 Good morning and welcome to the 12th meeting in 2024 of the Finance and Public Administration Committee. Michael Marra will be joining us remotely. Before we move to our first item, I want to record the committee's thanks to those who took the time to meet with us as part of the inter-parliamentary finance committee forum visit to Port Cullis House in London last Thursday. I'm sure I speak on behalf of all members involved when I say how worthwhile our meetings were with Treasury Committee MPs and Public Administration and Constitutional Affairs Committee chair William Ragh MP and also with David Gock, the Office for National Statistics and Institute for Government as well as our Welsh colleagues. I look forward to meeting with our Welsh and Northern Ireland counterparts again later this year, possibly in Belfast. The first item on our agenda today is to take evidence from the Scottish Government bill team in relation to the financial memorandum for the police, ethics, conduct and scrutiny Scotland bill. For this session, we are joined by Scottish Government officials Graham Thomson, head of legislation and division on development, and Stephen Bunch, bill team leader. I welcome both to the meeting and invite Graham Thomson to make a brief opening statement. Good morning, Mr Thomson, and over to you. Good morning, convener, and thank you for having us on today to provide evidence and to take your questions. We recognise there's a difference between the cost set out in the financial memorandum and the evidence that you've received as a committee, and I can confirm that we are working to revise that financial memorandum with the intention of publishing a revised version after stage 2. The cost estimate set out in the financial memorandum were informed by extensive discussions with our policing partners, in particular Police Scotland, the Police Investigations and Review Commissioner and the Scottish Police Authority. Also through the Scottish Police consultative forums were statutory staff associations such as the Scottish Police Federation were able to set out their views. Those discussions were complemented by written evidence and desk-based research that we undertook, and through liaison with His Majesty's Inspectorate of Constabulary in Scotland, the Home Office and the London Mayor's Office, all to help us to sense-check the information that we've received. There are three main differences between the financial memorandum and the evidence that you've received. Firstly, training costs. As we've prepared the financial memo, Police Scotland told us that those costs would likely be able to be absorbed. However, as you can see, they've now adjusted that position. This is partly due to the wording of the statutory responsibility that's being placed on the chief constable in the bill, and partly as a result of a more robust approach that they are taking within Police Scotland to assess the impacts of new legislation across the board. We are working with them to fully understand the training requirements and their financial impact and will reflect that work within the revised financial memo. The second area of difference is staff costs associated with the anticipated increase in the number of gross misconduct cases. We accept that there will be a need to increase resources in Police Scotland's professional standards department to support the bill's provisions and intend to capture that in the revised memorandum. The final area of difference is legal costs for former officers, which is dependent on the estimates of the number of additional cases and an average cost to support an individual's attendance at a hearing. We relied on information provided to us by both the Scottish Police Federation and Police Scotland in preparing the financial memo and recognised that those costs have now been revised by those organisations, and we'll also reflect that in the updated financial memo. Overall, the information gathered via the call for evidence is reflective of a greater understanding of the impacts of the bill, which we'll draw on to update the financial memo after stage 2. We'd welcome any questions you may have. First of all, I have to say that I'm quite astonished that the updated financial memorandum is planned for after stage 2. The financial memorandum should be with us updated before stage 1 of any bill going forward. I don't think that that's really appropriate at all, and I would hope that work will be done to ensure that that does happen. Secondly, I'm quite surprised by the fact that the figures that I've used in the financial memorandum relate to September 2022. That's 18 months ago, and, as Police Scotland pointed out in its submission, at that time inflation peaked to 11.2 per cent a month after that. Surely steps should have been taken, even if one does not agree with the costings that Police Scotland has provided. That should have been updated along before now. I was introduced into Parliament in May, June last year, and it was at that stage that we used the information provided us by Police Scotland. We accept what Police Scotland said about inflation. We accept that inflationary costs and pay has increased for Police Scotland and will reflect that. Indeed, we'll take advice from committee about when would be the best time to bring back a financial memorandum. Indeed, we can, and we are already working with those policing bodies to update it. We're already in a position where we can update some of the information and would seek to do that at the earliest opportunity. It was our understanding that that was likely protocol with the state that that would normally be after stage 2. From this committee's perspective, financial memorandum, if members are going to be deliberating general principles of a bill, it's appropriate that the Finance Committee scrutinises the updated financial memorandum before it goes to the lead committee, before it goes to stage 1. As far as I'm aware, that's the way it's always been done. That's the way it should be done. It certainly shouldn't be done after stage 2. I understand your point that the bill was presented in June last year. That makes me even more bewildered that nine-month-old figures were being used when, clearly, everyone knew that inflation was high. Even more so, there have been nine months to update it since then, and we have been presented with a set of figures that actually don't really mean anything. We could go through it all. I sat here with all my nice wee bits, all yellowed, with questions to ask about that. You're effectively saying that the financial memorandum, all how many pages of it, 22 pages of it, really isn't it worth the paper that's written on at that stage? Is that a fair assessment? I think that it's fair to say that we're updating. We look to update parts of it. I wouldn't accept that it's not worth the paper that's written on, but I do think that there are elements that we will update, and that's in line with the particular sections that we drew out. Why has it not been updated before now? It wasn't until the evidence that you received through your call for evidence that we had that information updated. While we've worked closely with Police Scotland, they did not supply that information to us in advance of providing it to you for the call for evidence. You don't have any other sources of information, other than the fact that you were clearly aware that there would at least have been an inflationary uplift over the last 18 months, even given the caveat that you've made with regard to submissions from Police Scotland and others? There are certain elements that are subject to inflationary uplift. I take your point that we could have potentially updated that at an earlier point, but that isn't the case across the whole financial memo. I'll be honest, we are reliant on some of the information that we've received from Police Scotland and other policing bodies in shaping that. We are reliant on the information that is needed to us or to yourself through your call for evidence. How did you come to the figures that you have in the financial memorandum before Police Scotland made the submission, given the fact that you're saying that you're so heavily reliant on what you've provided? We worked closely with the Professional Standards Department in Police Scotland and have done that over a considerable period of time. I mentioned in my opening statement that Police Scotland is taking a different approach to how they calculate how they assess financial impact and what they did prior to us producing the financial memorandum as they were very much concentrated on the impacts on Professional Standards Department alone. What they have done since then is consider the impacts right across the organisation. For example, when it comes to training costs in relation to the introduction of code of ethics or a GT of Canada, they are considering that across the piece. They had previously told us that that would be absorbable and that that would be a cost that they would be able to absorb, but they have now adjusted that position. We accept that there is a case to be made for that and we are working with them to understand that impact. Police Scotland is saying that it is going to cost nearly £5 million in the figure of the financial memorandum, more than three times what it has said in the financial memorandum. So, do you think that the police are more accurate than the financial memorandum that we have before us? I think that there are elements of that that are more accurate. I broke my opening statement down to three parts. When it comes to the legal costs and the staff costs associated with the anticipated increase, they have increased and we, broadly speaking, accept what they are saying there. There is still some ongoing discussion with Police Scotland about that training element, largely because the costs that they have set out include opportunity costs, so they include the costs because officers will be doing other things as a result of the old concentrating on the training rather than doing other tasks, rather than any direct costs. Colleagues are quite keen to come in, incidentally, but one of the things that you have talked about is the £10,000 benchmark for materiality, which I quote, takes into account the relative costs of changes in proportion at the overall budget of the affected organisations and the difficulty in being precise when dealing with smaller estimates. However, the approach to presenting costs as material and immaterial in the use of the £10,000 figure as a benchmark is not the usual approach to taking with the Scottish Government financial memorandums. As a finance committee, we are trying to interrogate apples with apples and not apples with pears, so why have you decided to use that approach, which is not normally used in financial memorandums? Let's keep coming in a second, but generally speaking, we adopted that approach because there was a little bit of uncertainty as to some of the costs. We recognise that actually costs can only ever be best estimates, so we accept that we could phrase that in a different way. If that is not in line with other financial memoranda, we will specify costs where we can and provide better estimates where we can. We are talking about things that were considered that are variable amounts, and Steve can potentially provide some examples of that. Very low amounts can be cumulatively large amounts. Do you have to commit to somebody's budget? The types of costs that we are looking at are things like consultation costs with the stakeholders for the code of ethics. We weren't sure exactly what those costs were at that low level, but if we were to assume them at £10,000, that would take account of those costs. As Graham Simpson said, we can remove that element from the revised memorandum if that is something that the committee wishes. Paragraph 27 of the financial memorandum says that the figures contained within the financial memorandum are the Scottish Government's best estimates of the costs of the provisions of the bill, but clearly that is not the case, is it? Sorry, can you repeat the question? I will quote from the financial memorandum, Paragraph 27. The figures contained within the financial memorandum are the Scottish Government's best estimates of the costs of the provisions of the bill, but they are not, are they? They are nowhere near the costs. The financial memorandum at the point in time was the best estimates that we could get from the information that partners gave to us. Overall, the costs that we considered wrote down as immaterial. In some ways, we potentially could have described that as absorbable, but those costs were included in the overall figure. Once again, on a situation in a Groundhog Day position in this committee, whereby an excess here in page 33, many of the bill's provisions were required for secondary legislation to be fully implemented. Why are they not being included in primary legislation? I will start off with that one, and then I will bring in Steve in a second. The bill is an enabling framework, and there are a number of provisions that are going to be set out in secondary legislation. I accept that there is more that we could potentially do to outline some of those costs, but there is a key element here, which is that when it comes to conduct regulations, which is going to be some of the things that are going to get introduced by a regular secondary legislation, we have to do that. I set out in legislation through consultation with the Scottish Police Consultative Forum. Those statutory staff associations such as the Scottish Police Federation are everything that is in the terms and conditions of an officer's employment that is set out in regulations, rather than in an employment contract, as it would be with other police staff or most other professions. As part of that acceptance, there is an agreement that everything can only be done through the Scottish Police Consultative Forum. In some ways, we have not gone through that process, and that process that we go through with the Scottish Police Consultative Forum may well change what is or is not in that secondary legislation, because that should be done by agreement through that forum. You have said in that same paragraph 33 that it is not possible to provide a full assessment of costs or savings till the regulations have been agreed. When one looks at table 1, you have given a figure of £1,414,474. You have put quite precise figures into the table, despite the fact that you have admitted that it does not bear any real reflect relation to what the costs are going to be. It seems very odd to me. A document that is just so imprecise. I take your point about the precise nature and, as part of the work that we are undertaking, to look again at the financial memorandum. I think that where we are not able to be as precise, we are likely to provide a bit more evidence in range form. Just one more question before opening out to colleagues around the table. When can we expect an updated financial memorandum with more accurate costings? As I said at the beginning, we were intending to do that after stage 2, because that was our understanding of when it was set to this committee. So, when can we have it? We can work to a quicker timescale, and we know that the Criminal Justice Committee are undertaking their stage 1 work throughout prior to summer recess, and we can work to that time table. Okay, thank you. I will now open up to colleagues first to ask questions about this before we move on to Michelle. Thank you. Good morning. Mr Thomson, the problem that we have with this committee, as the convener has quite rightly pointed to, is that we are being asked to scrutinise the numbers that have to go behind a bill. This is the fourth bill in recent months for which we have concerns, because the accuracy of the numbers do not suit the scrutiny that we have to provide. Do you accept that, when it comes to being a bill team to make a presentation to Parliament, it is essential that the financial memorandum that goes with that bill is understood and clearly set out before we get to any legislative process. Do you accept that as a bill team? As a point and principle, it is absolutely our intention as a bill team to try to make sure that the information presented is as accurate as possible. So, why then did you consider it, or originally consider it