their earnings is taken regardless of whether they are a single person at home or whether they have a family of five and that can be a real struggle in terms of afforded to pay your bills and could actually end up leading to more debt than it does support the thing about earnings arrestments is often as a money advisor I found it acts as a trigger for them to then seek money advice but only when it goes wrong so an earnings arrestment and for example if somebody's earnings arrestment and they're able to I'll say manage on their bills cope it's a you know they're Robin Peter to pay Paul to steal the reports title when that then tips over because they're finding that they're missing their rent for example or they're missing payments on their council tax or they're not being able to afford to put fuel in the car and then build other bills start and debt start to build up they'll then come to seek money advice through and we can look at things like the debt arrangement scheme that could then look at a more affordable repayment plan rather than just taking a full deduction from earnings and the current diligence scheme doesn't really take account of somebody's situation and personal individual it's just a blanket if you earn over this amount we take that amount if you earn over that amount we take that amount now that works in practice and it's good it helps employers it means that employers are able to to um take that you know put those through but it does mean that somebody could end up in a far worse situation how we would then build in a situation where they can look at some of these individual household components and there are ways in which we've done it in the past the arrangement schemes variation process for example does work and I think I'm Alan McIntosh's proposals it's certainly something that needs to be considered especially if we are able to show through the advisor that a variation on an earnings recent isn't going to stop the debt being repaid it just means it gives them a lot bit longer to repay that debt you mentioned DAS there has been perhaps an appropriate alternative obviously there's a little bit of controversy about DAS and the the fact that a lot of people go into that particular arrangement without adequate financial advice in doing that I'm not aware of that again usually there's something that came up in the previous committee all right okay a report that came out from committee at that point right okay in the sense of I mean a debt arrangement scheme is applied for on behalf by a money advisor and I would hope that the rigorous assessment of someone's financial situation is done to that you're able to put someone into a debt arrangement scheme and it's right for them having said that I think there has been since certain changes to for example the payment distributors no longer being the traffic system list and open that up to other organisations to be a payment distributor can open that up to potentially someone putting someone into a debt arrangement scheme when it's not suitable similar to what happens with protected trustees you know you might put them into a protected trustee and they're actually not suitable for it so if I can understand that there is probably some controversy around that but that is not necessarily around the debt arrangement scheme itself I'd probably say it's around the fact that certain changes were made to who could be a payment distributor and the expectation on that that needs a little bit probably more monitoring done and making sure that who again it's all about making sure that the person who's seeking to get advice to get in the right solution for them at the right time but one of the things that should needs to come under and it is coming under hopefully stage three review I have known clients having to go into a debt arrangement scheme even though bankrupt says probably a better solution for them because they have a family home to protect and the debt arrangement scheme allows them to protect their family home and if they go into a DAS or even if they go into bankruptcy or protected trustee they could end up losing that house and they could end up becoming homeless because that is an asset that needs to be realised for the purposes of the creditors so that our situations I do believe at this moment in time because the family home is not protected under other forms of diligence so other forms of debt solutions such as bankruptcy they're then having to go down a solution such as the debt arrangement scheme in order to protect their family home and that's why the stage three review is so important because we do need to make sure that our debt solutions work and can like harmony with each other almost and making sure that we are giving a tray of options to people as much as possible and making sure that it fits as many people as that we can there are certainly gaps in the debt solution landscape at this moment the debt solutions that we have don't necessarily fit everybody that is that are seeking debt support and there's certainly something that stage three needs to be reviewing and considering coming back to the diligence against earnings I think we've already touched on the certainly more complex way of handling family sizes and you know the issues around that if it stays for example at a fixed amount how would you how would you peg that how could that be fairly pegged should it be attached to cpi you know is there a way to make it fairer I think certainly yes and there is certainly a way to make it fairer and make it more grounded in reality in the sense of the fact that you know before certain changes to the bank arrestments protected minimum balance you know the amount that was protected wasn't reflective of actual people's living standards and living costs that they're having to see today so I think yes we need to make sure that any sort of diligence against earnings or diligence against anything is grounded more in reality and reflects what people's costs actually are because if you are shaking somebody a chunk of somebody's wages and leaving them in a situation where they're going to them being financial hardship and not be able to pay their priority bills and commitments then all you are doing is worsening their situation you're not you might be leaving paying a debt but you're putting them into further debts in a further days in stress that being said earnings arrestments are obviously a tool the creditors need to have in order to recover debts and as I've said before it can often be a trigger for that person to then go and seek debt advice and look at their options and what we would always encourage anybody and hopefully is that the sooner they seek debt advice the better but we do know that people do bury their heads in their sand to do trying while Peter to pay Paul and they try and deal with the situation until it gets to that breaking point that they can no longer deal with it and earnings arrestments and other forms of diligence are usually that trigger point. Just to move on. The Scottish Government plans to lay regulations to introduce information disclosure orders and to add inhibition to the options available for enforcement after summary warrant. Do you have any views on the likely impact to those proposals? From a money advisor's standpoint it's probably and from since the advice Scottish Scotland the reason why they're delaying it is if we would probably welcome because it means that they're taking consideration and they're not going down a route those forms of information disclosure orders and those are for the benefits of creditors and again I can argue both sides on why it's necessary but sometimes we do feel that a cautionary approach is wiser because we don't want to create unintended consequences and information disclosure orders obviously would allow creditors to be able to assess what assets somebody has in order to then take further action and diligence against them but that is that information disclosure order then going to be followed up with encouraging that person to get debt advice and opening up those discussions or is it efficient expedition so there's ways in which you can look at it. Now the majority of clients that we see as I've said before are clients with negative disposable incomes and no assets so the likelihood of this impacting on them is probably null but having said that you know there are people out there that it could impact on so I think taking a delay is probably a way to make sure that they are balancing the books in the sense of it is fair for both those in debt and creditors. Correct me if I'm wrong but isn't the information disclosure orders aren't they applicable to the private sector only and not the public sector? As far as I'm aware yes but I think we still see some days you know private sector could be some as a sole trader or partnership you know small business on which we can end up supporting so it's that's where we're trying to say like in our world it probably doesn't necessarily have a massive impact because the clients that we see are not necessarily going to come under that so it's fair but I can understand why they're probably trying to make sure that they are being fair for creditors and the people that they're trying to seek the money from. Let me just wind up with one last question probably as difficult as my colleague Murdo Fraser gave you. Do you have any comments on the diligence reforms in the bill and can you suggest any potential additions to the bill in this area? In terms of the diligence I don't have any further comments mainly because it is areas in which outwith our client scope and to the realms of business in the private sector so we don't feel that we would be an authority in order to speak to that in terms of