 Good morning, and welcome to the third meeting of 2022 of the Economy and Fair Work Committee. Today's meeting is being held virtually. Our first item of business is the decision to take items 6 and 7 in private. Our members are content to do so. Our next item of business this morning is the final evidence session on our inquiry into Scotland's supply chains. We are looking at the short and medium-term structural challenges facing Scotland's supply chains, and how the challenges and shifts in supply chains are impacting on Scotland's economy. We are also aware of a number of longer-term challenges that need to be addressed, too. We want to consider how to build future resilience and whether there are opportunities to build up domestic supply chains within Scotland. The committee has structured the inquiry around the themes of people, places and product, and we are looking to explore those issues with the minister and his team this morning. I thank our witnesses for joining us today, and welcome Ivan McKee, Minister for Business, Trade, Tourism and Enterprise, David Barnes, Interim Deputy Director of Trade Policy, George Burgess, Deputy Director of Food and Drink, Lewis Hedge, Interim Deputy Director of Fair Work and Labour Market Strategy, and Jeremy Rattigan, Deputy Director for Manufacturing Industries of the Scottish Government. As always, I ask members and witnesses to keep questions and answers as concise as possible, and I start by inviting the minister to make a short opening statement. Good morning, convener and committee. I thank you very much for the invitation to join you this morning, and you have already introduced the officials who are with me this morning. Scotland, as you know, is part of a global economy, and international trade is an important mechanism to which we can enhance our place in the world and build diversity in our supply chains. Recent events, including Brexit, Covid, the blockage of the Sears Canal and other challenges have exposed vulnerabilities in our supply chains. In Scotland, remote communities in particular often suffer disproportionately through being at the end of long supply chains or requiring smaller volumes of products. This has been a challenge in time for many businesses, but we have also witnessed tremendous resilience and ingenuity. Supply chains' shortages have accelerated change, created new opportunities for some Scottish firms and prompted innovative solutions. Perhaps the clearest example was the sourcing of vital NHS supplies such as PPE throughout the pandemic. We witnessed companies diversifying from producing whisky to producing hand sanitizer, electronics firms repurposing production lines and sub-sea specialists turning to making ventilators in previously unimaginable timescales. Pre-pandemic, all of our PPE was sourced from abroad now, with the exception of gloves. The vast majority is manufactured here in Scotland, and some firms have gone on to develop innovative new products that are being sold to the rest of the world. Alpha Solway, for example, a free space company, recently developed one of only a handful of UK-approved transparent masks available on the market today. The demand for this product has extended to overseas, with recent orders placed to explore millions of those masks' clients in the European Union with additional opportunities emerging. We will continue to maximise supply chain opportunities from public sector procurement and their investment in economic assets such as the National Manufacturer Institute Scotland, the innovation centres, the Scottish Manufacturing Advisory Service and others will support manufacturers to adapt to changes and constraints in the supply of materials and components. In addition, I have a programme of work on-going with ports and airport operators and others to determine the scope for Scotland to export more of our products directly, plus increasing resilience and reducing our carbon footprint. In excessions so far, the committee has highlighted that the labour market has tightened and vacancies have increased. We are working with business organisations to develop a working with businesses action plan focused on employability skills and shared work principles to identify actions to mitigate the impact of labour shortages. We are investing more than £1 billion this year to drive forward our national ambition for jobs and an additional £500 million this Parliament to support new jobs and reskill people for the good, fair and green jobs of the future. We continue to call on the UK Government to make changes to the immigration system, combat post-EU exit skills and labour shortages. Our new 10-year national strategy for economic transformation will have a focus on developing the skills that Scotland's future workforce needs and maximising the use of Scottish manufactured components in the areas of new market opportunity. Robust and resilient supply chains are the bedrock of a thriving economy, and I am clear that we need to take every opportunity to strengthen Scotland's supply chains. I very much look forward to our discussion this morning. Thank you, convener. Thank you minister. I would like to start by asking a couple of questions around the issue of people and skills in the labour market, which you referred to at the end of your statement. Often when people think about supply chains, they focus on products and commodities. What we found in the earlier sessions taking evidence was that people and skills were where a lot of the gaps were that were putting new oppression on businesses. They might be able to get the product. It was the issues with logistics of getting it here. One of the issues that we raised with Skills Development Scotland and Open University was about inactivity within the labour market. One of the reasons for that could be a consequence of the pandemic, but they identified people who were furthest away from the labour market or people who would be lacking the right skills to get into the labour market. Audit Scotland published a report in the past couple of weeks that has been quite critical of the way in which our skills service is delivered and places some real challenges for the Government and for Skills Development Scotland and for Ecology Scotland. Can you comment on the Audit Scotland report and how you will respond to the issues that are raised within it when it comes to addressing the labour shortages and pressures that we see within the earth's supply chain structures? On the issue of labour market inactivity, you are right that 22 per cent of Scotland's working age population is between 16 and 24 that are not active now. That is about 750,000 people who are thereabouts. It is a number that is broadly similar to the rest of the UK. When you delve into that and have a look, there are a number of reasons for that. Some of them are valid reasons to do with people in education, childcare responsibilities, ill health and other reasons. However, we have undertaken, as a programme—we will be talking more about that in our national strategy—to understand more about that and address it. It has become increasingly clear that access to international labour through Brexit has been challenged. We need to focus much more on how we tackle that labour market inactivity issue. For example, some of that will come down to the expansion of childcare that we are undertaking and enables parents to get back to work earlier when they chose to do so. It is something to do with transport links and a strategic transport review that came out recently that addresses some of those issues to enable people to get economic opportunities. Some of it will be to increase skills and make people, in some cases, first in the labour market more aware of the opportunities. People have not worked for a long time and helped to smooth their transition back into work. There is a whole plethora of different aspects of that that we are focused on. It is increasingly an issue that we need to address, not only because it is the right thing for those individuals but also because it is an issue that is increasingly of support for businesses and having access to the labour pool that is available within Scotland. On the Audit Scotland report, is there any specific aspects of that that you want me to address? I do appreciate that you are not the lead minister on the skills agenda, but it talks more to the skills agenda. There were concerns expressed about the issues around the ability of the sector to deliver for people who really need it and to be properly co-ordinated with what businesses need and for a working relationship between skills development Scotland and Collegy Scotland to be improved. I think that there are lots of bits of that that need to be joined up. However, it is a large extent that you have heard from some of your witnesses in earlier sessions. As a moving target, you have tried to predict what the skills shortages are going to be years ahead. It is obviously not always difficult, so it is a combination of increasingly closer alignment between the skills system and businesses. It is about having the right mix of practical skills that we know are going to be required, but also ensuring that young people, with those right through their whole career, are equipped with the ability to be able to reskill and understand the opportunities that are there and what support they can get for that throughout their career. As I said at the start, we are spending more than £1 billion supporting the skills system, which is actually £500 million on top of that over the course of the Parliament to focus on that. However, I talk to businesses every week, every day, and not skills is a number one issue. Everything else is going on. Not standing is always skills that is the top issue. We are hugely seized of the need to focus on that. As I said, it is about making sure that the skills system is increasingly aligned with the needs of businesses. We have clear routes of communication, so we can make sure that there is an understanding of what is required. However, the system needs to be very agile, because it is such a moving target. We also took evidence on the Logan review, which is then about digital skills gap, which, if you are speaking to businesses, you will know that that is one of the big issues. While it is about people who are far away from the labour market and need to enter the labour market, there are also those who are currently in the labour market who need to improve their skills and have access to the skills that we need in the modern age. The digital skills gap is one of the key areas. Do you know if there is a timeline for the implementation of Logan review's recommendations? There are lots of aspects to that across the education system, some of which are about doing more computer science teaching in schools, which is obviously the tick-tock, because you need to make sure that the resources that teachers are able to deliver those courses are raised in his report. If that is a challenge, you need to deal with that, then you need to roll that out across the school curriculum, which is hugely important in coming from my background. I absolutely understand the criticality of that. Other aspects such as the roll-out of the tech scalars are something that is on-going, so I think that there are different timescales across different recommendations and action points that are in the report and marked that his credit is kept on the pressure, because something like that—we are asking the