appropriate, not to provide us with that updated financial memorandum until after stage 2? Where is the logic in that? I think that it is my misunderstanding on my part that we understood that the protocol dictated that it would not happen to that. I would point out again that it was not until you received your call for evidence that we had the information to enable us to update that. It is a long-standing convention of this Parliament, rightly so, as the convener has rightly set out, that the financial memorandum must be presented in time for the legislative process. That is not after stage 2. If it is a misunderstanding, then we have to correct that very quickly. I suggest that there is a wider problem here because we have to ensure that any legislation that we pass in this Parliament is fit for purpose, that it is good law. Whether we parties vote in favour or against the bill, that is not the main point. The main point is about whether it is factually correct and whether the evidence supports it. At the moment, I think that it is very difficult for us to understand why a bill team thought that it was appropriate to come with the numbers after stage 2, which is after a committee stage, as well as the stage 1 debate in the Parliament. Do you accept that we are right to have these concerns? I absolutely accept that. It would be my intention to bring forward a revised financial memorandum as soon as it is possible or practical to do so. The stage 2 that was reflected in my opening statement was not born out of anything other than that. That is what I understood the protocol to be. If that is not the case, as you clearly are setting out, then we will work to do that as soon as we possibly can bring back the revised memorandum. I think that that would be very helpful. I will pursue another part of that, which is related. I do not know how many framework bills we have in this Parliament just now, but it is a lot. My understanding from a Scottish Government perspective is that one of the reasons for framework bills is to try to ensure that there is as much discussion between Government and the relevant stakeholders to try to co-design the right phrases that the Scottish Government uses. In other words, we have a better chance of getting good legislation if the stakeholders have had really good input to that. That is my understanding, and I think that that is the understanding that this committee has. The problem is that the co-design process is on-going beyond financial memorandum getting published, as you have just shown us, and beyond some of the initial stages of the legislation. Do you accept that that is also a problem, because it means that we are unable to decide what the costs will be if that process of suggestions coming in about the bill is still on-going? I accept the premise of what you are saying. I look at it clearly in the interests of Parliament to have all the relevant information in front of them. That is why a financial memorandum is presented along with the bill's provisions. I accept that, in this case, we now have information that allows us to update that financial memorandum, and it is the earlier that we can do that, the better to help to support Parliamentarians in their work. From a practical angle, as I understand it, the Justice Committee is discussing taking stage 1 evidence to Snow, is that correct? They are starting their stage 1 evidence sessions after Easter recess. Do we know how long that stage 1 process will be? We understand that they are planning sessions that run up until the end of May. We do not know for certain exactly whether that will allow stage 1 to be fully completed by summer recess, or whether that will extend after summer recess at the moment. I think that, convener, it would be very helpful if we could get some detail on when we might expect the revised financial memorandum. Thank you very much. Thank you. I thank you for attending. I am just picking up on that last point and reiterating what my colleague Liz Smith and the convener has said. I feel that it would be absolutely necessary that we have an updated FM before the conclusion of stage 1 and before the production of any report. There is a critical dependency in terms of the satisfaction of the finance committee that the numbers are within certain ranges as accurate as they can be going forward, so I would add my voice to that. It is really very important. As well as the finance side, we have responsibility for public administration, so I must admit that I am really quite surprised in terms of organisational culture, how we have ended up where we are. My colleague Liz Smith set the backdrop. We have seen an increasing number of framework bills, and framework bills carry significant risks to the public purse in that a lot of the costs are put past a stage where the numbers bod, i.e. us, would be able to really look in detail at them. From a public purse point of view, they represent a significant risk to a waste of money. I wanted to ask you what conversations are going on in your area as to the risks against the backdrop of chronic shortages in public sector funding? What are the risks that are actively being considered of using framework bills? There are lots of elements in the bill. It is not just an enabling bill or a framework bill, so the code of ethics, duty of candor and section 4, there are lots of elements that are on the basis at all. The point that I am making specifically is that there is a risk of overspend, of inefficiency in spend of sunk cost as a direct consequence of the co-design process. Against a backdrop of significant public sector cuts, understanding that and understanding about how money operates with those kinds of programmes, that veers against the use of framework bills because they carry those significant risks. My question is, within your hierarchy and what is going on in terms of the Scottish Government, what active discussions have you had about the risks of adopting that approach in terms of inefficiency of spend? I think that it is safe to say that the value for money and the impact on the public purse is a thread going through right through what we are doing within policymaking at the moment. Having said that, in terms of, we haven't personally, unless Steve tells me otherwise, hadn't had any personal discussions about the impact of framework legislation, as opposed to detail. We felt that this bill, working with our legal colleagues, was the best way in which we could implement the intention of the legislation through framework legislation, but we haven't considered, specifically, when bringing forward this bill, the impact of framework legislation in general. I can perhaps provide an answer in writing in due course to the committee on that. It's not part of the standard process, but it sounds to me like what you're saying, that internally quite a number of departments in the Scottish Government haven't got the memo about chronic shortage of public spending. It sounds like we might get round to think about it at some point. In genuine honesty, if it were me, I'd be developing a detailed risk assessment of using a framework bill for this type of legislation from a purely financial perspective and disclosing all of that. What that plays to, and I think what you're picking up from the committee, is confidence. If, in your preparations for today, either yourselves or whatever directorate, might have looked back at some of the committee's deliberations around a number of different bills and gleaned very quickly and easily that we have concerns about framework bills and prepared you adequately for that, because it really is a significant concern. In terms of the actual FM itself, a lot of the points have been picked up, and your opening comment, all the questions I had, I thought, right, these are in effect moot. I suppose the question then to me is just to explore a bit more how on earth did we get here. I notice and I acknowledge that you've clearly had conversations with Police Scotland, the Scottish Police Federation and so on, but I am interested to understand, given those conversations, what was the nature of them if, when we got to the nub of it in terms of giving evidence that suddenly they really had no meaning? What actually happened and why are we where we are? As we say, we have been working closely with Police Scotland, and when the bill was introduced in June last year, it was at that point that they were able to understand the full impact of the legislation on them. One of the higher costs is on the training costs for the code of ethics in duty of candor, which we were told would be absorbed within the general training for officers. I thought that it could be absorbed based on the conversations that had taken place by that point, so why was it that the information that they had available led them to that decision? It can only logically be because there was either a lack of information given to them, leading to a lack of understanding and, as they gain more understanding, they were able to update their figures. That place, to the point that my colleague Liz Smith is making, is that people are making up numbers with no clue of what is intended by the legislation. At the heart of that matter is that there is a statutory duty on the chief constable to ensure that all officers have done the training, and at that point that is where there is going to be a training package developed. That statutory responsibility was not known prior to that. The fact that there was a statutory responsibility, which brings the specific cost, was not known at the point of the original conversations. Is that what you are saying? We were able to explain the policy and we were able to say what we were including in the bill, but it is really that key point that was unknown at that point in time by Police Scotland, I do not think. They set out in their response to your committee that it was not until they saw the exact wording of the bill that was called on Police Scotland that they did not know that that was the case. We cannot say exactly the wording of what will be in the bill before it comes to Parliament, but we cannot have proper conversations with Police Scotland and anyone else about the policy intention, but until that was known they did not. I also said in relation to that that they are adopting a different approach when it comes to assessment of training and IT costs across the board when they are assessing the impact on them as an organisation. Between the time where they provided information to us and the time that they provided information through the call for evidence, they have put in place more robust processes. It is partly as a result of the pressures that they are facing as a result of the constraints on public finances that they feel they need to be better at explaining and setting out exactly the impacts on them to ensure that informs the asks that they put into the Scottish Government when it comes to budget discussions. My last comment, which I suspect is probably moot, but in terms of ranges for things, I will look at a range and the scale of the range adds to my confidence. In other words, if the range is significant, that makes me less confident. A range is entirely acceptable because we realise that these are estimates rather than final figures. I noticed that the estimated cost of the bill's provisions, which can operate, was 2.7 times more than the lower figure. Do you anticipate, or is it in your tension in the updated FN coming back before the end of stage 1, that the ranges will be something more acceptable? Before we finalise, it is almost like the range is one of the end points of where we get to, so I cannot commit one way or the other, but I take on board your point and we will try to make sure that we minimise the range as much as we possibly can. A couple of quick questions. First, on the process, you mentioned your understanding of protocol. The protocol for the initial publication lodging of an FM is quite clear, but Liz Smith was right in the language that she used of the convention that has built up around that as well. My understanding is that, when it comes to revision of FMs, we are generally relying more on convention. Are you aware of where you provided an internal Scottish Government protocol on how to revise an FM and what Parliament would require from that, including timescales? There is a bill handbook that sets out the process. Often the FM would get revised after stage 2 if there is any amendments, and that is where we assumed that that would be the point that we would be able to revise the FM. However, we can look at the bill handbook and see if there is guidance there. I am sure that there will be on how to revise an FM or to update it in line with the guidance that is already there for the initial FM. To back that up, we will take back the information and the evidence that you provided to us today and look to feed that into those responsible for the overall bill handbook and see if it can be updated accordingly. It is a living document, so it can be updated on a regular basis. That would be useful, and it would probably be worthwhile for us as a committee to engage directly with ministers on the handbook. My understanding of the handbook is that it is not specific enough in those circumstances, and there is a clear need for revision. I sympathise with you in that, ultimately, you are significantly dependent on the information provided by Police Scotland. It is unavoidable. It is not that there are third-party sources of the kind of information that you need. I am correct in understanding from what you said that the first person who was aware of Police Scotland's changed position was when the evidence that was submitted to us was published, i.e. that they did not proactively come and contact you. At the point at which they presumably realised that they got our call for evidence, they realised that what they were going to submit was significantly different from what they had originally provided to you. Did they proactively contact you to let you know, or did you find out when our evidence was published? We are engaging on a really regular basis with Police Scotland or with the professional standards department within Police Scotland, which is the department that is most affected by the provisions in the bill and the lead department within Police Scotland. It is safe to say that, as a result of the changes within Police Scotland, they are looking at much more holistically impacts of bill provisions across the organisation and what those previous conversations that we had directly with Police Scotland were until they managed to do that across the organisation, that they have come up with the totality of what they presented back in the call for evidence. I will let Steve come in on the specifics of those conversations that we have. They intimated that the costs would likely be higher when the evidence was published, but until it was published, that was not really their official position that had been agreed, I do not think. When we saw the evidence published, that was when we realised the difference. Sorry, I realise that this is going to sound like I am repeating the question, because they did not provide that revision to you directly. The first thing that you saw written down as a new set of figures was when we published the evidence that was provided to us. I think that we need to take that up with Police Scotland, because I cannot understand why they would not provide that information. There are issues here of the Government process, but I am a bit disturbed that the police would know that they were making a significant revision and would not provide that information to the Government. We will obviously deliberate in our private sessions when we go from here as a committee, but if that is your question, you can finish it all like John in, and you will be followed by Michael. Thanks very much, convener. I mean, maybe to slightly disagree with the convener, I have to say that I do agree with the idea of materiality and rounding things to 10,000 or so. I think that that is much more realistic, that is quite normal in accounting practices. So, I think that this is a good example, and the others should follow this example that the idea of having very precise figures, going down to £134 or £474, I just see personally as far to, well, just unrealistic, frankly. Some