anything that needs to be brought into discussion we would definitely as we've said suggested considering diligence against earnings and making sure that it is fair in terms of and one of the things that we would suggest around bank arrestments for example that system as well needs to be considered because bank arrestments are actually the form of diligence that is mostly used other than earnings arrestments and the bank arrestments are also get tend to use be used against those with the lowest incomes our own benefits only and we are finding as money advisers that clients accounts are being frozen because a bank arrestment is being made against them and they are benefits only but because their benefit goes into their bank account and it loses that protective status that their benefits are then taken through a bank arrestment and a money adviser then has to spend weeks months arguing back and forth between the creditor and the bank which also tried to spoke to their client who has now got no income because of a bank arrestment that has been unnecessarily unfairly processed against them okay thank you thank you very much to the two witnesses this morning your evidence is really helpful for our consideration of the bill I will now briefly suspend the meeting while we change our witnesses good morning everybody our next item of business is an evidence session on the report by the Fraser of Allander Institute on the economic contribution of the pharmaceutical sector in Scotland so I welcome Adam McGiwch a economist fellow Fraser of Allander Institute who's joined by George Davidson chair of the access and value group ABI Scotland and Sir Michael Ferguson reaches professor of life sciences university of Dundee and when I understand that Adam is going to give us a short presentation before we move to questions yes thank you convener and thank you to the committee for having us on today to discuss our fourth report for ABPI Scotland and this is looking at the economic contribution of the pharmaceutical sector to Scotland's economy so our latest report looks at a traditional economic impact assessment in terms of the sector's support for gvn jobs but given the Scottish government's national strategy for economic transformation that was published last year we wanted to widen this impact assessment to include how the sector contributes to things like tackling inequalities and improving the productive capacity of the Scottish economy so our analysis includes the pharmaceutical sector as defined by on s so this narrow definition of manufacturing of pharmaceuticals but it also includes a wider sector definition as when we engage with ABPI we realise that the pharmaceutical sector encompasses more than just pharmaceutical manufacturing but also things like pharmaceutical research and development medical sales and so on and given its importance to a Scottish government economic strategy we felt it was important to include life sciences in our modelling and analysis so as I mentioned we we reflected on NSET but also the delivery plans within NSET that was published last October and the underlying economic indicators under each programme of action so for example in entrepreneurial people and culture one of the key indicators is business survival rates so what we did is we looked at our pharmaceutical sectors and compared that to the Scottish average and for example we found that life sciences has a business survival rate of three years of 67 and that exceeds the Scottish average but also the Scottish growth sector average so we did this for a number of indicators under each programme of action to track progress against NSET to see how the pharmaceutical sector's contribute to Scotland's 10-year economic strategy overall we found that the sector contributes significantly to the Scottish economy for example the wider pharmaceutical sector contributes £1.7 billion in gross value added to the Scottish economy and supports over 15,000 Scottish jobs thank you very much we'll move to questions if people can keep their answers and questions concise that would be helpful can maybe start you refer to NSET which is the 10-year economic strategy that the government have in place have you as we've come to george first of all as an organisation do you see the impact of NSET has there been any changes since i know i think in year two have there been any changes and what in what ways do you engage with the Scottish government thank you convener so yeah i'm George Davidson here representing the pharmaceutical industry as part of abpi scotland i think i think in general to answer your question the Fraser of Allander report has been very positive and we do it to hopefully highlight the sector but i think also if you look at it we're a bit of a tipping point at the moment in terms of where we are as an industry if we really want life sciences to move on to that next level it's been quite well publicised that there's been a decline in clinical trials which impacts onward investment by industry there's a need obviously for regulatory to kind of speed up approval of new medicines it's difficult because there's new treatments there's different requirements and how do we deploy those innovative medicines quickly so i think running alongside that of course as well we're in a negotiation period as a pharmaceutical industry about the new voluntary pricing and access scheme which is at quite a critical stage we we've capped the medicines bill at 2 to allow medicines to be used in an innovative manner but recently the cap the the repayment rates got up to like 26.5 percent which isn't really sustainable so i can't see how that's going to map out but basically there's lots of discussions on at the moment about how we can basically drive you know the right environment for investment so i think at the moment you're probably seeing as well some companies making decisions to invest out with scotland stroke the UK so i think as i say i would just describe it as being a tipping point at the moment and do you find as i asked about the kind of engagement with the scottish government is there a forum that you're able to speak to the government about during i think we're very you know content if you like weren't a word we have a life sciences cross-party group which meets regularly and i think as an abpi industry we get we've had good support we've we've been campaigning for a number of areas primarily data to try and get the scottish data infrastructure set up that will actually attract that you know foundation for inward investment and i would say we have very good support yes because what would you say of the main we have outlined some around clinical trials and pricing but are there barriers particularly in scotland for growth for the sector because you've indicated that it's a sector that has potential for greater growth in scotland so why are you saying that they are without doubt the main barriers if you take clinical trials and you think about it it gets companies to invest but it also helps get patients access to medicines and innovation that they almost wouldn't have there's also a piece around how do you you know how do you look at the health health inequalities piece and can that be better you know mapped through if you have better clinical trials infrastructure i think you know bagging back to your question on the the support we have we've engaged very well with the chief scientist officer and dame anadamina checks been a fantastic supporter and talks at length about the need for a triple helix approach as she puts it which is very much about having industry as part of of that solution so i don't i don't see the problems being any you know unique in scotland versus the rest of the UK and i'll bring in sir michael ferguson so in 2015 the Scottish government economic strategy that's not eight years ago identified life sciences as a growth sector do you think since 2015 we've seen the growth that we would hope to have seen obviously we've had a pandemic which has impacted everything but and what do you think the barriers are to increasing the role of pharmaceuticals in scotland thank you very much convenient so you know georgias is speaking on behalf of the existing industries in life sciences and pharmaceuticals my concern is really with future companies creating new companies to get economic growth and in that context i think scotland could do so much more to help itself we have a university sector which is very very strong in life sciences so you know we scotland wins about 14 percent of the uk r and d budget if you like in in their universities competitively and yet we produce only six percent of uk spinouts in life sciences so there's a big divide there and i think there's a number of things which make the landscape of scotland not fertile enough to create those spinout companies in the first place and then even more tragically keep them when we do my own experience at the university of dandy is you know xc n tio was the biggest ipo biotechnology ipo in europe ever not this year last year but ever 510 million dollars on the naztac and it's in oxford mostly there's a little bit left in dandy but it was a university of dandy spinout and our ffista therapeutics another one did one of the largest series b rounds in biotechnology in 2021 it's now 100 in cambridge i call this levelling down so we're we are able to create highly invested spinout companies and yet we lose them from scotland because we don't have the infrastructure to keep them here so there's two problems one is that we don't create enough spinout companies at scale because we don't attract enough venture capital and that's partly not our fault it's partly because the venture capital community tends to fish in the golden triangle of