Government and the system to do things differently than we have done before—I am keen that the Government is able to be more agile, to be more responsive and to be able to execute on initiatives such as the work that Mark has undertaken, and we continue to push to move that along as fast as possible. We are on the right track there and, as I say, there is a different range of timescales depending on the specific recommendations. It is also worth reflecting that the report will come out shortly, the strategy for economic transformation, and it really builds on the work of the Logan report and extends that to other parts of the economy, other sectors, and broadens it out as well around the approach to tech scalars supporting those growth businesses, but also very much the skills aspect of that and making sure that people early stage career and mid career are able to retrain to be able to support tech, coding skills, digital skills, in all shapes and sizes, but also broadening out to wider requirements of the new industries that are developing in Scotland. The committee is looking forward to the publication of the 10-year strategy. We had hoped to see it before Christmas, but I do appreciate that it has been delayed. It is welcome that the Logan review will be suggested and that it will be integral to the strategy that will arise. I will hand over to Maggie Chapman, who has questions in a similar area, and she will be followed by Colin Beattie. Thank you very much, convener. Good morning, minister. Thank you for being here this morning and for your opening remarks and comments that you have already given us. As the convener said, just extending the discussion a little bit around labour and the gaps and skills in training, you said yourself that it is difficult to forecast to predict where some of the gaps are going to be, but there are very clear instances where we know exactly what is needed, what should be needed and what will be needed. There are some circumstances where we have identified the problem quite clearly and the digital skills gap that you have already talked about is one of them. We already know from the construction industry that, in order to meet their net zero targets, they are going to need 22,500 additional members in their labour force in the next few years, and we know in the just transition away from hydrocarbons, whether that is in energy, whether it is in other sectors, there are significant requirements for agility and flexibility. A couple of questions. For construction, how can we ensure that we meet the needs of the additional workforce numbers that are required? For the just transition, how can we ensure that uptake of the skills and training opportunities that we are planning for and are currently in train? How can we make sure that uptake is effective to deliver the kinds of changes that we need? I think that the first point that I will reflect on is that, in the question itself, when you talk about where the gaps are, there is one thing that says that construction needs 22,000 people, but what are those skills? Clearly, there is a wide range of different skills that are used on a construction site, but also when you look at the trends in that sector, we are doing a lot of work at the moment on developing capacity and capability and innovation around off-site manufacturing, so that moves a lot of construction work in modular form into a factory setting, which is a different type of skill set that you require. It is clearly with the shifting materials as a consequence of shortages, but also as a consequence of the transition to net zero with more types of timber structures coming in play, the types of skills that are required to support that change. That thing is evolving over time, but it is important that we stay close to that. We are talking about digital skills, but coding languages evolve every year or two. I am not an expert in that area, but when you look at those requirements, some of the train 10 years ago in coding, there is a large percentage out of date already, even five years ago. Upgrading those and understanding what the new coding requirements are is important. That is, again, different from broad-based digital skills, where people do not do digital all the time, but they do not know how to work with spreadsheet or how other digital connectivity skills are required. There is a whole range of different things even within those broad buckets, and it is really important to understand that. On how you get people to take advantage of those, you are right that there is going to be a whole range in that. Some people will be very hungry to be able to take part in that. They will see it as advancement, and they will see it as an opportunity to have their income in being a sector that is more advantageous for them going forward. Others will need to make them aware of what those opportunities are, and that extends right through the whole piece. There needs to be closer engagement between business and schools, frankly, so that young people will come with you to understand what those opportunities are and be able to set their sights on how their choice of subjects and how their choice of further and higher education reflect the types of careers and opportunities that are there and how they take advantage of those. Likewise, my career will be in people who have decided to reskill, and again, some great initiatives on coding training that are out there will look to develop that, or people who are unfortunately facing a redundancy situation and the pace condition is there to support that. Again, there is a huge priority there about making people aware of the different retraining opportunities that exist. I talked about labour market and activity, so as we get closer to that, people who are out for health reasons but are able to work perhaps at a time or perhaps in certain employments, how do we make sure that they have got to focus on the types of skills that they need, and people are returning to the labour market after having a family to meet them. I will be honest about what it is. You are dealing with hundreds of thousands of people. The training programmes are there, as I said, a significant amount of funding going on from the Scottish Government, but you are absolutely right to join that up and make sure that the provision that is there reflects what businesses are doing in the future and that people are aware of that. It is something that we are constantly focusing on. That is really helpful. In your opening remarks, you talked about the shift or the diversification that so many companies and businesses have done to provide the things that we needed during the pandemic. Obviously, a lot of that was driven by financial incentives for them to do that. There was also the moral imperative. Many of us would argue that there are similar imperatives around just transition. You said that some people who choose to reskill and retrain, perhaps particularly in energy, away from hydrocarbon energy-intensive industries, is there a role not only for the funding and support of the training and reskilling and the courses to enable people to get the skills for the future economy, but is there something around incentivising people so that it makes that choice easier? Is there something about the labour market workers feeling that they have no choice, that they have no power in all of that? Is there something that we can be thinking about and implementing to support people? We talk about the labour market and the workforce as an amorphic thing, but they are people and members of communities. They are individuals with hopes and dreams. That often gets lost in some of the planning and sometimes even the implementation. How do we bridge that gap? Yes, you are right. I think that it is about thinking about deeper understanding what is going on. If you look at energy, for example, energy is not a scenario in which you have fossil fuel production and on one side you have renewables on the other and completely different things are completely different from each other. The businesses that are involved in one are almost always involved in both. The newer businesses and renewables are specifically focused on some new technologies, but the legacy businesses that are in fossil fuels are transitioning in pretty much every single business in that sector or in that journey, and they are reskilling their workforce as they make that move. A lot of the skills are very transferable very quickly. A lot of the offshore skills, for example, deep water skills, are very transferable from oil and gas platforms to looking offshore wind and so on. A lot of that will happen as the opportunities will be pulled from the opportunity site. As we move the production over to renewable energy, there are other areas where there is a bigger gap in terms of the skills that you need to acquire to do that. I think that it is fair to say that this has got a huge profit. You turn the television on and we are talking about these issues, particularly in the back of corp. People are aware of that. People are making decisions on where they want to have their career, younger people in particular. One of the comments that I get from oil and gas production is that young people do not want to go and work for them anymore, which is perfectly understandable because they are focused on zero, understanding the climate emergency and want to be in the sectors of the future. I think that there is a pull from the technology as things move over. There is a push from people at all stages in their careers wanting to be in the sectors of the future. Our job is to provide the bridge that allows them to have those training opportunities, but it is not just that private sector businesses are hugely invested in that. We work closely with them and they are doing a lot of the heavy lifting on that, because it is in their interests, obviously. From our point of view, it is the right thing for them to do that. Everything is absolutely perfect. Of course, it is not black. I think that there is an awful lot happening that is moving that increasingly in the right direction. Thank you very much. Scotland is facing quite an acute demographic challenge, perhaps even compared to the rest of the UK. Inward migration over a number of years has been the key driver of population growth. Do we have any levers in the Scottish Government to attract the necessary inward migration to help to reduce labour shortages? Has there been discussions with the UK Government on Scotland's particular issues? We do have some levers, but clearly there are many levers that we do not have. I will talk briefly on the ones that we do not have and then talk about the ones that we do have. Clearly, we do not have control over immigration powers internationally. That is something that we have constantly asked the UK Government to be more flexible on, both in terms of what it is doing with the restrictions that it has—the ridiculous restrictions that it has on when labour is coming from abroad—to devolve more of those immigration powers. You look at countries such as Australia and Canada that have a degree of devolution of immigration powers, so it is a model that works perfectly well and there is no reason not to do it. Clearly, we would want to be back in the single market. That is our ambition to deliver on that to the European single market, which resolves many of those issues. In terms of the levers that we have to pull, there are things that we can do about