of your figures clearly are rounded SPA potential costs £259,000. The committee may disagree with me, but I personally think that that is the right way to do it. Like a figure with £134 at the end, I would just drop because there is no way we are being that accurate. Anyone can be that accurate when you are making such forecasts. That is just my comment, if you like, by way of support. On the materiality thing, I saw on page 9, paragraph 30, you compare the materiality of the £10,000 as a percentage of the annual budget of the different organisations, which come in at, like, 0.001 per cent, and such like. I just wonder whether it would be better, or did you consider showing the materiality as a percentage of the actual bill costs, which would therefore be, I mean, there would be something like 2 per cent in some cases, that kind of thing. I just wonder if that would be more helpful. That is interesting. I think that what we were looking to do is to capture the cost as a percentage of the overall budget to show that it did seem to be quite absorbable and not material to consideration of the bill. Given what we are looking at in this actual bill, I suppose for me a material figure is how it compares to what is in this bill, rather than necessarily what the whole budget is. Anyway, I will throw that in as a point of consideration, because your percentages that are shown in paragraph 30 are tiny, and they would still be small enough if it was compared to the bill, but anyway, I will throw that in by way of comment. The convener touched on the point about the cumulative effect that you could have a number of issues under 10,000, but together they would come to over 10,000. I mean, I just wondered again, would it be possible to have a line in paragraph 33, where you show the different costs, just a kind of sundry or miscellaneous, or something like that, or are you not comfortable having a figure like that? Yeah, I think if you look at table 3 on page 12, that's where it starts to set out what we think is the immaterial costs or the ones that would maybe transfer to another body or to be absorbed. Right. One of which, at least, was an immaterial saving, was that right, so it kind of sets off some of the others. Okay, and then just a couple of questions on some of the more assumptions or details or whatever. I didn't quite understand the point that if somebody has retired, the costs would be or have left the service, the costs might be higher in their case than if somebody is still in the police service. Can you just explain around that what happens there? Sure, yeah, so right now if there's allegations of gross misconduct and an officer resigns or retires, and this is gross misconduct and not any criminality, then the hearing would stop so there would not be an outcome. What we're looking to do in the bill is to make sure that an outcome is achieved so that it's either it's not gross misconduct or it is gross misconduct and if it is gross misconduct then it would be put onto the barplist and until that outcome has been reached, then the person would be on the advisory list. Right. So how do the costs vary because of that? Would the cost for either the cost for the Police Scotland or the cost for the individual officer be different and would be handled differently whether they're in the service or they've left? So the costs are the investigatory costs and I think if an officer resigns then the investigatory costs and the costs of the hearing would stop whereas if the hearing was to continue the police might need to still investigate that. If they had investigated that then they would also have incurred the costs of the hearing as well so those two costs would be part of the costs for the former officers. Yeah I'm not sure if I'm either understanding or explaining myself very well. In Police Scotland's evidence they say the legal costs involved in defending such challenges vary but will always be significant. An example of a level of cost that can be occurred was provided by a response and it goes on so far. But they seem to suggest that it would be different if an officer had left they might want their own legal representation whereas they wouldn't if they were still within the police. So I think what's being referred to there is the legal costs associated with that which so at the moment if someone resigns or retires no further action can be taken we are looking to make sure that that does that further action can be taken or considered. At the moment legal costs, there wouldn't be any legal costs arising from that. What Police Scotland are rightly pointing out and the Federation have also pointed out in their evidence is that someone will have to provide those legal costs now which wouldn't exist which are a direct result of the legislation being introduced and we accept that. So does the Federation cover the costs of existing officers but wouldn't cover it for officers who had left? Also is there a difference between higher ranks and lower ranks as to how the costs are involved? What we have put into the financial memorandum is based on the information that provided me as an overall cost both legal costs and an average cost irrespective of rank but it's safe to say that there's a wide range ranging from zero legal costs up to I think 170,000 or something like that. That's an asset out there which could be incurred as a result of the there. So we have to go for an average, otherwise we would end up in a situation where we're providing a very wide range Michelle, taking board Michelle Thompson's point that we want to try and minimise that. Can I just point out as well that the bill doesn't say that the officers would need to have that legal representation, it's just that if they wanted to have that legal representation which they might want to in a Grossman Scotland duct case. Right. Because one of the points the Federation makes is that it seems grossly unfair that those in higher ranks who are also higher earners are having their financial costs paid yet the Federated Ranking Officers are having to pay for their defence either personally or through their professional subscriptions. Is there an inconsistency there? At the moment, the Federation usually picks up the tab for all that as a result of the membership of the Federated Ranks and there are other representative organisations that are the Association of Police Superintendents and the Scottish Police Escaposa for senior officers, so those are ACC and above and as a result of the legal costs are sometimes picked up by Police Scotland for those ranks and that's because the membership of the Federation is 97% of the 97% of the ranks so they can generate more in funds to allow for the spending of legal costs where the status isn't possible through the at those more senior levels. So the Police Service itself sometimes picks up the cost. Right. Okay. That's interesting. Thank you. And finally I think probably on page 23 of the financial memorandum paragraph 107 it talks about perk making recommendations to chief constable and this is under the heading unknown indirect costs so there's a lot of uncertainty around this so it would depend what these were if there is a cost in implementing the recommendation then this indirect cost cannot be quantified. I was just wondering if you give any examples of that I mean what might perk recommend and is it really just so the variations are so wide that you just cannot put a figure on it. Yes. So what the bill aims to do is to strengthen the scrutiny of the police by enhancing the perks role so the perk when it makes recommendations the chief constable to make sure that we're not interfering with the chief constable's operational independence they would have to respond so they might respond by saying that this is something that due to resourcing or due to an operation they wouldn't want to implement but the perk will make those recommendations they'll be in public and the chief constable would have to respond but it's not we're not able to fully see what the perk would see from their review of the Police Scotland's activities to see what they would recommend. So I mean I don't know kind of what know what kind of thing they would recommend but say it was some new piece of equipment like a camera or something new cars whatever it might be is it just totally unpredictable then what they might recommend? Yeah it could be a new piece of equipment or it could be a new training regime or something and so it is pretty unknown but the chief constable would then take that on board thinking about resources at the time as well. Right so even with a revised financial memorandum that would that would stay the same basically it would still be unpredictable it would still be unpredictable yeah okay thanks. Thank you Michael to be followed by Jamie. Thanks. Can I ask the witnesses do you accept the costs as presented in the evidence from Police Scotland? So as I set out my opening statement for two of the three key elements we accept so that was in relation to the staff costs additional staff costs associated with the anticipated increase for gross misconduct cases and for the legal costs for former officers we accept we accept those where we're still in active negotiations with Police Scotland is in relation to the training costs so the training costs associated with the introduction of the code of ethics and a statutory and a duty of Canada. Is there anything else in the evidence that we've received that you would take on board in terms of when you're trying to revise the financial memorandum? The inflation costs and the pay the reference to the pay increase we would take account of because in essence that feeds into the staff costs that I outlined earlier so we recognise there's been pay increase since those original figures were provided. We've actually as a committee has been referenced already we've had a lot of backing forward with the Government on financial memorandums of late so I'm really looking for clarity from you. Do you accept that this financial memorandum is not fit for purpose as it stands? I accept that it is in need of revision so I accept that the information contained with it is not up to date and we are accepting the vast majority of what's in the evidence provided by Police Scotland and others. The evidence would indicate that the costs are up to three and a half times higher than those that you've presented so far and it's really important for us obviously as my colleagues have set out that we don't move to a stage one consideration with something that is so vastly out of kilter and doesn't have the right evidence based within it so do you accept all of that? I accept that it is of benefit to Parliament overall to make sure that we update this as soon as we possibly can, in line with what I said. Did you consider knowing that you were going to come here today and tell us this? Did you consider writing to the committee and saying the information on this financial memorandum is wrong? We'll revise it and we'll come back at it later. We didn't understand that that's what you would be looking for. As we said irrespective of whether it is correct or not, we had the understanding that we would be coming back with a revised financial memo after stage two. It's clearly not the case based on what we've heard today so I accept that we need to do something different. Thank you. On that basis, we've heard a little bit about handbook but I think that this is not a direct imparct criticism of your own work in this area but this is, and you'll be getting this very strongly, this is the fourth time the committee has been in this position. Who does the training for the preparation of financial memorandums within the Scottish Government? I couldn't remember their full name. I couldn't remember their acronym. The parliamentary liaison unit within the Scottish Government is responsible for providing on-going training and they hold regular sessions with members of bill teams on wide variety of things related to the introduction of a bill and including one specific one on financial memoranda. You're not presented them with any standard ways of presenting these as colleagues have picked up. We're looking at wildly different ways of presenting what should be the same thing. The convener has pointed out that we can't be in the position of comparing apples and pears. We've got this little disagreement between Mr Mason and the convener there about how these figures are presented and material or immaterial but there's no standardised process that you're presented with to say that this is how you should present these figures. Yes, there is a standardised process. We thought that it would be helpful to try and introduce the concept of materiality but obviously that's for the committee to decide if that's helpful or not. You didn't adhere to that standardised process? Yes, we very much did in terms of the rest of the financial memorandum but introducing that aspect of materiality is something that I've not seen before. Just to back that up, I recognise that in our attempt to try to provide something that we thought would be helpful, we haven't succeeded in certainly taking your point about consistency. If that is the most important thing for committee and for Parliament in general, then take the point that I'm adhering strictly to what is in a template form and the advice that is in that handbook. We'll take that on board. I mean I would say that consistency is important and it's certainly useful but accuracy is clearly the most important thing within the process and we don't have that in this process either. Can I ask then in just closing a convener? Part of us colleagues have addressed the issue about the number of framework bills that we're receiving and who is it in this process that is saying to you as bill teams and as civil servants what we should be doing, what we should be producing are framework bills? I think it's being decided on a case by case basis. It's not a policy intention or an intention by ministers or officials to introduce framework bills. We make take into account the individual circumstances, what you want to achieve and in this case we made decisions on what we're trying to achieve in consultation with our legal colleagues and in SGLD and PCO Parliamentary Council office to develop what we're trying to do. There's been a very marked increase in the number of framework bills that the Parliament is looking at from major pieces of legislation like the national care service, this one as well. We've seen these all the time now whereas I'm a relatively new member of Parliament like in 2021 but my understanding is that in years past these were incredibly rare if not completely unheard of and now we are seeing them in this committee almost every month in the agenda. Is it a fashion that's running through the civil service? I think we can take away the point you're making as officials but there's also a potentially question there for ministers as well but from an official's point of view there's no deliberate intention to do anything or certainly not within the constructs of this bill and certainly not anything that I've ever heard about whether we should do more or less framework bills. There's been no reflection within your discussions in civil service as to the clear problems that these are presenting in terms of the financial accounting of it as we are presenting as a committee but the general ability of the public and the ability of the Parliament to scrutinise the legislation effectively that's not being reflected on in the civil service. It may well have been reflected in the civil service but we're not party to those so I can only go from my own personal experience. Thank you very much Michael Jamie. I won't repeat all the points regards to framework bills that have been made and I certainly support colleagues on those. I just wanted to ask briefly about the timelines. You suggested that the Police Scotland didn't weren't aware of the implications full financial implications of the bill until they saw the bill presented. You suggested that despite working closely with them their official position didn't change until as far as you can see the evidence was presented to us. In that interim period since June last year when the bill was presented what concerns have they raised with you about the costs and what figures did they put on any