oxford cambridge and london what it really means is we have to jump through a few more hoops to get their attention so we should just do that but we don't we need some public sector investment to help us jump through those hoops and create more high growth companies and then we need to properly invested with serious venture capital money not with angel investment only because that tends to lead to small zombie companies frankly we need to get major investment in and then we need to make sure that investment doesn't just bounce off scotland and go someplace else so if we can fix those two things i believe we can create a huge amount of economic growth for scotland now you've both raised areas where other members will ask questions but before we move to that can i just want to be asked adam a question about the Fraser van der report on page 25 you talk about the gender pay gap within the sector i think in scotland it's a bigger gap than it is across the UK isn't right so 22% women earn 22% less than men work in the sector compared to just 6% less at the UK level though we have a narrower pay gap across all sectors you suggest it depends where women tend to be focused within the pharmaceutical sector and it's more in supply chain then could you maybe just talk us through why there is such a gap in scotland yes thank you convener so when we're looking at the pay data for pharmaceuticals it's quite difficult to get a picture of scotland when you're looking at industry and then at a regional level to get data that's available so we had to look at 2021 because the data was suppressed for 2022 but when we did look yes we found that the gender pay gap was 22% in the manufacturing of pharmaceuticals in scotland if we compare that to the UK manufacturing of pharmaceuticals that's 6% and if we compare it to just an industry advertor in scotland of 12% there's clearly work that needs to be done in terms of the supply chain impacts we looked at the economic impact of the pharmaceutical sector and then looked at the industries in which it trades with and to determine the gender split of that impact that it has and we did find that while there's not as much employment directly supported within pharmaceuticals it tends to be in the industries that pharma trades with such as in retail and in sales and medical liaison and these types of industries are not directly supported so George I don't know if you could say something from ABPI about what needs to be done to tackle the gender pay gap it's recognised as being an issue that does need to be addressed and what has been done to address it yeah no absolutely I think you know the report clearly highlights and is an issue that needs to be addressed so from an abpi point of view they have done a survey of members an eccentric report which basically indicated I think it was 62 or 68 percent of members had this as a priority if I speak you know from those are I think in within the report Rochefarmers or Eagles highlighted what they're doing so to Adam's point it's difficult when you get down to the subsets I can talk about large pharma so for example the organisation I work for we have got a minus 1.36 percent in terms of the of the mean gender pay gap but you know hands up it's something that ABPI are going to have to keep pushing with members to say address this because it's not acceptable okay thank you okay well move on to some of the areas that have been highlighted already and I'm actually going to bring in Brian Whittle first because he is going to ask a question around clinical trials yes thank you thank you to me and good morning to the panel I actually have got a kind of interest in clinical trials and how that is how those are conducted and I think especially for treatments of maybe rare conditions that require you know trials to be clinical trials to be drawn from beyond our borders in fact it's it's to surely to the benefit of any any new drug that we we draw from as why the diverse populations we possibly can how are we how are we aligned to be able to deal with the rest of the world for example to to pull clinical trials together that sort for the efficacy of any new medicines thank you for the question so I think that's the the real problem if you like so since 2017 we've seen a kind of you know 44% decline in patients entering clinical trials 41% drop in terms of the number of clinical trials being cited across the UK and you're right to point out you know Scotland on its own it's got some fantastic potential with its population size with the kind number but for organisations and global organisations that want to cite trials you have to do it across you know the more specialised medicines the populations are very small so therefore you need to need to broaden it out but there was a review done by Lord O'Shaughnessy which looked at the clinical trials of which Daymana Diminichick is very much all over and you know there's some good recommendations come out of that to try and reverse what's happening so I think from a Scottish point of view one of the areas I mentioned that we're pushing on is data what you want to be able to do is have the data infrastructure there so that if companies want to come and do their clinical trials the databases etc are there but we need to as I say just create that so you know that they've got a name to quadruple the number of people who take part in clinical trials by 2027 there's quite a lot of funding going into it and I know from talking to Daymana she's absolutely clear about working with industry to make sure Scotland plays its part within that. Do we not have a sort of global network or data network which we can pull on and tap into to to to pull potential people for clinical trials? I think there'll be networks how joined up it is it's not doesn't seem to be as cohesive as it could be even if you look in Scotland it's not as cohesive as it could be in terms of how companies can access that data that's one of the things we're looking at at the moment. Thank you I don't know if there may have been before I move on to my next question and anybody else wants to jump in there? Just to pick up on what George was saying just there and the something we touched on in the report was that in the trade and nation report with the Scottish Government clinical trials was highlighted as a sub sector of pharmaceuticals that has potential to really drive export growth within the sector so something that we picked up on the report is addressing some of the issues around clinical trial wait times could support the sector and its export performance. To be honest it already performs well in but to for it to perform better in terms of international export. Stratification is really the name of the game in clinical trials going forward. You mentioned you know for sort of rare diseases and so on. The point is to give the right medicines to the right people and then therefore using genetic information is becoming more and more important in clinical trials that you test the the medicine for the people who are likely to benefit from it and not likely to be poisoned by it and this is really important and and so the whole landscape of clinical trials is changing enormously and of course you need to to be testing medicines in the appropriate population so for example my institution has an anti-malarial compound single dose cure that's in clinical trials in sub-Saharan Africa because there's no point testing it in Scotland because we don't have malaria so it's a question of the clinical trials being done with the right populations but Scotland has such a fantastic opportunity to do clinical trials especially in chronic diseases where we unfortunately score rather well so we have an incredibly appropriate population for running clinical trials in medicines for for morbidities and we have a very well joined up informatics system which is the envy of England by the way but we could do so much more it's really this kind of slight frustration that we have so many of the tools that we need to be a real go-to place for clinical trials and yet we are not managing to to achieve that part of it is the NHS is reeling from the Covid crisis and finds it difficult to find the time to concentrate on on bringing in those clinical trials thank you that's been quite a dramatic drop yeah it is was its force is 41 41 percent since 2017-18 is it the pandemic we've had Brexit we've had we've got a war in Ukraine is it these factors or is it something more structural you've said about capacity with an hs it's something more mundane is that or i wonder if all of those factors but you know the the bit is it was Adam was saying it's about the and a manna speaks well to this just around the the commercial clinical trials versus other types of research that's going on so i think that that's the bit that's drifted off and you know if you look at Spain and Australia that Spain have got a fantastic infrastructure network for clinical trials they really have have taken off with what they're doing so i just think we need to hit the reset button a little bit on this one and and make sure because it has lots of spin-off effects as we mentioned you know around the whole health inequalities and indeed to help the NHS recover i think there's research within the paper that's that talks about you know when you have centres that are doing clinical research access knock-on effects to sort of staff parallel et cetera et cetera so i think okay do you have any other questions mr wittle before me i've got to see if that sounds to me there's an opportunity for an entrepreneur to around the gathering of data anyway i just i wanted a question to some echo that you raised around the spin-off companies out of new businesses you know that sort of SME type growth