labour market and activity, how we bring more people into the labour market that way, but also what we can do to focus on immigration from the rest of the UK into Scotland. At the moment, there is a net inward immigration from the rest of the UK. There are about 30,000 people who leave Scotland every year on average in about 40,000—41,000—to come into Scotland from the rest of the UK. That is a net positive. That is something that we are increasingly focused on maximising. I tackle many of those specific skill challenges. I have a programme under rail working with businesses and others in the sector to understand how we can target that more effectively, how we can get that message out there, how we can work to increase the net inward immigration from the rest of the UK into Scotland. That is a programme that will get an increasing focus on it because it is one of the few things that we can do—leavers that we can pull by a Scottish Government, given that we do not have control of our international immigration person. We hear a great deal about the number of killed migrants who came to us from Europe. Paul, we are still a member of the EU and how so many of them have returned to the EU. Particularly, we hear of areas such as social care, construction and so on, where we have shortages and that has potentially been exacerbated by that. Do we have any firm idea of the actual impact of Brexit on the skills shortages that we are facing at the moment? That has been significant. Part of the issue has been unpicking up from the Covid situation. If somebody leaves to return home, you do not know whether that is because they have personal reasons or other reasons why they want to be back in their country of origin to deal with that. The situation makes it much harder for them to move back and forward if they have family commitments in Poland or whatever. Covid-19 has made that much more difficult than people may choose as a consequence to stay back in their country of origin. However, without a doubt, Brexit has made a huge difference in its Covid restrictions subside. International travel opens up again in normal times. We would then expect that labour market to free up, but Brexit stops that happening. The message in the shoes is so important that the UK Government's hostile approach to immigration and to immigrants is very difficult, because—we saw that with the HDV drivers. The message that the UK Government was saying was ridiculous, counterproductive and really unhelpful in terms of what we expect these people to drop. Everything changes their lives, come and help us when we need it, and then we will not allow them to come in for a short period of time. Of course, it is not going to work. Brexit has a huge impact. As we move beyond Covid, we are increasingly all-face. That is a huge break on Scotland's economic potential. Just to continue on the question of Brexit, new restrictions on imported products from the EU came into effect in 1 January. Do you have any sense as to the impact that this is having on Scottish businesses? I know that it is early days, but perhaps there are some early indications? It is just another barrier. It makes life difficult, it makes business difficult, it makes things harder that should not be hard. It makes it uncertain as well, because there are clearly paperwork requirements. There are all kinds of clearances that are required in different rules and regulations. About that, it just puts red tape in the way of businesses that are really unhelpful and clogs up supply chains and eats away at the capacity and agility of businesses to respond as they should. It is useful and unhelpful. Those further restrictions have just come in too early to say specifically the impact of them, but it is another example of UK Government placing ideology above the needs of business. Is there anything that the Scottish Government can do to ease any of the restrictions that have been brought in, or is it completely out of the control of the Scottish Government? We continue to pressure the UK Government to change those rules, but that is a reserved area. We have talked about what we did in PPE and elsewhere, but we continue to do an awful lot of work through our supply chain development programmes. Other activities are to look for opportunities to manufacture more of those products in Scotland to create economic opportunities here and to build resilience. In terms of the work that we are doing, we have the primary lever to be able to tackle that, but there are many things that we cannot manufacture in a way that is competitive. There are many that we can, but we cannot do for everything. That is part of the answer, but it is not the whole answer. Given the impact of Brexit on the supply chains, do you think that there is a way where the Scottish Government can build more resilience into the Scottish end of the supply chain and realise that there is a limit to how far we can go? Does that mitigate the impact of Brexit in any way, or is that just so totally out of our control that what we can do is marginal? As I said, it is not the whole answer. It is marginal in the sense that it allows us to tackle some of the issues that are at the margins, but it does not allow us to tackle the key issues around various international trade, which is hugely unhelpful. As I said, the work that we are doing is to talk more about it, to facilitate more and support more manufacture of products in Scotland. As you rightly said, the Brexit restrictions make this very difficult for supply chains for businesses and for Scotland's economy and consumers. In nevering to put in place the measures that you are talking about there, minister, surely the skills shortages that apparently have arisen largely as a part of Brexit are going to constrain how far we can go in encouraging manufacturing and so on in Scotland? Again, that will depend sector by sector, opportunity by opportunity, but where there is, for example, in some advanced engineering, life science sectors, some other sectors where we have got opportunities to manufacture more in Scotland, the shortage of those specific skills that would normally have come from an international labour pool is absolutely a key issue. In other parts of the economy, for example in agriculture or in the good process in other sectors that relied on significant numbers of migrant workers, that is clearly put out in a significant vehicle. Those sectors are likewise on hospitality, leisure tourism and other sectors in the Scottish economy that are suffering as a consequence of Brexit and the restriction on labour migration. I will bring in Alexander Burnett, followed by John Smith. Alexander Burnett will follow some of the issues, because I share the minister's concerns and the concerns about the situation with it post leaving the EU, but that is the new reality. We need the Scottish economy to respond to that. The questions around skills and around a sustainable and resilient supply chain are issues that would like to have a full piss on. I will hand over to Alexander Burnett, followed by John Smith. Alexander Burnett 3 Questions on labour supply and investment to attract labour. The finance committee, chaired by your colleague Kenny Gibson, is saying that the evidence of Scotland's economic underperformance is deeply worrying. We have higher rates of economic inactivity than elsewhere in the UK across all areas, such as skills gap, lifestyle choices and lower life expectancy, leading to earlier retirement. What are you specifically doing to reduce such inactivity and increase our domestic labour supply? There is a gap. The gap is not as big as you are making out from many. We are at 22 per cent, the rest of the UK is at 21 per cent labour market activity. There are differences, but they are not hugely significant. As I said at the beginning, the other question is focused on understanding the make-up of 750,000 people. Some of them are in that situation for good reasons, because they are in education and they are suffering from ill health. They are taking care of families, but it is understanding on the margin what you can do to reduce the total number. Even 100,000 of those 750,000 people, for example, are to pick a number. A random number back in the labour market would be very helpful to the situation that we find ourselves in. For every part of that cohort of your light, there is going to be a different answer for parents that are returning after childcare. Clearly, childcare provision is important, so the expansion of childcare is hugely important. In some situations in rural but also in cities as well, there are issues about transport and accessibility to enable people to get to economic opportunities. Again, that is something that the Government is hugely focused on addressing. In situations where the issue is ill health, there may be, as I said earlier, opportunities that some individuals can take up with support and training, but they might not otherwise have been able to be part of the labour market, which is great for them and for the economy as well. Again, you look at students. One of the interests and differences in the UK and the rest of the UK and Scotland has been about the number of students in that labour market and activity pool and where we are exploring it a bit further to understand reasons for that. Again, that is a double-edged sword. Do you want students in the labour market when perhaps they should focus more on their studies? There is a balance to be struck there. We are increasingly deeply involved in understanding those issues and driving forward programmes to address each of them separately, because the answers to each cohort are very different. Thank you. The committee report also talks of longer-term low productivity and poor business investment. The latest blow to develop a manufacturing supply chain is the opposition to civil nuclear energy with Rolls-Royce's SMR consortium, which is looking everywhere for its £200 million factory except in Scotland. Does the minister recognise his own Government's policies or his own leavers—to put it in that phrase—are a problem for attracting in with migration to reduce labour shortages? Inward migration or inward investment? Both. In migration, the labour would follow investment, so if companies were interested in investing in the company, we would see what people are buying. I have already said that Scotland attracts significantly more people from the rest of the UK than the rest of the UK. Having a positive migration from the rest of the UK would be a question of attractiveness. On that measure, Scotland is significantly more attractive than the rest of the UK because it attracts significantly more people from the rest of the UK than the rest of the UK, and that gap is widening. In addition to inward investment, Scotland has personally outperformed every other part of the UK outside of London in terms of attracting inward investment over the past seven years in a row. We have outperformed every other part of the UK outside of London. When it comes to R&D investment, Scotland even outperforms London on the latest data. If you look at the data for last year, which was clearly the year of Covid, Scotland's inward investment increased by 5 per cent. The UK's inward investment was down minus 12 per cent. The UK's inward investment was minus 13 per cent. Everyone else in Europe was going down Scotland's inward investment. Scotland is a very attractive place for inward investment. The inward investment