potential increase on costs? When Police Scotland we've had to assess the bill and work out what those costs are and when we were engaging with them they said that the cost they think the cost would probably be higher than what they had said prior to introduction. So when did they say that? It was raised at the Scottish Police Consultative Forum when we met there. So when is that? I'm trying to get an idea of the timeline of how long it's taken to get to this position. September 2023. So in September 2023 they raised concerns over the costs and again at that point did they put a figure on it or did you go back to them and say look can you revise those costs now provide us with an updated parameters effect? No so we didn't know the figure until it was published with his evidence to the Finance Committee. But did you ask them for updated costs? We were discussing but I don't think they were able to say precisely and I don't know if they would know until it's been agreed as an official stance. Can I just specify this is going back to the point that I made previously about the fact that we're interacting directly with the professional standards department but what Police Scotland have done since the introduction of the financial memo, the discussions that the Scottish Police Consultative Forum and through to what they've provided to committee through call for evidence is that they have developed a corporate position which needs to be signed off by the executive team of Police Scotland as an official position. So it's taken them time I would be my understanding taking them time to arrive at that corporate position where they can set out exactly the overall impact on the organisation. But while that's been happening obviously you've been progressing with your work and the bill I mean what concerns did that raise with you that I mean were you aware that they were going to present new costs? We were aware that they would give evidence to the to the committee. So you had no idea at any point that the five million upper potential cost was going to be presented so that came as a complete surprise to you? The exact figures were surprised to us. I think we'd anticipated that there would be some increase presented but we didn't know the exact figures. I mean it just seems odd to me that you're aware that there's costs of being revised. You don't know what those costs are going to be. Ultimately they came at three or a bit times. You know at no point are you aware or that there seems to be that no point do they seem to be concerned from you how that might impact on the progress of the bill and also obviously this committee's ability to scrutinise that. I mean the costs are going to go up hugely for a key player. I mean do you think you've done enough in I suppose keeping in touch a liaising or requesting that information from Police Scotland? You know the information at the point in time when the the bill was introduced was the best information that we could have from Police Scotland. They've now revised that and I think that we'll use that better information that we've seen given to committee to revise the ferensia wave around them. And has this I mean as I say you know you weren't aware of it will this change how you may look at this in the future in other in other cases? I think it's safe to say that it is in our collective interest and we're working with Police Scotland across a full range of legislation that they have an interest in to consider the impacts on them as an organisation. They accept that they need to do better as an organisation at assessing the financial impact on them and engaging with the parliamentary process in doing so and that includes in working with bill teams like ourselves in advance of the introduction of a bill to parliament and then before the stage one consideration from our perspective I have to sit and accept the feedback that you've all provided today that we and recognise that we have not fully understood exactly the process here and the benefit of producing information in suitable enough time to allow you to give proper consideration to that. Can I ask just quickly when was a decision to update the FM made? When was a decision made once we'd received that call for evidence in preparation for today? So can you remind me when that would have been? Within the last few weeks. Okay so it's a relatively new decision okay and I suppose looking at looking at you've got the figures now from Police Scotland those updated costs you say you're negotiating or you're discussing those with them. Is the concern given that those figures that they've presented evidence could even increase higher? So now Police Scotland they're able to see the exact wording of the bill that those figures should be more accurate? I don't anticipate them increasing based on what is in the bill at the moment and obviously that subject parliamentary process could be amended but based on what is in the bill at the moment and what they have produced to committee and the conversations that we had with them just last week we do not anticipate that changing from their perspective. I'm trying to think of anything that might pay it should another pay deal be agreed and negotiated with with the police that that would impact on it but that's not a minute. Okay thank you now you had one brief supplement. Yeah it's a brief supplement. I just wanted to pick up on the point about the training you get from the Scottish Parliament liaison unit. How long does that training last? So there are I think off the top of my head is it eight separate sessions of an hour each where bill teams once a year essentially come together so in reality while we've been preparing for this bill we've been able to attend or had the ability to attend to those. And so just to be clear in terms of the bill team how many of the bill team that have had an input to the FFM have attended the entirety of that training? The bill team would have attended the entirety of the training. Okay okay and is there any other kind of project management training really is it just all in house that you've articulated? In terms of sort of for Scottish Government officials yeah so in terms of bill management and supporting bill processes is that that work that is the training programme that's supported and how many FFMs have you both developed or indeed the wider bill team? What's the sort of typical experience? Is this part and parcel of what you're doing or is this your first encounter? I've contributed to two or three more financial memorandum before now but this is Steve's first financial memorandum. And how many FFMs have you undertaken for framework bills? I don't think I've been involved in a framework what I would classify as a framework bill anything can be it's how you define that. It is last brief supplementary, convener. And in terms of the effectiveness of the FFM is that something that's included in your kind of annual review and I mean bill teams generally I don't mean yourself specifically is that something that's included how much an FFM hits a mark? I think that it's very much something that we'll be reflecting on in terms of future financial memorandums to make sure that they are presented with the best information for the committee. I think it's absolutely fair to say we will be taking what you've told us today and going back to our colleagues and wider Scottish Government to work on how we could do better. Okay, thank you. Thank you very much. That's concluded questions from the committee. Just one or two from me. I mean it seems to me that now that the Police Scotland have provided figures you seem to have more or less accepted those what level of interrogation of those figures has been undertaken by the bill team? Well there is particular so without going back over what I've already said when it comes to training costs we are interrogating that. The reason being that is the need for establishment of standalone individual training packages and the need for the different needs of probationers coming into the police service and they get a good amount of training at the moment and the officers and staff that have been in the organisation for a longer period of time. So we need to drill down into that and work with Police Scotland to understand that. When it comes to the difference in staff costs in some ways that's prima facie. Reflective of the fact that there is increased costs on staffing which Police Scotland's budget is quite a significant part of Police Scotland's overall budget. We did some sense checking of the information that we had received by speaking to the home office and by speaking to the mayor's office which is responsible for the met. There are plans for taking forward secondary legislation that could reduce costs by having things like accelerated hearings and where the evidence is incontrovertible. We are looking at this in the round in terms of the bill and secondary legislation. I am quite astonished that it seems only when the committee called for evidence went out that it realised that there was a need to review the figures and yet we still ended up with figures from September 2022. We talked about the process document being a living document but surely up until a financial memorandum was presented to the committee in an updated form, it should be a living document and if you know that the figures are inaccurate then there's a real misunderstanding of the role of this committee and the processes of this Parliament that you actually come here with something that bears no resemblance to what the actual figures are and indeed the timescale in which scrutiny has to take place to accept that. I accept based on what you've told us to take, Veener and other members of the committee, that we had personally misunderstood the role and the timing of producing a revised financial memo. We'll take on board what you're saying and we'll do as much as we can to get that back into Parliament as quickly as possible. Ultimately, this is tax payers money so there's a duty to ensure that the figures are accurate because what we don't want is a situation where our bill goes through, the figures are for example chronically underestimated, it appears to be in this case, and then that money has to come out for example from potentially from front-line policing services, I mean that's what we could be talking about if it's not actually elected. That's why we're looking at this in such a serious way, this is important that we get this right. I'll just end by saying that speaking behalf of the whole committee, we look forward to a revised financial memorandum prior to completion of stage 1 evidence in order that we can once again scrutinise that updated financial memorandum in order to inform the lead committee. On that point, I want to thank you gentlemen for your evidence this morning and I look forward to seeing you again before too long. Thank you. I'm going to call a five-minute break before we change the witnesses. Right folks, we're just going to kick off. The next item on our agenda today is an evidence session with the Scottish Fiscal Commission to discuss the commission's report on fiscal sustainability perspectives climate change, which was published on 14 March 2024. We're joined today by Professor Graham Roy, Chair, Professor David Ulf, Commissioner, John Island, Chief Executive and Claire Murdoch, Head of Fiscal Sustainability and Public Funding Scottish Fiscal Commission. I welcome you all to the meeting and invite Professor Roy to make a brief opening statement. Good morning and welcome. Good morning and thank you, convener. Unmitigated climate change would be disastrous for society, the economy and the public finances. For this reason, and in line with the Paris agreement, both the Scottish and UK Governments are committed to help limit future global warming by reducing greenhouse gas emissions. Whilst necessary, those actions impose costs on the public sector. Our report explores how the Scottish Government's finance could be affected by aspects of climate change. There are three ways that the public finances will be affected. One, spending to repair damage from climate change because of storms, floods or droughts. Two, investment in adaptation to reduce damage from climate change. And three, action to reach net zero and limit further global warming. On the second of those, adaptation, the Climate Change Committee has estimated the economy-wide investment required across the UK is £10 billion a year between 2020 and 2030. The scale of potential investment required is large and uncertain. It is also unclear whether Scotland will need proportionally more or less investment than the rest of the UK and the public sector's contribution. Even with investment in adaptation, there will still need to be spending in response to the first channel of potential costs, climate change damage, where there is even less information on costs. Unsurprisingly, therefore, it is not clear how costs in Scotland compare with the rest of the UK. There is more known about the third aspect, the investment that needs to achieve net zero, and we focus on the likely implications in our report. We make use of estimates from the Climate Change Committee on the nature and scale of the likely investment that is required in Scotland to reach net zero. We make assumptions about the extent of devolution and the share of public sector investment in each sector to produce our illustrative estimates of the investment that is required by the Scottish Government to reach net zero. On this basis, we estimate that the Scottish Government needs to spend an additional £1.1 billion annually between 2020 and 2050. To give an idea of the scale of that investment, that is 18 per cent of the 2024-2025 capital budget. That number requires careful interpretation. First, it is a projection based upon assumptions that we have set out in the report, and I am sure that we will discuss today. It is designed to provide an indication of the likely scale of investment required. Secondly, the projection only covers mitigation. It does not cover spending on adaptation and damage from climate change, which is something that we hope to cover in the future as more information becomes available. By writing illustrative estimates of mitigation investment, we hope to better understand the sources and scale of potential risks to the Scottish budget. For example, given the way that the fiscal framework works, a significant element of Scottish Government funding depends on UK Government policy decisions and the operation of the Barnett formula. Any differences between UK Government and Scottish Government approaches to net zero could present a fiscal risk to the Scottish Government. Those differences could relate to timing, the extent to which Governments bear their costs themselves or the extent to which they use regulation tax or other incentives to encourage private sector investment. One good illustration of that is that we have covered in the report concerns forest and land use, which is largely a devolved area of responsibility. Scotland accounts for 32 per cent of the UK land mass, roughly half of UK trees and 70 per cent of peatlands. The Committee on Climate Change assumes that meeting the Scottish and UK Government targets for net zero requires significantly more investment in forestry and land use to take place in Scotland than in the rest of the UK. That means that the fiscal burden of reaching the UK's net fiscal target may fall disproportionately on the Scottish Government. Finally, our report recommends improvements in data and information that is required from both Governments, and that information will hopefully help a fuller assessment of the fiscal risks that are facing the Scottish Government in due course. Thank you very much for that and for the very interesting report, Professor Ron, on a very sobering report. I should say that I am not particularly thrilled by the introduction of the acronyms. It is clearly important, because, as you have just pointed out, there is a disproportionate cost to Scotland as opposed to the rest of the UK. What I find quite interesting in paragraph 21 of the report was that the differential cost between Scotland and England per person per year in addressing the issue of investment for mitigation is £207 in Scotland and £149 in the UK. That is a £58 difference, but what you have pointed out is