i mean i think gordon mcdonalds intend to come in on that area question i apologize if i move over to you okay that's if we deal with clinical trials gordon mcdonalds okay thanks very much convener good morning panel we're ready touched upon spin-offs and i want to just try and understand that position a bit better so adam is author of the report maybe come to you first you've said in the report that scale-up is a barrier to success in scotland loses spin-outs and talents to england but in the same report you're saying supported by a knowledge exchange from world renowned universities and extensive government support have made scotland one of the largest life science clusters in europe made up of over 770 enterprises you then go on to say the number of businesses manufacturing pharmaceuticals has increased by 40 percent since 2010 and had a look back at your 2017 report and yet a very helpful graph not sorry not a table of employment from 2009 and in 2009 total scottish pharmaceutical employment was 2200 and it currently for the wider pharmaceutical sector is 5900 so i'm trying to understand where's this difficulty with spin-offs that's been referred to earlier on thank you for that question so in terms of the the clusters mentioned that we're reflecting on some analysis done by scotch development international so that's where that came from and and on the life science spin-outs it's more that the number of spin-outs is strong in scotland per head does have some of the best universities in the world and we always perform well on higher education measures compared to the rest of the UK and the UK and internationally it's more less about the number but more about the scaling up so making sure that we have the infrastructure for when those businesses want to get bigger and making sure as so Mike Ferguson noted in the case study having the lab space and the infrastructure for these life sciences spin-up spin-outs to scale up in scotland otherwise they can be lost to the golden triangle it's called a voxford in Cambridge on your your report you've got a chart three which says top universities for life science spin-outs what is that chart trying to tell us what's it's what's it's saying i think the scottish universities are in red Edinburgh university 18 spin-offs two were exiled is that probably down to the golden triangle you were talking about yeah when it comes and maybe someone will want to come in here with the life science spin-outs the point here was that there is the talent and the knowledge here in scotland it's just that it is when it comes to scaling up and best place to talk more about that would probably be mike in terms of the challenges in the life sciences sector so just before he come in mike i'm trying to understand this table a wee bit better because if i read across the various universities that are listed there and i accept it's only a proportion of the universities because obviously Dundee university hasn't mentioned on that table but if you look at it there were 51 spin-offs of which four were exited in scotland according to your table and in the uk there was 248 spin-offs which would suggest that spin-offs in scotland are higher on a population basis and there was 48 that exited south of the border which again is a higher proportion of the total number that you've presented so you know again i'm trying to understand is it the fact that we're creating them but we're not retaining them but your figures don't highlight there were no retaining them yeah what we found is that we create them but yes we don't retain them and and just touching on the data here and in something mean mike have spoke about is that other data sources depend on the underlying indicators of the different types of spin-outs and Dundee and many rankings come out on top when it comes to spin-outs which isn't reflected here in terms of the exited companies that yes that source that are bought over and leave that market so the point here is that we do have that capability in our Scottish universities but it's just about the scaling up i can't speak on what is happening to other universities in the rest of the UK because we did not look at that in the report we were just focused on the Scottish universities i've just lifted the numbers of your graph that's all um so some uh michael i was wanting to ask you um you've got a case study and you mentioned the two companies uh amphistar therapeutics and excentia if i've pronounced them correctly um one amphistia started in 2017 and excentia started in 2012 if i've got that right looking at the latest accounts would suggest that amphistia made a substantial loss in 2020 and in 2021 as total employees of 20 and is a net worth of minus five million pounds well it has a hundred employees actually i mean it'd be interesting about yeah okay so the point is that it's in the series b investment phase at the moment so it's an r&d based company platform company um and i'm a bit surprised by those numbers i don't know where they came from because for example it's got 2.3 billion pounds worth of business on those books from bms bristol mya squib and merc kga and it's past the first milestones in both of those big contracts so it's it's trading very very well at the moment but you know these these numbers also lag considerably the current realities so that's what i would say about amphistar i think it's everybody's looking at it as being very successful and expects at some point that it will IPO exit through an intellectual property offering and probably do extremely well as excentia did for example when it IPOed in 2021 so the figures are lifted but from companies house and it was the latest published accounts on companies house so i realise there is a lag between yes but it would suggest that similar to excentia that it's been recent that the improvement is financial position is because back in 2020 if again this is from companies house excentia only had 65 employees if i'm reading it correctly so it's only in 2021-22 that we've seen this substantial growth which we didn't have when they were created back in 2012 so i mean that the the natural history of of biotechnology in fact all technology companies is they get invested in through seed investment series a series b and during that time they're making a loss because they're they're they're growing them their company base and they're creating their products if you like and then when they get to a successful position that's when they'll go to the the market to exit get a huge IPO and that's when they go into mega growth phase so excentia is now over 500 employees 50 still in Dundee i'm happy to say but 450 elsewhere okay so moving on to the other questions i'm going to ask you had in your case study and you touched upon this earlier that there is a need for a public private fund that backs life sciences and innovation ideas can you say a wee bit more about that yeah i'd be very keen on this i mean i've probably spoken to something like 30 venture capital companies in the last two and a half years and it's always the same conversation which is you put in front of them your bright young ideas that are for innovation and spin out opportunities and they will pick and choose different different vcs will like different things but they nearly all come back with the same thing we really like this opportunity but just come back when you've done a b and c and that might be a bit of market research but more often than not it's sort of like killer experiments proof of concept experiments and the public the private sector expects the public sector to pick up that bill and vice versa and nobody's picking up that bill and usually for the sake of quarter a million pounds or something an innovation opportunity that's probably cost the charitable and public purse 20 to 30 million pounds of research to get to this innovation position for the sake of quarter a million you can't get it to an investable asset so there's a gap between innovation and investable asset now if you're in the golden triangle the vcs will kind of say oh well we'll give you some money anyway we don't get that luxury in scotland we need to close that little gap and that's why i talk about this one percent fund we you know Scottish universities win about 500 million a little bit more now of competitively one research funds in bioscience and medicine every year and yet we're producing half the productivity of our colleagues in the golden triangle in terms of spin outs and job creation wealth creation and i think we can close that gap by enabling scotland scotland's universities to have that that fund to help them get their innovation through to an investable asset basically have to tee up the opportunities a little bit higher in scotland than you do elsewhere so either we can complain about that or we can just do it and i think we should just do it and that way we will bring a huge amount of inward investment into scotland and if we have the right infrastructure we'll make it stick in scotland have high quality jobs for our graduates post graduates but very importantly for our school leavers the biotechnology is the the workforce in the r&d component of biotechnology is about 50% technicians right so folk who can leave school get an hnc qualification and move into that industry these are the kind of jobs that we need for our young people in scotland in my my opinion just my final point to yourself before i come to george how do we ensure that manufacturing jobs once we get out of the research and development phase are retained in scotland i'm aware from my son used to work in life sciences until fairly recently and it was an american investor that was involved in their company but the manufacturing despite all the r&d being done in scotland