plan is hugely focused on increasing Scotland's attractiveness for inward investors. We have got more work to do there, but we are in a much better place than many parts of the rest of the UK when it comes to attracting inward investment. I know what the continued increase in migration from the rest of the UK is, but you mentioned putting ideology above the needs of business, but we have now got a First Minister looking to bring forward legislation for another referendum. After all the lessons learned over the past eight years on the economic effects of referendums on the economy, in what parallel universe does the minister think that this uncertainty is going to attract people and investment, particularly when the rest of the world is focused on post-Covid recovery? That role is focused on exploiting the opportunities that exist in Scotland. It is extremely well-placed in many of those sectors of the future, be it renewable energy, life science, space sector, fentech, financial services sector and a range of advanced manufacturing opportunities, food and drink innovation and so on. Scotland is extremely well-placed to take advantage of those opportunities. The things that stop Scotland, as we have highlighted already in the questions, is not having access to the large EU market, both export and import, because of the restrictions of Brexit, and not having access to the labour market that is out there to fuel our growth, and not having the ability to tailor immigration programmes more broadly than that, and not having control over the full welfare of leavers that would allow us to tailor that both to support people and tackle poverty, but also to smooth the transition back into work when the UK welfare system mitigates against that in so many cases, and I could go on and on and on. The things that hold Scotland back are not having those leavers, not being a normal independent country that can take its own decisions, not despite having a suite of advantages of the most highly educated population in Europe at tertiary level. Despite all those advantages, not being able to maximise those opportunities has not been as well off as our colleagues in Denmark, Norway, Sweden, Finland, Switzerland and elsewhere, who are normal independent countries of Scotland-sized, with far less opportunities than those that do much better than us. The reason that Scotland held back is that the union, and the sooner we are out of it, the better. I remind members that the subject of this morning's session is supply chains, the inquiry that we have been working on for the past few months, and the minister is here to ask questions in that area. I do appreciate that people might want to expand into other areas, but we have a limited time this morning, and I would ask that members could focus on the issue at hand. I will hand over to Colin Smyth to be followed by Michelle Thomson. Thank you very much, convener, and good morning to the minister. The committee has heard a number of concerns about the current procurement regime, which claims that it is very focused on price. It does not properly measure the environmental benefit of using local products and the use of local firms that is largely ignored in any scoring process. It is really just about encouraging local firms rather than making it a requirement in contracts. It also says that the process does not encourage the use of alternative products and materials, which could encourage the growth of a supply chain in Scotland. Do you recognise those concerns from businesses? Has any consideration been given to fully reforming the procurement process to better prioritise local companies? I have a leading question. We are very much on a journey in progress. Significant progress has been made in a number of areas that I will talk through, but I recognise that there is absolutely more that we can do. I am relentless in my engagement with the procurement officials within the Scottish Government and wider across the public sector in looking at every opportunity to move forward in all those areas. The sustainable procurement requirements in legislation are important, and they focus procurement on making sure that we have community benefit and local aspects to procurement as part of the requirement. The situation is far from being that we will only go on price as a whole range of factors that are considered. In fact, we are in a position where only choosing on price is not an option, and we need to look at a wider range of factors, including local issues, sustainability, SMEs and a whole range of other factors as part of those decision-making processes. We have moved a long way from only being about price, but there is more to do. We also have to remember that we do not have free rein on that for good reasons. We are part of the WTO, which requires a situation in which Scottish businesses will try to export and expect the debt not to be stacked against domain international markets. Likewise, we have to have an open and fair transparent process for competition within procurement in Scotland, but what we can do is set the criteria as best we can within the rules that are available internationally to support that. If we look at the results, the percentage of public sector business that SMEs in Scotland win is far higher than that in the rest of the UK in way and in excess of the targets that are set by the European Union. In actual fact, SMEs in Scotland have got a higher percentage of it when a higher percentage of public sector contracts in their share of turnover in the whole economy. That is a positive thing that we have managed to deliver on over recent years, but it is something that we keep a focus on because we recognise how important it is. The other aspect of that is about the innovation side of it. We have done a lot of good work there, but there is a bit more to do. That is about making sure that Scottish businesses that come forward with innovative products are able to be able to present those and get a market for those. In the public sector in Scotland, leavers are £13 billion of procurement spend. Be that in the health sector, be it with digital solutions, be it elsewhere. The work of CivTech has been phenomenal and we have significantly upscaled their capacity to do that. That is an international exemplar of how to do it. It is leading a lot of international work in that regard now to show people how you do this stuff. They have done that primarily on digital and tech, but we are expanding their capability to do that much more broadly. We have got the work of SHIP, the Scottish Health Innovation Partnership. We are looking at innovative solutions coming from Scottish businesses, normally SMEs, and how we give them mark opportunities in the NHS that are more flexible on the purchase and requirements specifications so that some of those innovative and maybe does not fit exactly in the box of what we are looking for in terms of purchase and requirements. There is a route to market for that. The supply chain development programmes are again focused on where they will have significant public sector spend, where they will have the opportunity to build, envision a strong supply chain, and how we will put both of those together to be able to make that happen. That is, in flicker-sweption, that stuff happens. It is a huge amount of detailed work with different sectors and different businesses and different opportunities, navigating through the roles that are there and making sure that we are focused on delivering what we can. We are making progress, but absolutely there is more to do and I am always delighted to talk to businesses that have got innovative products and services to understand through working with them. We can give them a foothold in the Scottish public sector procurement. It was not a leading question, but it was outlining the concerns that the committee has heard. Absolutely, and I accept that. As I said, I am hugely engaged and very keen to talk to businesses to see how we can help them on that further. There was a clear view across the evidence that the extent to which supply chains are covered by the process of determining a contract that simply does not go far enough. In fact, changes in recent years to the process have driven many of the problems. For example, if a local council is building a new school, it is now a very centralised process. When I was a councillor, we awarded the contract direct as a councillor. Now, for example, on Dumfries and Galloway, it goes through the hubs of west process, notwithstanding all the accountability issues that causes when something goes wrong. It means that there is a real emphasis on economy as a scale on big, large contracts. Often, what happens is that the use of local supply chains is simply relying on the big contractor to subcontract that work at their discretion. Surely, the process that we have been driving in recent years has caused an increase in large contracts, driven, I suppose, given the fact that we have seen budgets cut to councillors, but surely that is still a big part of it, big contracts, driven by price. The whole construction sector works like that, so there is nothing specifically different about public sector procurement in that regard. Clearly, you have to be able to understand what the market price is if you are spending public money, so that has got to be done as efficiently as possible. There are very practical things that we can and can do to break out large contract sizes into smaller buckets and look for opportunities to do that. As you said, something that we are very supportive of is allowing smaller businesses to be able to bid for and when smaller pieces of work, rather than facing into bigger contracts, make it difficult for them. There are other things that we can do and we are very supportive of, which is that smaller businesses are working together to be able to address some of those larger contracts where we cannot break up and to put up the smaller chunks and be able to put forward the bidding proposals. I think that we are agreed on where we want to get to. It is a question of working through the details of that. It is not that we are saying price price price far from it and, as I said, we are very much away from that. As I said, I am very keen to work with businesses to look for opportunities where we can move further in that direction. Do you accept that there has been an increase in large contracts, a small number of big construction firms winning all those big contracts? Is there an active piece of work? I am not clear from what you say, apart from its on-going work, but is there now an active piece of work about adapting the lotting system? I will focus on that to ensure that smaller local suppliers are not driven out and that they are taken into account of the environmental impact when it comes to the criteria. I always joke that the biggest growing business in Dumfries is the guy who sells bacon rolls in the old Scouts of the Town because he serves all the white vans travelling from Glasgow to Dumfries every day to carry out the work. There is a clear environmental cost of big businesses in the central belt carrying out contracts elsewhere. We are surely that environmental impact of a lot of that, with the focus on local businesses, should be a bigger proportion of the criteria for awarding contracts. You should be breaking up the lotting system a lot more to focus on smaller contracts. First of all, as there has been a shift in more of this stuff