that £54 of that £58 is simply because of land use, land use change and forestry. Given that that is quite a huge additional burden to fall in Scotland in a burden over many years, do you think that consideration should be given in terms of the devolved settlement through the block grant in order to take that into account? Obviously, it is not for me to comment on the fiscal framework and the specifics of that. However, I think that the general point that we are picking up here is really important in that the fiscal framework, the devolution and budget arrangements were not set in considering issues around climate change. So, when you start to look at issues such as climate change and how they translate into the budget process, you actually reveal some really interesting dynamics that are going on here, and I certainly learnt a lot when we were pulling this report together. You see the potential areas where there could be variations in the risk, given the nature of the fiscal framework. One of those, as you are right, is Lulw CF, which is a basic thing, but the geography is different between Scotland and the rest of the UK. Therefore, the opportunity and the investment that can come from tackling climate change in forestry and restoration of peatlands will be more focused on Scotland, but it is a devolved responsibility and therefore a higher share of the burden is there. However, there are also other areas where differences in timing between the two Governments in terms of relative prioritisation will have indications on how much money will be flowing through the Barnett formula. There will be differences potentially in policy responses, so if one Government chooses to rely more on the private sector to do some of the heavy lifting rather than the public sector, again that will have indications for all that. I guess that the key takeaway for me in this report is that we have this fiscal framework, and once you overlay it on to something like climate change, you see some really interesting dynamics that are leading to fiscal risks flowing through to the Scottish budget. I am going to go through some parts that I am touching on in your report specifically in a wee minute. I think that what you are effectively saying there is, if you think that Scotland has got 70 per cent of the United Kingdom's peatlands and peatrestaurations is absolutely critical for tackling climate change, but it may be more difficult for Scotland to afford because it is a higher proportion of our budget in the UK, then perhaps that aspect of the fiscal framework, climate change, has to be looked at again or perhaps overlaid the existing fiscal framework. What is your view on that? The broad conclusion that we make at the end of all of this is that—again, it is quite interesting in terms of learning and pulling together this sort of report—is that it is to fully understand the interdependencies between the Scottish Government and the UK Government. The UK Government needs Scotland to achieve net zero, to overachieve net zero in order for the UK to hit net zero. The UK relies on Scotland in order to meet its objective, but Scotland also relies on the UK to meet its objective because a lot of those responsibilities are going to be in reserved areas. The funding for that is crucial. I think that the broad conclusion that I would make without getting to specifics about any aspect of being renegotiated is that, if we are looking at that subjectively, the importance of both Governments working together and looking at the solutions that are needed to get to net zero, both in Scotland and the UK, is something that, from a purely public finance point of view, is really important. I think that that is why we stress in the report the idea that meeting the climate change targets is a shared endeavour between the two Governments. We mean that in two senses. One is how you actually work out the precise way in which the reductions in emissions are going to take place in Scotland and the rest of the UK needs to be worked out as a shared endeavour. Secondly, the funding implications of that need to be worked out as a shared endeavour with the two Governments talking to one another about the issues that Graham was referring to, the timing of actions that were taking place, the balance between the use of the public sector and the private sector and the balance between devolved and reserved areas. All of that is an area of discussion between the two Governments, and they need to manage that as a shared endeavour by talking to one another. That thread of shared endeavour runs right through the entire document. For example, one issue is flooding. The recent flooding in Angus cost £15 million to the Scottish Government through the Beylans scheme, but the UK Government had flooding of £10 million south of Borda, so there was only a £1 million consequential. There could be disproportion, and that could work in the other way, as you pointed out in your document. There could be an incident that only affects the UK, and Scotland effectively gets a manic consequential, even though it is not impacted on Scotland, so there needs to be a bit more flexibility. Prior to the update of the fiscal framework, there was a Scottish economic shock, if you like, and that was removed. There should be something along the lines of a climate shock, for example, so that, instead of the situation whereby the examples that I have just given in relation to whether flooding is enacted in that way, we would have something a bit more climate-focused. It is a really interesting reflection, and in many ways a lot of the example there that you are giving about flooding and the potential impacts is very similar to the discussions that the committee would have had around the Covid pandemic and how, essentially, there was nervousness and a concern that the amount of funding that would flow into Scotland was actually dependent upon decisions taken in the rest of the UK. There were concerns about if there was additional spending on healthcare needed to help or business support to support a further lockdown, that then Scotland had to wait to see what would happen for the money to flow in. In many ways, it is very similar to that where you might be having these asymmetric shocks across different parts of the UK, but the funding mechanism does not allow for that. You could think of ways that you could respond to that. As I said, both that could be a shock that happens in England that Scotland gets Barnett consequentials for. It could be a shock that happens in Scotland where there are not Barnett consequentials. The ways that you could think about managing shocks are the ways that you could think about adjusting, borrowing and savings so that you can build up funds to respond to that. If, as the scientists say, those potential risks are going to increase and become more significant, they will become more material over time, and that is where you then have to look at the fiscal arrangements that are working most effectively in that world. You say, for example, that the Scottish Government controls most public spending on surface transport in Scotland, but in many aspects it is regulation or reserve. For example, banning polluting vehicles or imposing more stringent emissions standards. That illustrates how policy decisions at UK level are important in ensuring that the Scottish Government can meet its net zero targets. You have also got shipping and aviation as well thrown into that mix, and they are also reserved. How realistic is it to expect Scotland to meet its targets without very strong co-operation from the UK Government? It is essential. As David said, it is shared between Scotland needs the UK to co-operate and work constructively in order for Scotland to meet its net zero targets, but also the UK needs Scotland to implement key policies in areas that are devolved and, in many ways, overachieve in areas such as land use and forestry. One of the things that is really interesting that I certainly learnt a lot about working in this report is that something like net zero and climate change is quite different from most of the other policy responsibilities that we have, where it is relatively clear to define that health is devolved. There is a debate about the funding of that, but health is essentially a devolved responsibility, but climate change, as I give you an example, on transport. Scottish Government is responsible for public transport, investment in transport, infrastructure, roads, rail, etc. A lot of the regulation around transport is a UK responsibility. The transition to net zero on climate change is quite different from most of the other policy responsibilities that we have, where it is relatively easy to define devolved versus reserved. Here, it is all-encompassing, as you would expect, given the nature of the challenge, that it comes crashing into both devolved and reserved responsibilities and crucially into the careful interaction between them. I think that the point that I had asked is that, when the fiscal framework was initially developed, it was done so against the background that the kinds of shocks that economies faced were the normal or macroeconomic shocks. We did it with a different type of shock here. We saw with Covid that the framework that we developed did cope with that to some extent. There were challenges there, but the issue is the inability of Scotland to transfer funds between years and periods. That is the challenge that is going to arise here, because, as you said, there will be asymmetric shocks. There might be a large flood in the rest of the UK that generates Barnett consequentials, but there is not much that the Scottish Government can do with those. Equally, there might be a huge flood in Scotland that does not have the resources coming from Barnett consequentials to deal with. What we are saying in this report is that, because this is a shared endeavour, the Governments need to think about how well the existing fiscal arrangements will cope with climate change types of shocks, which is the point that you are trying to get to in your question. As has been mentioned already, it says here in page 38 that the Coordination and Cooperation with the UK and the Scottish Government is going to be required to succeed in reducing emissions, but there are obviously different policy priorities between those two Governments and different spending priorities. Ultimately, Scotland will be at the mercy of those UK decisions. Will it not, if, for example, a future UK Government decides that it would rather spend the money somewhere else? As I said, I think that the broad point that you are getting to is right. The nature of this is that there is shared policy responsibilities in the broad areas such as transport, where decisions in reserved areas will have an impact on Scotland, and then there are areas where reserved policies will interact with devolved policies. In the funding element, wherever the UK Government decides to do it in equivalent devolved areas, it will have a Barnett consequential, which will have an impact on Scotland. There is also the geographical and general variations that differ between Scotland and the rest of the UK. There are strong linkages there. It goes the other way in the decisions that the Scottish Government takes, and Scotland has a significant impact on the UK transition to net zero. That is why it is quite different from most other policy areas. I cannot think of one where it is all encompassing whether there is that interaction between the two, which will drive the success of both Scotland and the UK achieving net zero. What about global decisions? We have got the cops year in, year out. I know that there is always an element of dismay that they do not go far enough. What about the implications for decisions that are made at an international level? We have to take largely as given, just given the relative size of Scotland there. You are right. One of the things that we highlight is that there are uncertainties with all of that. What we are trying to do is very much show the direction of travel and the scale of investment that is needed if we are to meet our obligations. However, there are uncertainties around technology, for example. If the global economy invests really significantly in new technologies, that might reduce some of the costs there. We talk about where there could be tailwinds and headwinds in achieving net zero. There are potential changes to overall policy agendas that will have an impact on how the potential costs to damaging adaptation are. We do not go into the detail in that, because there is not that much information there. Clearly, if the world does not make the significant reductions needed in emissions and climate and the temperatures continue to grow at unmitigated rate, the potential costs to the public sector in both Scotland and the UK of damage will be much higher. Again, what we have tried to do in this report is not to get too much into that. We are not climate scientists. We benefited greatly from advice and support on that. We are really just to show that those are the channels through which the fiscal implications can come through into the budget and then why the Government needs to start to prepare and get really serious about costing through those various mechanisms. I think that definitions are also important. You have said that the Scottish Government should articulate its plans and how to achieve net zero and what level of public spending will be required. You are going to say that we recommend that spending on mitigation and adaptation be identifiable in budget documentation and outcomes, so that spending plans can be linked to deliver spending. How do we define what is spent on climate mitigation? There is a temptation for people to say that a job is a green job and it may be somewhat more tenuous to another eye, for example. Do you think that there has to be an agreement between Scotland and the UK on what exactly the language that is being used is so that they are not talking about different things when we are looking at them? I will go first and make it clear. I want to come in in some of the detail on that. There are two things to separate. One is when things are like green jobs or whether things are targeted in the environment and the like. That is where the definitional bits can get a wee bit wooly. Ultimately, if we are to achieve net zero, then every job will be a green job and the vast majority of jobs will be green jobs by the very nature. The bit that we think that Government can do more in is being much more targeted about where there are specific interventions and spending that are explicitly designed to support the transition to net zero or explicitly designed to help to adapt to the challenges that will come from climate change. Where is the investment in decarbonisation of housing? Where is the investment in grid infrastructure? Where is the investment in green public transport? That is the bit that I think from our analysis would then be really helpful and much greater clarity for us and for this committee to be able to see about where is the scale of ambition matching the targets that have been set from the Government. I do not know clearly if you want to say a bit more about what we have done. The main data source that we have used is from the Climate Change Committee and they have an established process for estimating what they call the additional capital investment. That is across the UK so to a certain extent there is a way that you can measure this which has been done and what we are asking for is for the Government to essentially reflect something similar in their climate change plan and in their budget documents. I think it is nice to say that things are all positive for the climate but what we really need is something that is a lot more specific about whether the Government is meeting those kind of level additional capital requirements which the CCC have identified. Can we in the budget documents and in the climate change plan actually see what is the amount of money the Government is spending on specific mitigation activities to reach net zero? At the moment that information is not sufficient for us to be able to do that which is why we have had to rely on what the climate change committee has rather than being able to look at the climate change plan. When the draft budgets published