the manufacturing plant of that american investor was in europe yeah this is a really difficult um there is no magic answer to that if we can anchor companies in the r&d phase in scotland then there's a chance of the manufacturing staying in scotland if we don't anchor the r&d in scotland there's no chance of the manufacturing in scotland that's all i can say but it is a probabilities game and the complexities of investment and investment decisions commercial decisions by investors is something you can try to sway in dundee we have a a company which is in in r&d mode at the moment and by remonstrating with the chair of its board i've managed to keep it in dundee a little bit longer how long we can manage that for i don't know but you know we can all just do what we can to make um scotland an attractive and fertile ground for companies to stay even if we can only keep them through the r&d phase and keep the r&d arm that's still a net benefit to gva for scotland i mean a substantial one if we can also get them to uh to put the manufacturing here if it's that kind of business that would be a massive bonus uh that's a complex one george you might want to comment i think you're absolutely right i mean i work for organization it's got two manufacturing sites in scotland and you know we've gone through spells where it was kind of a bit rocky one was going to shut and thankfully kept it open and that's the now out of the recession things are looking good touch wood but i would totally agree with what you're saying might that you know if the bit that abpr focused on is can we get the investment at the r&d stage the clinical trials in because then once you've a company bought in it's easier than to then say what they want to do and you know the medicines manufacturing innovation centre at remfrew should be held up as a beacon of what can be achieved you know and we should really try and get funding in from companies to really really accelerate that as much as we can as brexit made that harder given it is a market of 550 million people there and it's harder for us to actually trade with europe because of what's happened over recent years i don't think you can point it just at one thing to be honest with you no no but it's obviously there are challenges of course there are challenges but you know there are equally chance i said before you know but if you really think about research now you you're not just going to have it all cited just in just in scotland you've got to think rod or so yeah i just think we need to everyone knows this so everyone can talk about i know what the solutions are but you just got to go on and do them i think you know that's the key thing really so i've got a couple of questions for you george one is we talked about the golden triangle of oxford cambridge in london yeah yeah and scotland is a highest number of education students enrolled in stem subjects and scottish population has a higher proportion of people have got higher education or degree status so so what's the difficulty in retaining jobs here when we've got a highly educated population and we've got a lot of students in stem subjects yeah i know i agree i think i think the challenge is just it's probably just set up when people sometimes do what they've always done and all honesty i think you know within my own organisation i'm always trying to encourage people to come up to scotland and see what the art of the possible is because you know i think as we mentioned at the start we get we get very good support it's a great infrastructure there is talk of the triple helix and i think you know through abpi we're always trying to put on innovative type workshops to get the people that make these investments to say come to scotland see what's see what's possible i think you know like it or not that golden triangle it kind of there's a it's kind of it's a tipping point making i we're talking about it you know the taste city's deal for dundee is a good thing because that will hopefully you know it gives a bit more infrastructure and i think we will we will reach a point where you've got we've got all the stats it's just how do you get people to kind of come and see for themselves what's possible yeah and my final question and then i'll pass back to the convener um i noticed that a pharmaceutical exports were up i think it was nine percent but exports to the rest of the UK was down from 155 million to 50 million was there a reason for that it's funny i was just chatting to adam because i didn't know the reason myself and i saw it just that kind of the difference to the UK versus versus international we were saying potentially you know there could be a number of things i was thinking from our own organisational point of view we if you go back to that time period we were under quite a lot of pressure for from different suppliers and we're sourcing some chemicals from you know india and china which is now reverted back thankfully so our site you know in an urban we can't manufacture enough at the moment which is fantastic so we were saying of instance to see the next batch of figures that comes through with the revenue going up and hopefully that won't that will reverse itself but yeah i don't know the exact reason to be should be straight about it right yeah and the magic ingredient is in a serious investment venture capital investment both national and international you know these companies need to have seed funding of two to five million series a funding of five to 15 million and series b funding of 15 to 60 million and if you're not in that area you're not going to have a high growth company and so we have very bright people with great ideas but they're under invested in okay so just i was going to pass back but i've just thought another question there was a there was a report from Deloitte's that came out in january that said that the average expected return on investment from search and development had fell from 6.8 percent to 1.2 percent in 2022 so given that that's the lowest level of return on investment on record is that making it more difficult to attract this funding that you're talking about yeah so yes of course at the moment everybody says oh you know that it's it's really difficult raising funding for for spinners actually if you look at the if you look at the the smooth the graphs you see what happened was in 2021 there was a massive spike of investment during the pandemic people had all of this money equities were overvalued as they put them they put it into venture and now it's come back down but it's still on an upward trajectory it's just a spike on top of an upward trajectory so there is still money venture capital money around the returns just at the moment and not looking so clever because of the over investment spike has actually diluted the returns so i think it's an adjustment in the in the economics that we're seeing at the moment okay that's my view thank you thank you thank you um adam i don't do you want to respond to the question about exports to the uk did you help yeah no no just a quick follow-up from what george was saying um our assumption was that perhaps it was a restructuring so perhaps something that was produced in in scotland as was in produced in the rest of the uk that year and that's something we and george were talking about and the latest data we have is for 2019 because export statistics at scotland were delayed in recent years but we should get figures for 2020 and 2021 in november of this year which will allow us to dig a bit deeper to understand is this a long-term trend or is this just a one-off? okay thank you thank you thank you mardo Fraser to be followed by ash reagan thank you community i've just got a couple of issues just to follow up on the line of question from from gordon mcdonald um first of all to yourself adam just just so i can get this clear in my head because you're saying your report that scotland lags behind other parts of the uk in generating life science spinouts and yet the the figure that gordon mcdonald alluded to suggested in numbers that we perform well so is that because the overall level of investment is lower so with engagement with surmike yes we found that the overall level of investment was lower and it was a challenge around scale up so what we covered in the report was that the numbers were of spinouts are strong but it's a scale up yeah okay thanks so just come on to surmike if i call you surmike is that right so you identified two key barriers one was infrastructure and the second was access to venture capital so first of all infrastructure by infrastructure you mean i assume access to facilities building space what do we need to do to fill that gap what what what is the role for example of agencies like scotland enterprise local authorities you know what role do you see the public sector might have in trying to address these issues thank you well in fact through the city's deals the city deals i think actually we the situation is getting much better so for example in my city of dundee by this time next year we will have an innovation hub built which is ideally designed for by technology and by pharma spinout companies and it's the lack of that to date which has caused us to lose xeantia and amfista but hopefully we'll stop doing that and we're in discussion with Scottish enterprise about their level of investment into that into that building structure as we speak so so i think and then abedin for example has just opened a bio hub as well through its city's deal the edinburgh bio quarter is is well invested and so on so i think we're gradually producing the infrastructures that scotland needs to retain its spinouts do we have enough infrastructure probably not but it's not as chronic as it was a few few