that is happening with larger contractors, I do not have the evidence to hand to say whether that is accurate or not. What I can do is to look at the whole piece. As I said earlier, a portion of contracts that go to SMEs in Scotland are far in excess of what it is in the rest of the UK or far in excess of the European targets for this. SMEs get a higher percentage of their work through public sector procurement than larger businesses do. That is the situation and that is the reality of the off-world numbers. I think that that number is about 46.5 or 47 per cent. That is the reality. You will always get anecdotal stuff about what happens, and that happens on a particular contract. I am always keen to see those specific examples, because it helps to inform the overall picture. However, the data is clear that we do much more of our procurement through SMEs increasingly in Scotland than elsewhere. There are, as I said, requirements in place so that the purchasing is not done in price alone. There are a whole range of other factors, including local benefits, quality and sustainability, that are factored into that. We can have a debate about whether that balance is right or not, but, again, that is not black and white. Those factors are already in play, and they are part of the criteria. In terms of lots sizes, I absolutely look for every opportunity to debate those lots up into smaller buckets, precisely to allow smaller businesses to be able to bid for them. That is a proactive part of what we are doing, have done, has been going on, the sustainable procurement legislation is in place and has been for a number of years. The annual report comes out every year, which is very transparent about what we are doing, how we are doing and who we are working with and what is happening across the public sector. The data is moving in the right direction, as I said, because, if you look at the proportion of SMEs that are winning those contracts, we have the intent, the actions and the results. Is there more that we can do? Are there anecdotal examples of things that can be improved? Of course, there will always be, but we are very keen to address all that and continue to move in that direction. One final point, though. You say that it is containing the criteria, but one of the biggest criticisms of the Scotland-wind leasing process is that the actual local supply chain was not part of the criteria. Companies had to have development plans and we will see what they looked like at some point. However, the big criticism from the trade unions and many others was that, specifically having local supply chains was not part of the scoring process when it came to awarding those contracts. You will be aware that there are international rules on that stuff. There are bidding rules, there are RWTOs, part of the GPA. We cannot go to school making that stuff up. We have done it as much as we can within those rules to be able to move that forward. Huge commitment on making sure that those supply chain development statements were in place to make sure that bidders were coming forward and being very clear about how they would use supply chains and the scoring criteria pushed that absolute to the limit in terms of what has been able to be done within international rules, as I am sure colleagues will hear. I will make some progress now. I want to pick up a little bit further on procurement. Just for the record, the finance report was mentioned earlier. I am on the finance committee. The Scottish fiscal commission expects the Scottish Labour participation rate to decline by 0.2 per year relative to the rest of the UK. It is even less than you had suggested when you were talking about it earlier. On procurement, there are a couple of questions here. Once some businesses have asked about the possibility of more pipeline visibility, you have alluded to that earlier that many businesses will create a component product offering to make the bid. That would give them time to do that. My second question is about the use of mandation. One helps to develop supply chains and to target more for net zero. We saw comments from that in the Construction Scotland Innovation Centre. The pipeline pieces that are important in the construction sector have made great progress. I am a co-chair of the construction leadership forum. It has been a huge area of focus there. The Scottish Futures Trust has been working very hard on that with Government, and we have that pipeline in place now, which allows the public sector to put their future plans for construction work on the pipeline tool, and then everybody can have a look and see what is coming up. That stability of demand is obviously very important in the construction sector. Contractors know what work is there, and they can plan accordingly in the whole sector. It is not getting moved up and down year on year by the feast and famine in terms of the work that is there. That has been really effective. It has just come online in the past few months. That has made a huge difference. Also, working with other industry leadership groups, other groups are looking at what construction is done and learning from it, and seeing how they can do something similar. That is a great example of initiatives that were taken. Your other point was round about sustainability. You have accurately depicted the wider environment in terms of rules that you mentioned, and so on. Is the general concept about mandation to affect change in the market, and I have mentioned net zero as well? We can put in place requirements within the rules, as I have said, as best we can, to be able to say that we have to factor in sustainability, net zero aspects, carbon footprint and so on. Obviously, we will look to do that where we can, and that is increasingly an area of focus, as you would imagine, to be able to address it. What does that do? Obviously, it encourages local production, but it also encourages innovation and construction. It is a prime example of the work of the construction innovation centre for innovative solutions to the net zero carbon challenges. We want to use the levers of public sector procurement to be able to facilitate that as best we can. Fiona Hyslop, to be followed by Jamie Halcro John. I would like to pursue that a bit more. In terms of supply chain development, it brings resilience but also opportunity. In terms of the Government's activity, can you share with the committee how much of a step change there is across the public sector to embed the importance of supply chain development across different departments, not just to your own? For example, in the NHS, can you share more of what is happening in support and supply chain development in the NHS? Not just in the public sector but in private sector opportunities, for example, in net zero around heat pumps, to what extent is that there? Do you think that our agencies as well are geared up to keep a focus, a lid-like focus, on supply chain development? Yes. I am hugely focused on that from a manufacturer background. We have done a lot of work off the back of the success on PPE manufacturing, and it was great to see that that was referenced several times in your earlier evidence sessions to formalise that process and understand where else we could apply it. Now, there are two parts to that. There is the procurement piece, and I have responsibility for procurement. We are working through procurement of the Scottish Government, reaching out across the whole of that £13 billion spend, which includes local government, includes Transport Scotland, includes the NHS, and other public sector bodies to stress the importance of that. The shift work in the health service and Scottish Health and Innovation partnership work is a key part of that, and it has increasingly drawn through those opportunities. The other side of it is from the enterprise agencies, and, yes, they are usually seized in focus of the importance of that and working very hard on it. They were an absolutely critical part of the work that we did on PPE. It is about joining that up. When you look at a sector and you say that public sector spending is over £100 million on that, most of it is going abroad. Let us look at that while we are spending on those commodities. What businesses do we have in Scotland that are capable of stepping in and doing that? What do they need to be able to allow them to bid? Is it to do with getting their qualifications and the right standards in place? Is it a question of capacity? Is it a question of skills? Is it a question of investment equipment or investment in premises? Is it a question of what the things are stopping and getting there? The enterprise agencies wheel in and say, right, we can help you with this, we can help you with that, and SDS will come in and help with whatever. It is about getting those suppliers in a place where they are able to bid for those contracts, and not just one supply, but a whole series of them around the sector and creating that capacity and capability to bid for those contracts. Joining that up in an intelligent way is what is important, and to do that you have to drill down to understand what you are trying to operate. The programmes that we have in training at the moment are the PPE. We are looking at reshoring a generic medicine manufacturer. We have programmes on heat pump manufacture again. There are a couple of opportunities there in Scotland. We need more, but a lot of that becomes where the sub-suppliers, the supply into the heat pump manufacturers in Scotland, and how do we get more of that content in Scotland? We are looking at electrolyzers for hydrogen, which is clearly going to be a huge issue going forward. We are looking at it as I mentioned earlier, timber frame construction from forestry all the way through sawmills into manufacturing facilities in Scotland. How much of that is going to be off-site manufacture and modular build in the construction sector? There are about seven or eight programmes that we are running with at the moment. On top of that, we need to clarify on the Scotland thing. There are actually requirements in the contract that if the developer does not follow through on the supply chain development plans to use local content, then there are penalties as a consequence of that. It does have teeth contrary to what was suggested earlier. I can talk about that for hours because it is hugely important. I am hugely passionate about it, and there is a huge amount going on, but I will stop there giving time. I know that it is virtual, but I can feel your passion there. Can I reflect that when we started looking at the inquiry, there were real constraints around supermarkets and food supply, so I would appreciate your current takeaway since things are in relation to resilience for food supply. Also on the issue, you talked about carbon miles and what powers we have in Scotland to make that part of any public sector, contract, etc. Obviously, globally, there are movements in that way, but that would have implications for food and drink in particular, so I am interested in that. Thank you for your paper on the construction. Cement has come up a number of times, and obviously the enormous amount of energy that is required for cement production has implications for net zero, so innovation would be needed. We also know from the construction constraints of the supply chain over the recent year that that is also a reason to have that resilience there, so perhaps you can talk about those products food and