every year you would hope to see something like that being added in in the future for example from a Scottish perspective. If you want to track it over time, the climate change plan would set it out for 15 years and then in the budget you should be able to see whether the Government is actually spending what is committed to spending and the same in out-turn data as well because we all know that what is in the budget is not necessarily what is actually spent over the year. The climate change plan that the Government produces should be produced every five years and that plan in the past has had a list of policies and proposals attached to which there ought to be a mitigation figure so you can see the impact on on Scottish emissions and what we're asking for is attached to that sort of each of those policies and proposals is also a cost ideally split down in terms of the public and private sector but certainly a total cost and in a set that's just a step forward it's consistent with how the the UK Government approaches its carbon budget as well so ideally you'd be able to sort of have a common framework there. The other piece of information which Claire has sort of mentioned is that every year there's an axe in the budget documentation which talks about the Government's climate change expenditure and that's a very broad definition they just categorise into sort of you know basically all items of spend whether they're sort of you know negative positive strong negative strongly positive for for the for climate or stroke environment and that's not really tied in at all to the climate change plan and what we're asking is that very explicitly that document is or that annex is tied into the climate change plan. The previous parliamentary committees when the Government has produced its its climate change plans have asked for a proper evaluation framework and that would be another mechanism for for doing for doing that but the key really is to take the climate change plan that the Government is committed to producing is required to produce making sure that's got the right information in and then carrying that over into the budget documentation. To net zero you know portfolio within the budget but we don't really have anything in the other portfolio sections which I just specifically look at climate mitigation but I mean one thing John that he talked about there was public and private sector and I mean quite interestingly you know in terms of your figure 3.3 in page 33 of your document if you look at for example electricity supply you know almost well but 30% of the total cost of actually capital investment required to on the balance pathway from 2020 to 2050 is in private sector electricity supply you know 20 times more than public sector electricity supply so that's not only 30% of the total cost it's also reserved so that shows the difference again the interaction I think that graphs quite interesting because if we actually look at the devolved sectors total that more than almost half in Scotland is of the devolved sectors are public sector but less than one tenth of the reserved sectors so does that make you think that the public sector in Scotland has to take a greater lead perhaps than it is at the moment? To say that when we're doing this split between the public sector and the private sector we were just using the split that was used by the OBR when they did their physical sustainability reports so we didn't want to introduce a further complication in our analysis by using a different definition of public sector by private sector from the OBR so we just followed their splits when constructing our figures here. I think that the general principle I think again is really quite interesting in the broader point in that the nature of the sectors that are devolved are sectors that are more likely to have more heavy lifting from the public sector and that as David said the same we're using exactly the same ratios that you would have for in England for example so buildings land use surface transport waste agriculture these are largely devolved sectors but actually look at what the OBR and others have looked at it is it actually in general they're likely to be sectors that are going to rely more on the public sector to take more of a lead in their in contrast things like electricity supply given the nature of electricity given the large consumer market that's much more likely to be done the investment the capital investment done by your your big utilities companies we all pay for it of course through our bills but that is the private sector that is larger doing that investment and again that's again against I think what's really interesting about the report is that it's only when you start to sit down and think and work through these you realise that a lot of the sectors that are devolved are what our sectors where there's going to be that the onus is on the public sector doing quite a lot of the investment into that. Yes indeed I said you know 43% public share in Scotland so it's quite a lot talking about 43% just the last question for me because colleagues want to come in is regarding the offshore energy industry because 43% of UK oil and gas jobs are located in Scotland so what challenges does that present in terms of moving to a just transition and net zero. So we've discussed this much more in the context of our economic forecast in the CEPH and we will expand a wee bit more on this in the upcoming forecast in May and so the story is there of course is that Scotland has huge potential in the green economy in renewables offshore renewables to grow new sectors grow new jobs grow new investment and the key is transitioning from the energy the energy sector that we have at the moment in oil and gas into these new opportunities and the the opportunity there is to use the legacy and the assets and the skills that we have to create greater market share to punch above our weight in these new sectors and industries of the future and that's where the prize is for Scotland's economy the risk and and the challenge in there is how do you do that it's easy to say that but how do you do that how do you manage to continue to support that transition for these high value jobs and you've seen from our forecasts that we've done in the past particularly in not the most recent figures but beyond that the gap that was opening up between Scottish and UK earnings a large part of that was being explained by what was happening in the northeast and a large part of that was therefore explaining about what was happening in oil and gas so from a purely again from economic short-term reason and from a tax reason then that managing that transition is is a risk for Scotland's economy given their disproportionate weight on oil and gas jobs and crucially high paying oil and gas jobs and that's that's the big adjustment the big transition that needs to be managed carefully yeah you've said that it's one in two hundred jobs in the UK one every 13 scotland but what what's what share of taxation comes from that sector it's difficult to it's difficult to get the exact numbers in part because what we can get is we can get data by region so we can get we've published in the past northeast region and in Glasgow and the like and we can get that from the HMRC data where it's more difficult is to work out where actually many people might be working in that sector but they locate somewhere else so as you know income tax is collected in residence rather than employer but lots of people who work in the oil and gas industry you know live outside in northeast live outside Scotland and so therefore difficult to get the exact estimating there that's why we tend to use the north thesis an example just to give a signal of whether the sector is dragging on Scottish tax receipts or whether it's adding to it proportionate yes yeah it would be of course yeah and you look at average wages in oil and gas and it's way above the national average so if scotland has a disproportionate number of these jobs and it therefore matters for the income tax revenues that we're collecting okay thank you we're going to open up the session and first best to ask question to be ross to floor by john computer i'm interested in the what i think is a bit of a contrast between your report and the ccc's report last week and where i think you've you've got the balance better and i know what you said about having worked with them but the ccc report whilst i agree with the kind of broad criticism that we're we're off track and they are they were really quite critical the Scottish Government for highlighting the impact of UK Government policymaking particularly financial policymaking on Scotland's ability to meet its own targets but as you've outlined this morning and what's in your report you point out that we require a disproportionate amount of spend the fiscal framework doesn't take that into account the devolution of these powers is is not uniform cc's made some pretty sweeping comments about your transports devolved land uses devolved decarbonising buildings is devolved am i right though and this is maybe just a reframing of some of the convener's initial questions is it fair for me to conclude what you're saying is as it stands it is effectively impossible for Scotland to meet its own climate targets and therefore for the UK to meet its targets given how critical scotlands are without either a significant devolution of financial powers to the Scottish Government an adjustment of the fiscal framework more direct funding from the UK Government something that is entirely within the gift of the UK Government needs to change here because it's one thing to say governments need to cooperate but these aren't two equal partners who have an equal amount to contribute what you're really saying is something needs to change at UK level whether it's devolution of powers increased block grant something so i wouldn't go that i wouldn't say that you probably expect me to say that i think what we do in our report is simply set out where the interlinkages are and where there's potentially read across there so you know again ultimately it's a choice as well i would say so government can choose to make more progress on on buildings the can choose to make more progress on on in transport and again committing climate change makes a judgment that we don't make about whether the government is making progress on on that or not but ultimately it's a choice for government and i guess what we're trying to do here is just highlight where first of all the scale of investment that's needed by the by essentially the public sector overall and then secondly highlighting where there are potential areas where Scotland might need to make more investment relative to the rest of the rest of the UK and the one thing i would say is on things like the target to get to the UK 2050 and Scotland to get 2045 in order for the UK to get to net zero by 2050 then Scotland has to meet its 2045 target as well so Scotland has to you know many ways Scotland's committed to doing more heavy lifting and the government has set that out and with that comes additional investment and additional cost that has to go into into all of that i think that we're saying two things in the report one is that because of the limited ability to transfer funds between periods it matters a great deal to Scotland both when the UK government makes certain decisions how it splits those between devolved and reserved areas and also how it splits those decisions between the public sector and the private sector because all those decisions set the fiscal context within which Scotland has to make its decisions and then the second thing we're saying is we're just trying to illustrate the scale of some of the investment that might be required by the Scottish government so within that context that will tell you how it has to balance that off against other priorities that the Scottish government has got. I think that those are the two main things we're trying to say in this report. So you mentioned Professor Oafthair that that's what a public private. I'm interested in what you said a moment ago but the report makes presumptions essentially to mirror the OBR's presumptions about this is based on if it was entirely public spending. I would be keen to press you a bit on the logic behind that, particularly if we're taking land use etc, Lulu CF, to use your pronunciation and acronym. The Scottish government's already started some quite significant pilot work in private financing around nature. Now there's a significant political debate to be had around that, I believe the net zero committee are having that right now upstairs. I'm interested in why your report makes the assumption of, particularly in land use etc, of this being entirely publicly funded when we've already, I think it's a £2 billion pilot that's already taken place so it's not small fry what's already happening there. So the honest answer to that and the short answer to that is that what we wanted to do was be really transparent and really simplistic because this gets really complicated really quickly and part of it was to really highlight and say look actually this is a big issue and this is a potentially a big issue in that given Scotland's geography, given Scotland's share of forestry and the potential value for Scotland in this, this is actually a big issue for us to discuss so you're right, we follow the OBR and we say a 100% public share but in no way are we saying this is exactly what is going to happen or in most important we're not saying this is what should happen what we're saying is that if this you know if it's 100% public share potential investment this is the additional investment needs to go in Scotland now it's then hopefully what we're trying to do is then pass it over to for exactly those sorts of conversations about well how do you do this what's the best way of doing this can you secure private investment into this that would potentially reduce that public sector share what would that look like how could we part of the process and then how quickly could it happen and what's the what's the nature of all of that so I think you're probing out exactly the right things again we set this out really transparently and you can start to play around with these numbers and you'll get something different the key point I would come back to is that the level of investment is significant and government need to actually you know really set out the detail about how we're actually going to secure that level investment either from the public sector or from potential innovative ways to secure investment in the private sector too and you could do that with all of them where we've had where we've put into assumptions you can play around with the different assumptions that go there I could just add as well in figure 3.8 we look at the Lulu CF category and show a very simplistic illustration but if actually you only had 60% of that funded by public sector investment you're still looking at a big gap to what would be spent per person in the rest of the UK and so we could have made a different assumption in that category but actually the broad principle of you've got such a big difference here in what needs to be invested that you'd need a much bigger private share to bring it down to be comparable so in that sense what we want to do is highlight the fiscal risk that will occur even if you had some tweaks in how you actually deliver that to the private sector as well. Thanks. Final point. I recognise this to some extent repeating myself. I'm interested in the conversations that you have with the UK CCC though because again as much as I think last week's report was incredibly valuable and I agree with it as a reflection of the last five years and a complete failure to meet the demands that the science has set out. It left me with a lot of frustration because we need to triple the amount that we spend on peatland restoration. I mean you know that there's not 40 million of capital money just rattling around that we need to come from somewhere but if you take decarbonising buildings it's not tens of millions it's tens of billions that we're talking about there. It's entirely unrealistic isn't it to expect the Scottish Government within the current envelope available to within the current confines of the fiscal framework to actually deliver the particularly