years ago i think that that's that's that's good so i think what we then need to do as i keep on going back to is make sure that when we have innovation to create spinouts that we give it that little boost so that when it goes to the market for for its initial venture capital investment it gets serious investment rather than dribbles right because we get very large number of spinout companies but they're all small companies one person in their dog companies and frankly that doesn't push the needle on the economy okay so the second part you mentioned was access to venture capital this is a perennial i remember city on the predecessor committee two decades ago we were talking about that then you know we're still talking about it what role of any do you think something like the Scottish national investment bank has here in terms of attracting more venture capital into the sector right well i'm a hope i'm not going to say anything too controversial but it seems to me it seems to me the Scottish national investment bank should absolutely be investing in exactly this unfortunately i don't know maybe it's too small beer for them in a way i mean for instance a a pan scottish investment fund just for life science as i'm talking about now to basically fix this innovation to teeing it up as a highly investable asset to bring in serious venture capital we could do that for five million pounds a year now that you know and i think the returns on that would be enormous right i think you i think the steady state the returns would be well in excess of 250 million of inward vc investment in terms of gva be over 50 million a year and so on so the returns would be really extraordinarily good but don't seem to get any traction with snrb on this particular we have spoken to them but but nobody seems to want to step in and fill that gap and i i would prefer it was public private what do i mean by that i think if you set up if there was a sufficient public sector investment in this in this area you would bring in venture capital partners who would want a seat at the table to see the opportunities that are coming through from scotland and that's why i think you would end up with a public part public private fund so if the public sector was was to put in say five million pounds a year into this pretty soon that's going to be a 10 million pound a year fund because you might have four or five major vcs that be essentially sitting at the table and co-investing at that very early stage okay thank you thank you thank you um kevin sure is it linked to it's um i'd be interested to find out more around about the discussions with the scotland national investment bank and maybe mike and others can forward us that details in terms of that joint public private investment that you're talking about i wonder if there has been any discussion with any organisation whether that be snrb or whether that be scotland enterprise or maybe even with some of the regional economic bodies like opportunity northeast because you hinted at the work that they were doing by establishing a never green fund whereby investment is made possibly by public also by private and that you know eventually gets a return which then can be recycled so that we have got that constant recycling that constant growth of investment has there been any discussion around about that and if so could you give us an indication of how that discussion has gone yes thank you so scotland enterprise i've been in discussion with myself and colleagues about this for some time now and they just commissioned e-costs over this summer to do some some data collection and i have a discussion follow-up discussion from the e-costs report with scotland enterprise next monday so that's that's all good and so they've been looking very closely at this idea of a pan-scotish life sciences innovation to investable asset proof of concept fund and and they're coming to to a view on that but i think they they see the the opportunity there as well i do agree with with you with the evergreening i think if the public sector put in let you know of the order of five million pounds a year for six years i think by the end of that time it could be self-sustaining and that the public intervention wouldn't be necessary anymore because as you say it could take it the fund could take a small amount of the equity of the things that it's investing in and eventually that will pay back i mean one major ipo like the xc entier one which was 510 million dollars will pay back one percent of that would pay back the the whole fund so i think you know we can all be a bit negative when we're discussing this these issues but the report itself talks about scotland enterprise and the role that has played in startups in scotland since 2016 and 2020 and that's not insubstantial the investment by opportunity northeast in in terms of building that infrastructure is not insubstantial do you think that there should be greater co-operation between all of the players here in order to get that right and to open up discussions around about things like my proposal of an evergreen fund which i think could make the odds here as it is done in other areas absolutely i think the more joined up we are the better i think that the article that i wrote says says that we need to be more joined up so how do we do that then like well you know i think um Scottish funding council which looks after the university's day to day business and Scottish enterprise probably need to be talking to each other a bit more often than perhaps they do and i think also both of those agencies need to be plugged into Scottish national investment investment bank and we have a good avenue through the cross party group and life sciences into the Scottish government and i've you know i've always had productive discussions with with members of the of the Scottish parliament whenever i've asked for them so i think the the connectivity into government is is good i do think that the agencies of government need to be cross referencing now they have a lot of different things to to think about and to and to worry about so i don't underestimate the the pressures on everybody's time but in the life sciences industries i think you know scottan really has a fantastic opportunity to harvest and capitalise on its university sector which is so strong in the life sciences and make sure that that works to the benefit of our key stakeholder which is the taxpayer the Scottish taxpayer thank you thank you thank you i've our experience of some pressure on our time now so i'll ask members to be concise if possible i'm ash weekend to be followed by thank you we're always interested in the Scottish parliament on committees about what's working well elsewhere even if it's really you know a further field so are there lessons from elsewhere in how we can be better supporting life sciences and the industry i'm happy to kick off when i think that for us the achilles heel at the moment is larger pharma but it brings obviously a lot of you know investment is just this deal with the government about medicines so you know if you look at lessons from elsewhere you've got markets such as germany spain ireland where the kind of rebate rates are between 12 and the 8.25 percent we're at 26.5 now whether we like it or not that's not sustainable we've capped the medicines growth at 2 percent but i think you know industry will vote with her feet if they don't get this one sorted out so i think you know we need to probably look and see and it wouldn't be so bad but we're not we're not at the forefront in terms of innovative medicines getting to patients at the end result so we don't sit well in the rankings and i mentioned clinical trials you know we've dropped we've dropped to 10th in the world in terms of phase three clinical trials that's not a good position to be in so i think we need to why are spain bethlet doing clinical trials and we are and it shouldn't be the case to mic's point we've got the best academic centres you could wish for you know we've got a really cohesive network it's just it's just back to that bit i think i just and you know mr stewart made the point i think how do we through the cross party group we try to get people to come together it's just about collaborating at the right people in the room to make it happen okay thank you anyone else wants to contribute i think that you know if you look at south of the border for example where let's take oxford they've got oxford sciences enterprises which is a fund which is a commercial fund that were major investors of sort of pre put money in to basically commercialise oxford's scientific outputs we don't have such a thing in scotland ucl partners is a similar thing in london northern gridstone of course is a is something a movement in the same general area of getting pre investment to to go then go looking to invest in their university's innovation we don't have a comparable entity in scotland okay we probably need one okay no nothing to add to that thank you and then if i just move on briefly obviously the cobit 19 pandemic i think for the industry and for government things obviously the way we're working changed levels of support changed is there i suppose things that we can learn from that as well that we should be continuing that we maybe don't want to just leave in the past there and we need to take forward yeah no i think it's a key point that we should never lose and it's funny we're across party group but we're just saying that you know how quickly people forget after cobit cobit with a lot of bad things with cobit there's also a lot of good things come out of it in terms of collaborative working breaking down barriers not working in silos if you look at how quickly they brought vaccines to the market