drink cement. You have already mentioned that, but if there is any additional on that. Green cement, there you go. It can be done. It involves huge capital investment in the plant to do it. We are talking to Scotland only cement manufacturing plant about their plans in that regard. It is very much on the radar. It is part of the mix-in construction. As I said, timber and mass-lamp timber solutions allow you to have timber products that can do structurally the job of cement. It is an important part of that as well, so we are approaching this to a whole range of different aspects in the construction Scotland innovation centre and Blantyre. We are doing a superb job leading on this stuff with input from Herriot-Watt University and others. Again, that is a key strand in the construction leadership forum, so we are absolutely on that. As I said, it will require a significant private sector investment to deliver on that, but the sector understands absolutely that that is the direction of travel and we want to make it as easy as possible for people to make those decisions to invest in that capacity in Scotland for green cement, as opposed to elsewhere. Food supply is another great example. Again, there are a lot of different things happening there. Five of those conversations with local authority purchasing and others, very often that comes down to a willingness to be able to buy, a keenness to buy locally, but the capacity is not in place locally because of the volumes that we are talking about. That is about, as I said earlier, getting local supplies to the position where they are able to supply at a scale to meet the procurement requirements and doing a lot of work to try and join that up as best we can. The food miles part of that is absolutely an important criteria. It is about how you address and factor it into the procurement decisions, but also, as you said, there are moves afoot internationally. I am on carbon accounting in other measures at the EU level and elsewhere to take those factors into account. That, of course, will impact on the cement discussion that we have just had. There are a lot of things happening internationally, and a lot of things that we are moving forward on there to take advantage of those. I know that some of the evidence that you took was in the food and drink sector and some of the examples of difficulties that access and procurement for various reasons. I have officials following up on that. To learn how we will learn from those examples, we will be able to make our processes more effective to deliver on what we all want to see. I will pass back to the community shortly. Can you give us an assessment as to where you think the constraints for supply are? Inward supply of food is to Scotland, be in mind Brexit and Covid constraints. What is your current take and the Government's current take? It is obviously hugely concerning that we have additional constraints in place, which are unhelpful. At least now, as you have heard from wholesalers and retailers, they have worked hard to mitigate those and kept the shelves fully stocked. I think that, in terms of that side of it, it has the sector and industry done what it can to keep product flowing. Of course, it absolutely has, and we have worked with them on HGV driver issues and elsewhere to help support that. Is there a resilience issue longer term? Yes, there is. Is there more that we can do to grow more food in Scotland to support that? Yes, there is. Some of the technology is vertical farming technology. For example, we are in Scotland as a world leader in the technology and exporting that technology at scale is an area of opportunity for us. Again, joining all of that up to be able to build more resilience in the Scottish supply chain is something that we are very focused on. I have two questions on transport in relation to supply chains and one on preports. You mentioned at the beginning of remote communities being at the end of supply chains. Do you recognise that good transport links are vital to supporting access to markets for businesses in those areas and that the issues that are facing our ferries fleet with ageing and increasingly unreliable vessels and increasing breaks are causing real concerns for businesses in some of those communities? Is there a fear that those problems are only going to get worse over the next few years? Of course, transport connectivity is hugely important. The Government has published a strategic transport review identifying the steps that are taking there. It is important that all of that is addressed. We continue to improve transport links, be that road rail ferries, as has been mentioned, and I have no doubt that the new transport minister will already be all over this. The minister mentioned a review. There are improvements that are needed to road infrastructure across the Highlands and Islands of my region and across Scotland. Given the opposition of the SNP's new partners in coalition, the Greens' new road project and waning commitments over the A96, how confident can businesses and communities be that the Scottish Government will take forward vital investment in our roads infrastructure investment that is so important for ensuring supply routes to some of our remote areas? That balance issue is important, but businesses can rest assured that we are absolutely focused on transport connectivity and where that requires roads to be upgraded, then that will happen. The agreement with the Greens has been structured in a way that allows that to happen, taking account of the absolute imperative to move towards reducing car miles and facilitating transport to business connectivity. I am hugely focused on making sure that that continues to happen. Can you provide any update on the green port proposals? What is the timeline, designation and implementation? Will there be any further talks with the UK Government about alignment with the free ports proposals? Given that it is reported that the UK funding available will allow for only one green port, as opposed to free ports, what impact will that decision by the Scottish Government to go forward with the green ports model have on their ability to support wider development of port infrastructure? Quite a lot on that, but I will take the opportunity to give the committee an update on where we are. As you know, the UK Government's free port proposals came out more than a year ago. We looked at them at that point and decided that there was some fundamental gaps that we could not sign up to. We were not going to engage in a race to the bottom, as I am sure the committee would appreciate on environmental standards, labour standards, labour pay rates and so on. We were absolutely seized by the requirement to make sure that there was a net zero component central to the initiative. We discussed that with the UK Government through the course of last year. In September, it came back and said that there were no circumstances that would allow us to make a payment of real living wage a requirement. We were very lukewarm on the net zero requirements. As a consequence of that, the discussion stopped. We then signalled that we were keen to move forward with our own proposals. We are now in a position where the UK Government has come back to, as I said, that they want to be open discussions. Those discussions are on-going at the moment. We had hoped to have them concluded earlier before the end of the year, which is when we said that we would go forward with our proposals. However, given those discussions are on-going in a reaching conclusion, it is important that we see that process through to conclusion before we see next steps. We are hopeful that we will make progress here. We are hopeful that the solution will come forward, and that will be a solution that will have our requirements on net zero and fair work at its core. It will be a solution that will be good for Scottish businesses, Scottish economy, Scottish workers and communities and the environment. Thank you very much, ministers. Just very quickly on that point, you can't give us a timeline exactly, but once those discussions have concluded and information is available, you will be able to update the committee and the Parliament. Absolutely. As soon as we can and you are right, there are two partners in this. We have been keen for more than a year to make progress on this. We are not the ones who are taking the time to get abducted in a row. We are waiting for our partner to finalise the things that they need to finalise internally. As you understand, they are slightly distracted by other matters at the moment. I want to continue the discussion about transport in relation to our supply chain inquiry. The strategic transport project review that you touched upon a minute ago recommends that there should be a modal shift from road freight to rail. I wonder if you can tell us what steps the Scottish Government is taking to support and encourage that modal shift from road to rail. A lot of that will come down to the specific opportunities that it presents, so I am not close to the details that transport colleagues are working on, but where they present themselves will look at where railhead facilities can be developed to allow them more product to go on to rail relevant roads. I feel that a lot of that will be where there is volume products and you have specific opportunities to be able to say, yes, we can take 800 trucks off the road by facilitating some rail connection. That works on going. The piece of work that I am directly involved in is looking at direct port shipments from Scotland, so I have convened a group of port operators and airports and others to understand what volume and traffic leads Scotland by truck going to ports in the south of England and how we address opportunities to get more of that on ships leaving Scottish ports. That will be a combination of commercial realities, but it is understanding what those commercial realities are and other things that we can do to move the locus of calculation there to make it easier for people to be able to use Scottish ports. That works on going and I hope that that will yield some significant results going forward. I was going to ask you about direct ferry routes from Scotland a wee bit earlier, but I will continue that level of questioning just now. There has been witnesses, as you are aware, called upon a new direct ferry route from Scotland to similar to what we had to Zebrauga from Resive previously. I noticed that Irish holliers have reduced by 244,000 the number of HGB movements using the island to UK land bridge and the number of direct ferry routes from Ireland to Europe have increased from less than a dozen before Brexit to 44. Given the previously route from Ireland to the continent, which has not been financially viable, has the situation in relation to six-hour delays at Dover, Seven Mile Tabark, Tailwax and M20 refocused Scottish exporters' minds on direct ferry routes from Scotland? It is one of the situations where you have a scenario of where you have different players who are all rightly looking at it from their own perspective, but then when you look at the whole system and get everybody in their room to talk about the different moving parts, you are able to broker solutions that otherwise would not happen. Clearly, if you are looking to move goods, you cannot be messing about with this stuff and taking risks on it because you lose your market. Cost is an issue, reliability is an issue, frequency is an