capital investment required to meet the demands of both our climate act but the UK Government's climate commitments? Again I think that I don't disagree with the general point that what we're trying to say here is this is huge investment that needs to be made into the Scottish budget and we gave the number about 18 per cent of the capital budget being a good illustration of that and that really poses you know tough challenges on government. What I would say though is that I think you know that I think what our report I would say you have to read it alongside the Committee on Climate Change report but also what the OBR about saying about the UK as well and I think you have to read all three reports together that yes while the Committee on Climate Change are pushing Scottish Government and we are pushing the Scottish Government for greater clarity around this you have the OBR saying exactly very similar things about the UK and there's a number in there that they have which is really stark about if we don't meet or well if we have unmitigated climate change you know debt will explode to nearly 300 per cent of our economy that's you know it's it's completely disastrous from a purely public finance point of view not to mention everything else that happens to the economy and society so I think that to be fair I think you have to read our report alongside what the OBR saying about the UK and what the Committee on Climate Change are saying not just about Scotland but also about the UK and that's where I think the broad conclusion is from a public finance point of view this is a significant fiscal risk for government that requires huge investment across a whole variety of diverse areas and that becomes even more complicated when you look at it in a devolved context so I think that when you look at it in the round I think you probably get a slightly different I think you get a slightly broader view than than maybe a more this is critical specifically of the Scottish government thank you when we say this equates to something like 18 percent of the capital budget we want that to be understood against the context in which the capital funding is going to be falling in real terms of at least all the next five five years and that is largely driven by decisions by the UK government to cut capital funding so it's against that background that some of those these figures need to be understood. It comes back to the point Professor Roy was making about choices but choices facing government we we can't not build new hospitals we do the cost of decarbonising hospitals actually is massive but it's the challenge of how do you balance the long-term unavoidable necessity of tackling this with keeping everybody alive in the interim by meeting all the other needs of society that's all for me though. Thank you very much John. Thanks convener I mean just to pursue this and I have to confess this is not my area of expertise so perhaps I'm not understanding some of the things on land use I get the point that we've got 32 percent of the UK land mass do these figures because they are dramatic that we should be spending so much more per head than the UK is. Do they take into account the state of the land as it currently is because presumably some land needs work done on it and some land doesn't? Yeah so I'll give you the clear maybe comment on specifically the detail that but broadly speaking the way to think about this what what the committing climate change have done is looked at what's the total additional economy wide investment needed in different sectors in order to get to net zero and that's what we take so we start with that so that will include all the stuff you're talking about about restoration of peatland the investment that has to go into that around forestry the types of trees to preparing the land etc that's all in there what we then do is then say okay well how much of that is likely to be public private split and then we look at the potential fiscal consequences for that so this is quite different say from timber production and things like that this is purely about exactly all of those issues that go into the investment of preparing land for forestry to help soak up some co2 emissions and also investment in in peatland as well don't I do you want to expand on some of the detail yeah I mean essentially the climate change committee have sort of four main areas where the costs arise and some of that's changing the use of land to forestry. Rod of planting new woodland improving tree density there's restoring peatland to stop them releasing emissions and also the planting of bioenergy crops to replace fossil fuels so those are the main categories which the ccc have looked at and estimated the share of the costs which would need to fall in Scotland relative to the rest of the UK. So if you take forestry I mean I think we have been planting more trees than elsewhere in the UK but but in a sense that's not enough because the potential for trees in Scotland presumably is huge and is bigger than in the rest of the UK. You talked about the three damage adaptation and mitigation and thinking especially of adaptation you've also said that you're needing more plans costs and data. I mean is are we in a space where it doesn't matter how much data you've got it's still very uncertain where we're going and you know can there ever be enough data to give us solid projections. So two things I would say so first of all there will always be uncertainty around this and that's actually one of the big fiscal risks that we highlight this is uncertain and they actually we need to prepare for that uncertainty and governments are going to have to manage budgets in a world of uncertainty particularly looking forward to some of the costs because that's where the greatest risks are particularly around damage as well we've talked about that already with the convener where you have asymmetric shocks by definition they're uncertain and therefore government will have to think about how they plan for all of that in time. I think where we can make a lot more progress is there's very little information provided at all in detail by the Scottish Government on likely investments in adaptation and John was talking about the climate change plan where you can start to cost some of these out government can make more progress and be more transparent around thinking about where some of the investments and adaptation are going to be and start to give more of an indication so I think there's my answer is probably two parts one is yes more data is going to be really valuable and help get some more clarity on it but there will always be uncertainty and that in itself is something that the government have to plan for. One advantage of mitigation as against damage is that you can in principle plan ahead and decide what investment sorry adaptation you can in principle plan ahead and decide what kinds of investments you're going to be making in adaptation the problem with damage is you might just get a storm one particular year and there's no way you can anticipate that when that's going to occur the real uncertainty around adaptation is we don't know how rapidly the climate is going to heat up and the scale of adaptation might have to be adjusted in the future once you learn what other countries are doing and therefore the potential scale of adaptation you need to be making here so there is uncertainty around adaptation but it's an uncertainty that you can do some planning for and the problem we face at the moment is we just know almost nothing about what the Scottish government's plans are to enable us to put any kind of figure on the lightest scale of investment so should you be expecting more of that plan when we get the medium-term financial strategy later this year? I'm not quite sure when we'll get enough information on the Scottish government. I mean would that be part of that or is that a completely separate thing? So the government's currently got a draft Scottish national adaptation plan so it would be when the you know one of the things that you can ask for is when they publish that final plan that it has costings and at the moment it has some rough costings on some policies but not a sort of comprehensive estimate of what the policies that it has in its plan will cost overall and when those costs will be incurred. Right, and what kind of timescale are we talking about for that? Do we know? It will be published in its final form in this September 2024. Right, so the government's committed to that. Right, okay. I think there's two parts to it I think would be really helpful for the broader debate on public finances and the work of this committee. There's specifics that go into a budget which is looking at what's the next five years or more often not the next year and understanding the detail in that but then there's a broader work which is actually what's the fiscal sustainability stuff and that's the much around a pre-budget scrutiny and the looking ahead about where the big investments are are coming and that's the bit where I think that more information and something like the adaptation plan can then inform that broader thinking about well here is this is the totality of the capital budget how much of that is going to have to go in over the next five to ten years into adaptation into mitigation and then back to Mr Greer's point what's left then for everything else and how do you make those choices? Okay, I mean maybe you could just clarify for me one of the phrases that's used a few times is balanced pathway scenario which again I'm sure everybody else understands but I didn't really know can you clarify what balanced pathway scenario is I think that's our CCC term was it? Yeah it is yeah so there's broadly speaking they have five scenarios the one we use is the balance then they have ones where you've got differences in terms of behavioural change and levels of investment do you want to maybe clear explain the technical detail behind that? So it's based on the UK's sixth carbon budget so it's about what the UK needs to do over the next few years and then to get to 2050 what the level of investments that's required each year and to use a slightly simpler term is essentially their central scenario of how that's achieved the UK reaches net zero by 2050 and what the CCC do is look across the different sectors and where would the where does the investment need to happen when to hit all these interim targets at the UK level as well and how does that investment best traded off between sectors at different points in time so we've taken those cost estimates they produce them for the UK and they produce them for Scotland as well so we use the Scottish figures to estimate the Scottish Government's costs. Right thank you. Now this figure of the public share of investment in buildings is 43 per cent I think the convener kind of touched on that I'm not sure I'm quite understanding that either so that 43 per cent is that is that quite a kind of rough figure as to what the public sector commitment would be. So it's an illustration based upon differences in split between different types of building and again as we take that from the OBR in terms of relative balance between public and private sector and again you can start to play around with the different shares for example so you can think about more private investment or public investment but what we use it for is simply to say if the total investment is 36 billion what might be the relative public sector share within all of that and what's crucial of course is how that then leads into the funding that potentially flows into that because remember the same we use again we use exactly the same share for the rest of the UK so potentially the same public sector investment that goes into that would then flow through in terms of funding to Scotland. So it's not based on ownership it's based on an estimate of where the expenditure would come from. It's an average share across the residential and non-residential sectors so there's things like in the public sector non-residential which 100% of the costs are paid by the public sector and then obviously the private sector is bearing more of the costs for non-residential private buildings and then in the residential sector there's a sort of share that's there which is for the public sector will pay some of the cost you know for the OBR highlight things such as lower income households you'd expect the public sector to pay more of the costs whereas high income households would pay the cost of decarbonisation themselves. Yeah that's what I was wondering because a lot of private owners would not be able to afford very much investment that's fine and I think my final point was I mean this is a lot of this is looking at additional investment but of course we're already spending quite a lot on agriculture the kind of replacement for the common agricultural policy how does that interact here is that a factor because that's money that's already going out but we can tweak it a bit as to how it's used. The easiest way to think about it is that what we're doing is looking at the additional investment in the economy that the economy needs to make between 2020 and 2050 in order to hit net zero some of that is additional investment so some of that will be new investment but other aspects of that could be changing investment that was already placed but actually for targeting mitigation so some of that could be about if you're spending money on public transport is all of that public transport that's going to get you towards net zero again that would be additional investment in public transport net zero but you're using your cutting investment elsewhere so it's not looking at kind of the budget and saying this is raw additional investment it's looking at what's the totality of the investment in the economy needed to get to net zero so there'll be some things that will net off. Okay that's very helpful thank you. So what the Committee of Climate Change is doing is say here's the level of emissions in 2020 if we're going to get to zero net emissions by 2050 how much do emissions have to fall year on year on year between 2020 and 2050 and what they're calculating is the additional investment to get that additional reduction in emissions year on year on year that's the figure that lies behind us we fully accept that within the figure for 2020 there's already a significant spend to get those emissions down to that level compared to their 1990 level so we've already brought emissions down a fair bit. So they're really looking at what spend is needed rather than where it comes from. Thank you Michelle to the four bill is. Good morning firstly can I put on the record my thanks for doing this report I think it really really fills a gap and I think everyone should read it and understand it and I'm heartened to see you're doing the session for MSPs tomorrow and I'd like to see further iterations of it because I think it's so helpful and I think also that the CCC should also be reading it because it gives much more insight into the complexity of the fiscal framework with this level of granularity. Will you be having meetings with the Scottish Government as well about it? This is my view that I hope they will because it's so valuable. So as always the government we've engaged really constructs with the government who've helped in formwork ultimately this is our report but you know the conversation with the civil servants has always been is always really helpful in this and even just chatting through with them the results and finding has said I learned a lot doing this work with the team and I know from the conversations with them it was that they found it really helpful as well so I think again the broader point is that I think and thank you very much for your kind words about this report I think part of this is going to try and socialise this as much as possible with with a broad and diverse group and that will be you know key public bodies and key stakeholders like the government like the committee for climate change too. Yeah and it's almost like we wish that we'd had that before there was the review recent review of the fiscal framework given where it sets out wouldn't that being very very valuable I think. I think yeah I think one of the things that I come back to the early points about the convener is that I certainly hadn't thought