i think there's lots of learns for us to take from that model and hopefully a lot of the things i talked about although i don't want to paint a negative picture it's almost saying this is the art of the possible this is what we can do if we really just keep that momentum going and i think day mana is a fantastic supporter from a scotish perspective about you know as i keep saying she talks about the triple helix and if anyone who's met her she's a she's a force to be reckoned with and i think you know it's great for scotland she's she's going down wanting to find out what's happening with the life sciences vision making sure scotland's got its place at the table and i think that that's got to be a good thing okay thank you thank you convener thank you i'm going to ask you a fairly obvious question here you would think that with a unified health service such as the nhs that there might be an opportunity for the industry in scotland to collaborate together and i'm not sure from what i've read here the level of collaboration there is if any and what would the benefits be of that collaboration so pharmaceutical industry is collaborating together collaborating with the nhs yeah yeah no no absolutely and again i think go back to what i was just saying that there is quite a lot of that goes on behind the scenes that maybe don't doesn't get publicised enough but i think you know there's um we're just rewriting through abpi and scottish government the memorandum of understanding so that you know partnership working can take place in a very open public way so that's always been done we're working with professor allison strath at the moment just around i mentioned some of the more innovative medicine so she's looking at the horizon scanning and how it's not just about the medicine but it's about having the infrastructure in place and what industry can do to help support that before a medicine comes to market so that you get fast uptake and i think industry's got a fantastic role to play to help the nhs out of the situation that it's in post pandemic so but i'm not clear on the scale of that i mean you would think it would be obvious that this would be a partner you would deal with you but to put it bluntly then if you look at there's probably still a lot of skepticism between industry and the nhs i'm not saying which side it's on but you know i think industries are often quite willing to go out and get involved but it's not often it takes a while you think it sounds an easy thing to do but it's difficult sometimes to get the to get it going i think the centre for sustainable delivery i think there's a lot of stuff happening through that now and i think we're beginning to see a kind of more sort of scotland wide once for scotland approach which hopefully will bring industry in to do to do more of it but yeah we probably all need to take our ownership to see how do we accelerate it what are the barriers to getting this collaboration escalated to a better level i mean is there a capacitance on the part of one or other parties i think there's been a bit of a hesitancy sometimes about is it industry what are they in it for you know do they invest then do they pull out their money so that there's all of that that bit but we know there's lots of great examples and case studies when industry have got involved they make a difference they just have to accelerate it so i think but is it hesitancy in the part of the nhs or in the part of industry no i think if you look at the nhs at the moment you know if you're an industry you want to go and get stuff done it's kind of difficult as well because they're under the cost a little bit around you know they've got waiting lists they've got you know everything else to deal with and then there's industry coming along maybe we're wanting to do some innovation people really want to do it but where's the headspace to do it so i think there's a bit of that goes into it so if you look at the the issue with covid which came in over a period of a couple of years or so there pre-covid was there more collaboration than there is possible i'd say there was there was less probably less pre-covid i think covid is as i mentioned i think that that demonstrated when you take some of the barriers down what can actually happen you know you shorten time frames you could be wanting to work together i think that that showed what was possible so i think we need to probably take some of the learnings out of that and the danger is sometimes you move on too quickly and don't maybe do a for want of a better word action after action review to see what what were the learnings out of that and how do you how do you replicate those and don't lose them how do you collaborate with the nhs in terms of approaches i mean there are different nhs boards and so on do you have to approach the boards one by one or it would vary company to company if you know i mean we're so it varies hugely as abpi we have quarterly meetings with health improvement scotland and through that meeting there's a lot of information in exchange you can get passed on what's happening with industry and at a board level but invariably it tends to be an industry collaborating with a board i think the beauty now as i was saying the centre for sustainable delivery there is this desire to kind of do kind of pilot type projects and then scale them up quickly which i know dame hannah is very keen to to promote given you said that post covid there's been actually an increase in this collaboration it's still difficult to get a feel for how significant this collaboration is how is collaboration just one or two odd projects here and there or is there actually something that's well i think it's collaboration at different levels so if i take you know we take abpi we engage with dame hannah from the outset because as much as you know we all we all represent our industries if you like from a scottish perspective a lot of the members at abpi in scotland so we're very keen on things like the lord oceanic report and everything else to make sure how do we collaborate to bring that you know research into scotland so there's a there's a kind of cross pharma work going on at that level but then if companies have specific areas they want to collaborate on in certain therapy areas then that's down to them to drive through a board discussion and engage so you see it at different levels seems to be hard to actually get your hands around what the total scope of this is it's not easy it's not easy that's for sure thank you thank you thank you to the panel for your contribution so far it's been an interesting discussion i want to explore a little bit more the the notion of the infrastructure that we need in scotland that the golden triangle clearly has and we don't and that i suppose george talked very specifically about it in relation to clinical trials but i want to think more broadly than that and we've had reference to the tayside regional deal and and equivalents elsewhere i suppose adam in your in the report you talk about the regional dispersal or the geographic dispersal of the industry being being good and having a network across across scotland that it does that apply across the different elements of what we're talking about here or is it specific to you know that there's good research capacity in some places and not elsewhere there's good innovation in some places and not elsewhere that kind of thing i'm just trying to understand the the stratification within that statement about goodness good dispersal yeah thank you for that question yet so we touched on that in a report the the geographical split of pharmaceutical jobs if that's what you're referring to yeah so yeah the pharmaceutical industry predominantly employs in north urshire which we highlight has been widely recognised quite deprived area facing many challenges in scotland and also the second houses in the highlands and it's predominantly jsg manufacturing so these are highly skilled highly paid as we also outlined in a report across all the sales of pay the manufacturing of pharmaceuticals in the UK pays above the living wage and well above average so this is more to do with the manufacturing of pharmaceuticals jobs that are in north urshire and the highlands so just that definition plus some of the pharmaceutical R&D counts within that definition okay so so there is maybe not a disconnect but there's a distinction between that that dispersal and what we've been talking about the focus in institutions around you know the edinburgh the edinburgh focus done ddundee Aberdein but those kinds of things this is more the split is more focused on the predominantly manufacturing of pharmaceutical jobs in these yeah and I suppose that that that that then means there's also a comment in the report and you mentioned that in the summary at the start around the value of skilled jobs and I think there's that that that connection that that I think many of us will will try and see of investment in R&D and the sustaining of skilled jobs making sure that those don't get sucked into an equivalent of the golden triangle in scotland you know the central belt how how do we ensure that we've got the infrastructure that doesn't doesn't lead to that sort of sucking into another it won't be a triangle will it will be a yeah it's a great point and it's really important that these jobs will split across the whole of Scotland and that they are in places like North Ayrshire and they are in rural communities as well and so it's important that for example the GSK manufacturing plant in urban these kind of places stay open and continue to employ those in the local area because it's not just about jobs in these places but they have and it's not just about the kind of economic impact but