issue, what happens if something goes wrong is an issue, so if you can get it on a truck to Dover, there is a ferry every half an hour or whatever and you can get another truck when you need one, then that does not withstand the other capacity constraints that we have talked about. You have flexibility there, if you look at a Scottish port and there is one ferry once a week and if that does not happen then you have to wait another week then you have got a problem. You have got those kind of issues, so it is multifaceted, it is not just cost. What we are doing is looking at commodities when that can be done, looking at routes where it makes sense, looking up what the actual cost gap is and whether it is bridgeable, looking at the resilience that we can build in. If you have all of those things, you can move forward with a couple of notches, we could perhaps be in a position where operators and businesses will look at it and say, you know what, that is something that I could be part of, consolidating loads, for example, among different producers, etc. All of that is on the table and I think that hopefully we will make some progress on that, but now that the environment that we are in, in that example, really gives fresh impetus. Just getting back to the rail situation, and I accept that you are not the transport minister, but we have recently saw the UK Government and HS2, the extent of the route being reduced, and it seems to have become nothing more than a one-day burning on shuttle. Given that the justification for HS2 was to free up capacity on the existing network for local trains and more freight, does that have an impact on Scottish exporters who are looking to use rail freight? Given the example of the large supermarket coon that has introduced trains from Spain to Scotland with fresh produce, which has helped its supply chain resilience, what impact do you think that HS2 restrictions on its route has had on the ability to move freight on to rail? Yes, it has obviously characterised it very well. Clearly the timescales are HS2s who are only just getting started, so it is not impacting things today, but does it impact strategic thinking for the future? Of course it does. High-speed rail is usually important, and you look at international examples where it is well embedded in the transport infrastructure. Yes, we should be in a position to exploit and develop that more. The speed is an issue, frankly, that the capacity is probably more of an issue. It was going to help in that regard, so the fact that that is, as we said at the start, they want to do that seriously. They would be started for both ends at once. We would have started from Scotland and from London and met in the middle, but clearly that is not what it is all about. It is about getting consumers into London rather than looking at the whole country. It is an issue, but it is more of a long-term issue that affects strategic thinking. However, in the immediate term, there are other things that we can and are doing to address that issue. Thank you for your time this morning, minister. When we first began the inquiry, I think that it did come from concerns, particularly before Christmas, around what we have heard from the construction sector and the food and drink sector about pressures. There is perhaps less media reporting of concerns around shortages. That might be because other things are occupying the media at the moment. I did notice in the construction supply chain document that you sent us. At the very end, it said that the general expectation on the marketplace situation will now begin to settle, at least in terms of supply. Is that particularly relevant to construction? Is that something that you see across the Scottish economy? I suppose that is more focused on commodity than people in places. We are looking for some assurances that, although things may be starting to settle compared to the pressure result for Christmas, that that is still a priority for Government. We recognise that, whether it is Brexit or the pandemic or other factors, it gives an opportunity to change the way that we do business in Scotland. Part of that is through pressures that we are experiencing, but it does move to present an opportunity for us to look at some of the issues that members have raised around shorter supply chains and more resilient supply chains. As a question is, do we still have—I think that you have expressed it this morning—a commitment that those are still important issues for the Government and that the 10-year economic strategy will reflect and give a recognition of the importance of how we look at future supply chains? Yes, you have that commitment. Yes, you are absolutely right. It is resilience issues that are important, and there are other aspects beyond what we have talked about today that are also part of that broader resilience piece. As I said, we are doing more manufacturing in Scotland. That is hugely close to my heart, so that focus is absolutely essential to what we are doing in developing those supply chains to be able to support Scottish businesses and consumers absolutely wherever we can. It is hugely important. The reality, of course, is that businesses will make those decisions to buy where it makes sense, and all we can do is help to put in place measures that would make that decision easier for them. I think that the real risk is interesting. If we look at the PPE situation and the real concern at the start of that, or as we have moved through it, we have managed to switch production to Scotland, but will it all switch back to China as soon as the markets open up again? The reality was that that was not the case, and we have managed to hold that position for a whole load of reasons. We are in a bit of innovation with Alffastoll, and we are moving up to transparent masks, which has opened up new markets and around automation and other factors that we have done to facilitate that. Yes, the focus is there, but it is about making lots and lots of intelligent decisions locally in different supply chains, all adding up and making a difference. The PPE thing is shown that we can do it, we can do it quickly and we can hold on to it, and we can use it as a platform for export if we make the right decisions in those sectors. Thank you very much this morning, Minister, for your time and for the time from your officials, and we will briefly spend the meeting before the next set of witnesses. The committee will now take evidence on the registers of Scotland digital registration, et cetera, regulations 2022. I welcome to the meeting Tom Arthur, who is Minister for Public Finance, Planning and Community Wealth. He is joined by Graham Fisher, Deputy Director of Scottish Government Legal Directorate and very muddy policy lead at registers of Scotland. I invite the minister to make a short opening statement. Thank you very much, convener, and good morning to the committee. I am grateful for the opportunity to appear today to answer questions about that instrument, which relates to land registration. As a committee, we will appreciate very well the keeper of the register of Scotland as a vital role in the Scottish economy by safeguarding property rights through the registration of documents in the land register and the register of say rounds. In response to the necessary closure of register of Scotland's offices due to the Covid pandemic, the emergency coronavirus acts provided a basis for applications to be submitted to ROS digitally, ensuring that the property market could continue to operate during the period of on-going public health restrictions. This method of submission has proven enormously popular with strong stakeholder support for the tension of this method of working. The Coronavirus Recovery and Reform Bill, which was introduced yesterday and will be published today, will therefore look to provide a continuing basis for applications to be submitted to ROS digitally. Regulations complement the bill by making digital submissions the default method of submission to ROS, subject to exceptions, and, in addition, open up the register of deeds in the books of council and session to electronic documents for the first time. The regulations also make technical amendments to the requirements of writing Scotland Act 1995. Clarify and make additional provision about issues that have come to light through the increased use of electronic documents and signatures over the last two years. These regulations give effect to proposals set out in the digital submission consultation registers of Scotland held on our behalf to set out plans on how digital submission could be placed on a permanent statutory fitting for several of the keeper's registers and how that represents a positive step on the road to fully digital registration. The reaction to that consultation was overwhelmingly positive, with customers and stakeholders showing strong support for the proposals. There is a clear expectation within the convening profession that digital submission should become the standard method of submitting applications to ROS. As the convener will be aware, I am joined today by Harry Murray, a Murray from Register Scotland and Graham Fisher from the Scottish Government legal directorate. I would be happy along with my officials to answer any questions that the committee may have. I was wondering why the regulations have been drafted in a way that they only come into force in respect of the presumption if new primary legislation successfully replaces the emergency acts. Harry Murray, you might like to explain why it has been brought forward in that order and what the reason for that is. Will the minister be satisfied with Harry Murray? I am very happy to respond to your question, convener. The bill and the interaction with the secondary is ultimately a matter for parliament, but specifically on the technicalities of how they interact and on that specific point, I think that Mr Fisher from the SGLD is in a better position to respond to. Why it only comes into force if the new primary legislation successfully replaces it? Is it expected that it will replace it? I was also wondering why you said if it replaces it. I am definitely happy to reply, convener. Obviously, it is for parliament to consider the bill provisions, and I appreciate those that have only been introduced yesterday, as the minister said, and published today. However, effectively, what the Covid recovery and reform provisions will do is replace the temporary provisions that were in place to allow traditional paper deeds, which have been signed to be registered electronically, and copies of those deeds will be registered electronically at the register, and it will replace the temporary provisions in pretty much identical terms to the existing provisions in the temporary Coronavirus Scotland Act 2020 provisions, which allow for digital submission. The changes that are being made in regulations 2 and 3 of those regulations come in at the being tended to be in effect at the same time as the permanent provisions introduced by the bill would be appropriate to make the procedural changes that those regulations make alongside the change in the bill that has come forward. They have effect at the same time, which makes sense in having both sets of measures in place at the same time. That is the only reason for the fact that the change is being made alongside the bill, so that it can come into effect at the same time, which is the neatest approach for having the default provision