about how this all interacts in the detail in the transition to net zero about what did that mean in a public you know in a devolved context and the broader point is that I think a lot of this work around fiscal sustainability in a devolved context hasn't been done I mean I think David and I have been chatting about this there are some examples in Canada for example they looked at fiscal sustainability within a devolved context but no one's really thought about this in any great detail so a lot of this is really new and it's only when you start to dive into something like demographics that we did last year or climate change this year that you actually see wrinkles and lumps and bumps that otherwise you wouldn't have thought as being important and again I think that's hopefully where this work is designed for the long term so it's designed to help you know this government to think about what it needs to do it's designed to help the government after this government to think about what needs to do and in time that should get into debates about what's the optimal structure of the public financing and it does lead on to the the perennial challenge that always comes up with this committee is about a much more strategic long range look at public sector finance it often expresses the need for multi-year funding and do you anticipate that you will have any discussions with the UK government given the critical dependencies that you set out you know one needs the other do you anticipate you will have discussions with them or and or indeed treasury yeah so again it's not our job to influence them in any way but we will we speak to the UK government so we'll present our results and findings as we always do after a budget or after a report such as this and they all and again they're always really engaged and really keen to learn insights and ultimately it's up to them and their ministers to decide what to do and all of this but this is really new and I think you know I think it does add a lot to the debate and understanding of all of this and I said what again what struck me from this is that this is so different from most of our policy areas we talk about where health is devolved and fuel duty is reserved but actually if you look at the broad context around net zero and climate change it comes crashing across the devolved and reserved responsibilities in a way which is much more complex than any other area that we've looked at and you alluded earlier to the kind of you know the normal or one with working with it at the moment debt to GDP ratio of 90% and the startling figure of it was all public the 289% and I think that more than anything I know that was the OBR makes clear the need for private investment as well but does your report accentuate the fact that it's the volatility in the public sector funding environment will have a direct influence on the confidence of private sector funding to come to the fore as well am I correct in that assumption in the broader concept yes I mean we I think and at one point that we haven't made now it's important to get on the record is that we assume that doing nothing climate change is much worse than the public finances than doing something so we almost kind of we park that we say this is completely unthinkable so this is this is we're going to look at actually making progress on there and that but it's really important to remember that this isn't a well this looks quite challenging let's just not do it because the consequences of the public finances and broader economy society are much worse I think that the broader point you're getting into here I think is then what do you do with all of this so you see the relative scale of the public sector investment in there the relative importance of the public sector so how does government think not just about using its spend but its role as a leader and enabler to unlock private investment and capital investment and Mr Greer's point about you know looking at land use and forestry it's a significant chunky investment that needs to take place if you assume that all of that is the public sector then that is going to have really tough choices about what the public sector spends its money on so if you can think about how you can get innovative funding coming in whether that be the public sector putting in an amount of money and then leveraging in private sector investment then that is an option that clearly there's a political debate to be had in here but again hopefully these numbers show that um there's a political debate there's also a public finance debate as well that needs to be balanced between if you can secure private investment into some of these areas that's more public investment that can go in other areas and if you don't then that is going to be less public investment going into other areas and I think you kind of make my point for me when we look at the lack of longer term range thinking if you look at the scotch government set up scotch national investment bank for example using financial transactions and we've seen this year the change to financial transactions and their ultimate withdrawal the ability of the scotchish government to have sufficient long range to be able to match or attract and use leverage for public sector funding is quite diminished without that longer term range and I think your report makes that quite start the clear not least of all the reminder about you can't carry forward across years yeah and there's a broader point I would add to that as well about uh is that so we've just started doing these fiscal sustainability reports and I've been really encouraged by the way that this committee is in really engaged with it and supported us in this work in doing it it's really important that government and the broader parliament engage as well so debate issues such as this and work through it that government responds in a way which is actually taking the principles that we're trying to set out and actually have that much more forward planning and note the comments that you had I think in the pre-budget report that you did about the government needing to respond in detail to these fiscal sustainability reports like the parliament needing to have a full debate on the fiscal sustainability and I think that is can only be healthy if we can at least discuss through these issues so yeah there's a technical issues about within the budget but is that much broader conversation we need to have about the scale of these numbers and what and how do we respond didn't agree more but also I think either this committee or some other committee needs to start getting evidence about what might be the potential blockages to getting private sector investment what's working well what's not working well in this area so gathering evidence from people who are actually in the sector as to what the challenges are that they face in making this this investment just one question for me and it's one of clarification and professor Roy you raised an interesting point about future scottish budgets and it would be helpful if we can see the numbers about how much has been spent to mitigate climate change was your suggestion that within each portfolio of the existing budget that should be done or are you suggesting that there should be another section within the scottish budget where that is a cumulative total it's a good point so I probably don't have a specific view on it as long as it's really transparent I think that would be the thing that would be useful so whether that's within portfolios the specific line that shows exactly whether or whether it's all collected somewhere else and kind of less worried about how it's presented I think the key thing is is it transparent is it really visible and crucially is it consistent over time because that's the the fun that we all usually have is is changing definitions and portfolios etc so that would be my only plea is that it's quite transparent and it stays and it lasts the test of time thank you so I have that what's really really important here is to take the climate change plan the government publishes the policies and proposals in that and their granular detail and track those through time whether that's done in the budget documents as Graham as you suggested or whether it's done in a sort of an annual evaluation report that the government publishes it's less important but what matters is that that climate change plan the detail in that is reported back on through time so we know how each line is moving in terms of the investment the government's making that's very helpful Mr Ion I'm just asking the question because as you know there's been quite a few situations where we've been questioning just how easy is it to track money through the Scottish budget and just from your expertise whether it's better in one unit or whether it's better through the system thank you anyway thank you Michael thanks to the witnesses for the really useful discussion so far be given all that you've said in the contents of the report do you still believe that the 2030 target is credible that again just we don't comment on that and we don't again what we're trying to do is look at the public finance elements of it so we take the projections and we push it through I should say that because we're using the balance pathway the balance pathway doesn't have Scotland meeting the 2030 target so actually these numbers are underpinned by Scotland not meeting the 2030 target what we then highlight is to say that if you were to try and make the 2030 target then that required more investment and it required more investment not just in the sense of accelerating and making up for lost ground but it would also require more expensive investment because again the nature of these projections have certain technologies embedded into it so you need to make more investment there and then secondly because reserved policies wouldn't be making it because we're assuming they're constant you'd have to overcompensate for that so I guess to answer your question without answering your question that we don't have it we don't have these projections not are not Scotland meeting the 2030 target if it wanted to try and make the 2030 target it would need more investment than what we set out here. In our report we say that on the balance pathway Scotland will meet its 2030 target of a 75% reduction in 2035 now by 2035 Scotland on the balance pathway will spend 6 billion between 2020 and 2030 a further 6 billion between 2030 and 2035 so that means the annual average spending is going up from just over 600 million a year in the 2020 to 2030 is doubling to 1.2 billion between 2030 and 2035 because it's getting progressively harder to bring the emissions down to meet the target but as Graham said if you would try to meet the 2030 target you wouldn't have to spend 12 billion by 2030 you'd have to spend considerably more than 12 billion by 2030 because you wouldn't get the benefits of technical progress which will bring forward better ways of meeting your emissions target and also you wouldn't get the reserved areas you'd have to do it all through devolved spending so devolved spending would have to go up by more than 12 billion to meet the target by 2030 now we're not saying that that's impossible we're just saying that's the scale of the financial challenge that Scotland would face so that point you make where you say in the report a quote you would require technologies and other changes to be more advanced than set out in any of the triple C's pathway scenarios to reach net zeros just for clarity what you're saying is that those technologies are not sufficiently advanced and as a result of that it's going to cost more money to do things on existing technologies so actually that acceleration there's a cost to the acceleration that's very useful and can I ask in the broad how this maps on to your other work as the SFC so you've set out the long-term fiscal scenarios for for Scotland is that you've said that you've learned a lot Professor Roy in this process and can we expect very substantial updates against your longer term challenges in the next iteration of your kind of 2050 vision yeah so what we're trying to do is a couple of things one is that every every second year we'll publish a much more detailed long-term projection for the moment that's still largely based around demographics and for next year we'll be doing a bit more about health inequalities and public health and putting that into there and that's larger because we know a lot more about that there's a lot more data in there what we're then going to do into in every in every other year is to do this sort of thing which is more a perspective thing where we take a step back and we say actually let's think about something like climate change what could the fiscal risks be but we don't have enough data we don't have enough information that we could then start to plug them into our more detailed long-term projections so what we're doing with this report is really highlighting the big issues now in time hopefully as we get more information and more detail then we'll be able to start to pull this together into a much more detailed long-term projection piece but for the moment we're going to be doing these riding these two horses to an extent between highlighting issues and then also doing these long-term projections we will necessarily be focusing a smaller set of issues. Just in closing I think the observations around the interoperability and the reliance on a collaborative approach between the UK Government and the Scottish Government not least in the kind of fiscal trajectory that the country takes to meet these challenges is absolutely right but do you feel that there are the institutions outside the fiscal framework that are reflecting these concerns do you think that ministers and senior civil servants are having these discussions about the scale of the challenge of where that might be met around the between the devolved institutions and the and Whitehall? I probably can't comment really to be honest on detail largely because we're still this is we've just published this report and I mean but I would hope that this sort of thing and highlighting some of these issues these interactions about issues around targets about responsibilities about funding elements etc I hope it's I hope it does inform these conversations and discussions and back to the point you know thinking about I think you have to look at this report alongside the committee on climate change report and also what they'll be are saying at the UK and it's when you look at all of these together you can actually see the key message which is the scale of the challenge but also the urgency but the need for planning and co-operation and if this report can help that planning and co-operation then be delighted with that. Thank you that appears to have concluded questions from the committee it's quite interesting the huge amount of money that this is going to cost given that Scotland produces 0.1% of the world's emissions and all the production is currently 108.6 million barrels per day so I think it's a real global issue and we can but play a part in resolving it. Are there any further points that you want to convey to the committee today or yourself or any of your team before we? I don't think so other than other than just to thank again the committee's support for this work on fiscal sustainability I think that the committee's support has been really encouraging for us and it's given us a lot of confidence in doing this work and moving into new areas and I think we wouldn't have been able to do that without the support of this committee so thank you very much. Well thank you for yet another excellent report and we have got a commitment from the deputy First Minister to have a debate on fiscal sustainability between now and the summer recess so we'll continue to press on that but I want to thank you today for all your evidence and for asking your questions and also I hope that members will come tomorrow to actually the spice event 830 to 930 bacon rolls and scrambled eggs included in the Holyrood room. Okay so look forward to seeing you again tomorrow. With that we'll have a five minute break in order to allow witnesses and official reports to leave and give members an extra break. Thanks. Public proceedings finished for the day. We'll have any private session.