the wider impacts that have on these jobs in those areas that have experience if you look at the Scottish index multiple deprivation income deprivation employment deprivation some of the highest child poverty rates in Scotland so yeah in terms of the both economic impact but also the wider impact keeping these jobs is really important not in the kind of glass wedding but in places like North Ayrshire Mike I don't know if you want to comment on that given what you've said about the the lack of or the mismatch of investment in in certain at certain stages certain times of yes yes thank you I think it's really important that every region every area every city that has the intellectual capital to create spin-out companies has the infrastructure to absorb those spin-out companies because if your spin-out companies are kept close to the founding scientists and the technology platforms that created them the companies themselves get the fastest opportunity of growth and therefore it's important that we don't just have for example I'm not picking on it but don't just have the Edinburgh by-quarter know everything should go to the Edinburgh by-quarter doesn't really work you know Dundee spin-outs need to be next to Dundee University Aberdeen spin-outs need to be next to Aberdeen University and so on and so forth and the distribution of excellence in in the fundamental research of the opportunities to create spin-outs is across the whole of Scotland I mean the big three are Dundee Glasgow and Edinburgh but you know Aberdeen is absolutely spectacular in biologics it has a real sort of you know specialist niche and then you know St Andrew's Harriet Watt Strathclyde and Sterling in Aquaculture you know they all have these zones of excellence and expertise so all of them need to basically have the opportunity to keep their fledgling and an actual spin-out companies close to give them the best opportunity of success being close to the founding scientists and the technology platforms that created them so that's what I think is necessary we're starting to get that infrastructure now with Aberdeen by hub the Dundee innovation hub which will be open next year and so on by-quarter has always been there Glasgow has some significant capabilities for spin-outs as well so that we're beginning to to level up that playing field enough probably not but sufficient you know but some sufficiency so I think and that will keep the the distribution of the R&D base wide and I think that's really important I would I would agree with you that what we don't want to do is just to see that suddenly collapse into one place so I suppose building building on that and maybe this this you know we we've heard a lot about scaling up and the importance of different types of investment at VC into that and and the public public investment to bridge the gaps is there is there something that we also need to be thinking about and we've heard it in this committee before in other contexts and and other sectors around scaling deep and scaling out and Georgie talked about you know how do we stop people doing the things that they've always done you know and what is it about the culture change or the culture that that we need to change that isn't just about money but also how do we what what what else do we need to do to ensure that we get the we get the routes these essentially what we talking about are those those setting down of deep routes around the spinouts so they do stick and that's not always about scaling up and we don't talk about scaling out or scaling deep and how do we how do you help us change that conversation and how do we what what do you what do you need from us to help change that conversation I think we need to make Scotland a really attractive place for for investors to invest in and also we need it's a 10-year project this but we need to accrete a talent base that we don't currently have we have the talent in the in the in the science and the ingenuity but what we don't have are the c-suite talent you know the CEO the cso the cfo they all live in the south east of england but one thing the pandemic has taught us and it's been a fantastic revelation actually is you can leave them there you can keep your r and d team which is the majority of the jobs in scotland and the c-suite folk can carry on living in the my opinion ghastly south east of england and and come up and down to to their Scottish assets and actually in doing so over time we'll accrete them to scotland because it's such a much nicer place to live um and uh but that's a 10-year 10-year project but it used to be seen as a barrier people would say well well you'll never get investors to to do anything in scotland because all of all the c-suite people are in the southeast but actually it turns out they can work virtually right that's one thing the pandemic has taught us everybody can work virtually and it works very well from from that point of view so that's much less of an impediment now and i but i do think over a 10-year project as it were we need to accrete a critical mass of that talent set as well as the fundamental scientific r and d talent okay thanks jocky and also so you just just add to that i think you know this um the innovation hubs but also the fact of scotland size it's it's quite an advantage really because if they can act is i think there's one for scotland approach that's been pushed out at the moment is really really positive because um you know if you get that data infrastructure right then companies will ought to go back to this tipping point i think we will get to that place where we're not far away from it at the moment you know so i have a duty of care to kind of bring people in my organizations other organizations up and put showcases on to show people what what scotland can bring to them okay thank you thank you very much convener in good day almost afternoon to the panel the scottish government is considering the creation of a national pharmaceutical agency to improve links between life sciences and the nhs they've described it as a possible front door for the life sciences community do you think there's this agency is necessary and if so what should it do yes so we've heard a lot of conversations about it we've actually invited allison strath along to our access and value meetings i guess we haven't really debated it in any great detail at the moment because we're still waiting to sort of see some of the the detail on that to to what it's purpose would be what it's going to do what would the opportunities what would the threats be so it in short answer to your question we haven't had a big debate on it so is this something that appears therefore to become from the government rather than from the industry itself is this an initiative that appears to be coming from the government or it doesn't sound like it's coming from the industry itself yeah it's not nothing that we really were proposing at the moment no okay don't know if if somebody has any comment oh it's really the other end of of the business chain you know i'm i'm my expertise such as it is is in the early innovation and creation of spin-outs george's expertise is at the other end which is how do you get final products engaged into the national there's nothing negative about it it's just we haven't had a ongoing debate about it yet you know i'm sure when the time is right we have a great relationship with allison strath the health minister etc so i think you know we'll be brought in we'll have discussions we've never had an issue with that back to the point i made earlier i think in scotland we're we're fortunate that way that we have we're very much round the table and we can have these discussions so i just think we don't know what the government described it as in its early scoping stage so i think you've very much confirmed that for us yeah correct okay thank you very much for the witnesses i'm very brief final question we are in above time mr stewart if it is very i think it's an important one i'm sure it is thank you george and others have mentioned spain's ability to carry out clinical trials in a more efficient way if memory serves me well from the pandemic spain itself also had a very high vaccine take-up rate is there a scenario whereby covid and some of the conspiracy theories on it some of the conspiracy theories that there have been before caused difficulties in certain places in recruiting people for clinical trials and is spain an advantage because there is a seems to be a trust in the government in the infrastructure in terms of managing to do those clinical trials we're doing well so i'm not sure that correlates over you know good observation i couldn't make the correlation but what i would say about spain is because i cuvia who based you know in scotland obviously and gary white who's the deputy chair of the industry leadership group from Scottish life sciences i asked him why spain what they're doing so well and his only answer was that across each of the regions they're really cohesive in terms of how they do it so they're all talking to each other so i think that that's back the points we made earlier that scotland's small enough to be able to do this and have been yet our data structure our universities everyone just working together and i think you know hopefully there's a great landscape here to to move it forward i don't know if anybody else wants to come in he's also invested hugely in their public health services so they now have the capacity to bring in clinical trials whereas previously they didn't thank you thank you thank you thank you that does now bring us to the end of this morning's session thank you to the witnesses for an interesting discussion i now bring the meeting to a close and move into private session