that is made in those regulations. As the minister has mentioned, those provisions have been supported by the convening profession and to have that all come into force at the same time. I hope that answers the question, but I will be happy to answer if that does not make sense. In session 24 of the new bill, if members are interested, the provision that simply replaces the temporary provision in the virus sites could be available. I will bring in Michelle Thomson to follow by Alexander Burnett. I am personally very happy to see the progress and it is one of the good aspects of Covid that has accelerated something that was intended anyway. It is a very generic question on how confident it is that the organisational capacity and capability from an IT perspective is in place. You may have already tested that with safety and security. Obviously, those are extremely important documents that go back a long way. Hacking is a concern for any organisation, so it is fairly general. Can I thank Michelle Thomson for that question? I also thank her support for those measures and recognise that it is an opportunity to take another step forward to a fully digital service. I will ask Harry Murray to come in a moment, but the observation that I will make is that it is actually putting on a permanent footing what has been in place for the last couple of years with the digital submission service. As you will be aware from the consultation response, the consultation was carried out from December 2020 to February of last year. There has been overwhelming stakeholder support. I encourage members to have an interest in the applications of digital technology to public services to read the responses to the consultation, which are really encouraging and heartening just how overwhelming the support has been. A whole range of particular issues from efficiency, ease of use and huge savings as well in postal costs and, indeed, in paper, which is something that is giving our environmental commitments. I am sure that we would all welcome further. However, with regard to seeking assurances about the capacity to deliver going forward, I will ask if your permission, convener, is to expand on the points that I have made. Yes, please go ahead, Mr Murray. I think that the key point to make is the development and the implementation costs and the work to provide for those regulations. That has already been done. That work was carried out at the outset of the pandemic to make use of the provisions that were introduced in the temporary legislation on the point of security and fraud. The important point to make is the digital submission service. It is only open to existing registers of Scotland e-service account holders, the majority of whom are solicitors, and those users are applicants. They are under a status rate duty of care under the Underpinning Land Registration Act 2012. Solicitors are also additionally under their own professional and regulatory standards. In the two years that we have been offering these services, no fraud has been attributable to the digital submission service, so we are extremely confident, as are users, that this does not expose any risk and that there are any issues. As I said, we are effectively—this is the business as usual—a operating model now, so we are not, in essence, introducing anything new. Thank you very much, convener. I know my registered interests around using the land registry and certainly welcome the progress in digitisation and electronic formats being developed. I want to expand a bit on people who are still going to need or are still only capable of submitting written or paperwork to the register. We have a huge issue, particularly in rural areas, with digital divide, people's connections and the like. I want to firstly expand on—we can't guarantee that people will explain to people how people can still submit non-electronically. For those who are submitting non-electronically, can you explain how this will be recorded and reported to make sure that there is no discrimination in the quality of service or speed of service between those doing it digitally and those doing it non-digitally? Thank you. I thank Mr Burnett for his question, and it is an important one. As you will be aware, while this moves to a digital buy default, there are exceptions within the regulations. For example, where the Register of Scotland IT system is down for a period of more than 40 hours, paper applications would be possible. Similarly, particularly in relation to the important point that Mr Burnett raised, for those individuals who do not have access to a computer or internet connection, the option of paper submission will again still be available, and there is also a discretionary power for the convener to allow for paper submissions in exceptional circumstances. However, I would be happy if you could perhaps ring in Harry Leung who could perhaps expand on some of those points. I am building on what the minister said. The digital submission service, as I explained previously, is limited to existing professional users, primarily members of the legal and convening community. However, we have already existed, and we will continue to be provided those exceptions, which apply the key one being a citizen who deals with their own convening activity. They would simply be able to submit a traditional paper-based application in the way that they previously would have the way that the land registration provisions work. There is no preference afforded to a digital application. The date of registration will be the date of registration, so there is no real change there. The other point is that there was a query around wars and island communities. The digital provisions lend themselves really well to that. Effectively, what we have is a system that introduces a level playing field so that remote or island communities are no longer disproportionately impacted by the vagaries of postal or courier or ferry services. We feel that a level playing field for all manner of people interacting with our services is certainly a level playing field for all manner of people interacting with our services. Can I come back to my second part of my question and press you for what analysis we will be able to see in the reporting of the volume electronically and by written submissions? We appreciate that you are saying that there will be no discrimination in terms of dates, but will we be able to see volumes? The keeper frequently provides statistical analysis from all the full range of work that he provides. Certainly, if the committee were interested in having periodic feedback on that, I cannot see any difficulties there. It is something that the keeper could potentially provide as part of her quarterly updates to the committee. I would not see any difficulties in being able to provide data that will confirm that there is no disadvantage to the types of submissions. Thank you. I hope that the keeper will be noting the conversation. I have a couple of questions. One of them has really been covered by the last bit there from Alex. I am delighted, as Harry Murray says, if there is any disadvantage that island communities face that has been removed as an islander myself. I was just going to ask the minister very quickly. There were 223 respondents, 97 per cent approval rating for this, which is something that politicians can only dream of. Obviously, there were some concerns raised. Could you outline any of the issues that might have been raised around those changes? I agree entirely that it was overwhelming to nearly none of his support. The small proportion of respondents had less than 10 per cent who raised questions. It was primarily about a digital by-default approach and any of the potential consequences that could arise from that if people were excluded. However, the previous line of question that I think goes to show how that issue has been addressed through the guard that was safeguarded and built in. There were also some very limited number of concerns that were raised around security of personal data. However, as was touched on earlier, that has been addressed in the sense that there was no new personal data being collected through this process. As we have already seen over the past two years, this is a robust and resilient service, which has served as well throughout the pandemic, as well as providing a more efficient service going forward. We will provide this with a more resilient service going forward to any other, hopefully not any other unforeseen events that require the kind of interventions that we have been living with over the past two years. I do not know if there is anything perhaps that Harry Murray would like to add from my AroE's perspective. Exactly, as the minister said, I have never been involved in any form of public consultation that has had such striking support. We were having to dig to find anything. It is slightly anecdotal, but I think that the responses that we had, the sole respondent who objected to the policing of the digital submissions provisions on our permanent footing, the rest of the responses would tend to suggest that they would answer that question in error. The other point that is worth calling out is that the very small number of people who had could be classed as negative responses. There was nothing in the way of any positive contribution or any specific comments as to why they were not. It was really difficult to tackle or tease anything out of that. Obviously, managing of personal data and maintaining public records is the work of the keeper. It is something that she has enormous experience in. It is something that we are very confident that we have robust processes in place consistently, doing impact assessments and reviewing our processes and making sure that we maintain our records to the highest possible standard. We are extremely confident that we do not expose anyone to any risks. If there are no further questions from members, we will now move to agenda item 4, which is a formal debate on the motion. I remind the committee that only members and the minister may take part in the formal debate. I invite the minister to speak if there is anything further that he would like to say and to move the motion. As any member wishes to speak in the debate on the motion, please type R in the chat box. I think that members were content with the question and answer session. I will now put the question on the motion. The question is that motion S6M-02599 be approved. Are we all agreed? Yes, I think that everybody is happy with that, so thank you, we are agreed. The motion is therefore approved. I invite the committee to agree that the clerk and I will produce a short factual report of the committee's decisions and arrange for it to have it published. I thank the minister and his officials for joining us today. We will now move into private session for the remaining items on the agenda. Apologies, no, we do not. Sorry, that was my haste. We have another SSI. We have, when I move to agenda item 5, which is consideration of a further SSI. It is invited to note the consumer Scotland designated regulators regulations 2021. The purpose of this instrument set out the authorities as per section 96 of the Consumer Scotland Act 2020, where designated as regulators from whom consumer Scotland can require information related to its functions. I invite members to note the instrument. That concludes the public part of this morning's meeting. I suspend the meeting and move to private session.