Good morning and welcome to the 16th meeting in 2019 of the Finance and Constitution Committee. For this meeting, George Adam is substituting for Angela Constance. The first item on our agenda today is our final evidence session on our inquiry into EU structural funds in Scotland. I welcome to this meeting Ivan McKee, who is the Minister for Trade Investment Innovation. Hillary Pierce, who is the Deputy Director for European structural funds in the state aid division, and Susan Tambourini, who is the team leader of the smart growth European structural funds. I invite the minister to make a short opening statement. I thank you for the invitation to contribute to your inquiry into the funding of EU structural fund priorities in Scotland post Brexit. I know that the committee is keenly aware of how important European structural funds are to Scotland's economy and society, particularly in rural settings and smaller communities, where attracting private investment can be difficult. It is difficult to think of a sector or region in Scotland that has not benefited from those funds since we joined the EU in 1973. That is why it is deeply regrettable that Scotland is set to lose out on this much-needed funding as a result of the UK's exit from the EU. Regarding the current programme, the EU's aims of smart, sustainable and inclusive growth towards the European 2020 targets and the Scottish Government's ambitions of sustainable and inclusive growth are set in the national performance framework are neatly aligned. We are using the European social fund to develop the skills of our workforce, alleviate poverty and increase social inclusion. The European regional development fund is supporting SMEs and developing energy-efficient renewable technologies to help Scotland transition towards a low-carbon economy. The future of the committee is aware that the UK Government promised to publish its consultation on the shared prosperity fund by the end of last year, and we are still waiting for that. The Scottish Government and our dialogue with the UK Government on the shared prosperity fund have consistently reiterated five key principles. Firstly, Scotland should not lose out financially compared to the current level of funding that it receives from the EU. Secondly, the devolution settlement must be respected. There must be no attempt by the UK Government to take back powers that the Scottish Government has rightfully executed to date. Thirdly, the Scottish Government's role in the development of shared prosperity fund must be as equal partners. Fourthly, the current level of flexibility of allocational funds should not be reduced. Finally, the replacement scheme should be operational and time to be implemented in early 2021 so that our stakeholders do not suffer any difficulties due to funding gaps. The committee members will be aware that we are running out of time to provide certainty about future funding to our stakeholders, and it is difficult to plan when there is no information coming from the UK Government, especially on simple questions such as the value of the shared prosperity fund. We cannot wait on the UK Government any longer, and that is why I have agreed with the Cabinet Secretary for Finance, Economy and Fair Work on a proposal for our consultation exercise on future funding. I intend to establish a steering group that is made up of a range of stakeholders, including lead partners, delivered organisations and end-users and beneficiaries of European structural funds. The steering group will ask key questions on future funding for Scotland, identifying possible priorities, administration practices, methods of allocation and duration of funding. The group will also collate existing research, including the evidence obtained by the committee, to inform the structure of the future programme to the Scottish Government. This work will generate interest not just across our huge range of stakeholders but across ministerial portfolios. I will be happy to provide an update to the committee as that exercise progresses. Thank you very much, and I am happy to answer any questions that you may have. I thank you very much, minister, for telling us about the steering group. I think that you are right that some of the evidence that we have certainly taken around the country will be very useful to your steering group in terms of some of the very useful contributions that we have had from many organisations. In Scotland, the structural funds are currently worth £872 million across the seven-year EU period. Currently, the Scottish Government is the sole managing authority and the largest delivery agent. How does it see its role in managing any future funding post Brexit? How is the Scottish Government preparing for the transition from the EU structural funds approach to try to make any new funding arrangements? In terms of the role of the Scottish Government as the managing authority, we would see that continue. That is the most effective and sensible way to do it, which allows us to co-ordinate with strategic priorities of the Scottish Government and identify where the priorities are in Scotland for deployment of the funds. In terms of the transition, it is difficult to—if you take a step back and look at the wider context in terms of Brexit—we are not even sure that we are leaving the EU, never mind under what terms. We are not sure whether there is going to be an implementation period or not. It is a huge uncertainty even at that macro level. We are having to watch all the bases of the EU. We are continuing to engage with the European Commission to ensure that we are up to speed in the eventuality. We are staying in the European Union and continuing with those programmes. We are pushing the UK Government hard to understand some more information about the shared prosperity fund, and it is unfortunate that very little has been forthcoming there. In terms of the transition, it is difficult to do that to any great level of detail. As I said, the time has come now where we cannot wait any longer, and the purpose of the consultation will be to understand what the future programme should look like in Scotland from our perspective and the perspective of users and beneficiaries in Scotland, and what that transition might look like. I am interested in how funding would be allocated, because we are seeing that there might be a UK pot and then some money will come to the Scottish Government and then it will be further devolved to local authority, for instance. However, how would allocation be set up? Would it be needs-based, population-based, rural versus urban? How would that work? Those are issues that the consultation will certainly look at. That is a core part of what it will do. In terms of the overall picture, our red lines are that Scotland should not receive any less money now than it is receiving under the current programmes, or that it would otherwise have received, for example, under any future EU programmes. We are very clear on that in terms of the money that is coming to Scotland. Within Scotland, the mechanisms for distribution of that money at the moment are through the lead partner structure, down to individual projects, and applications come forward from projects through lead partners to enable us to disperse that money. The consultation exercise will look at the mechanics of how we do that, and it will also look at the most effective way to deliver benefits across Scotland. Clearly, at the moment, Highlands and Islands is a separate area as a transition area. In terms of the EU process at the moment, it operates under slightly different rules with regard to much funding percentages and so on and so forth. However, all of that will be considered as part of the consultation. Is there a risk that if there is money that retains within the UK Government, because we have already seen issues with convergence uplift money that was due to Scottish farmers of £160 million, that was not delivered? Is there a risk that the UK Government controls everything for funding in the future? Of course, there is always a risk of that. The other point to bear in mind is that the shared prosperity fund in terms of its size and scale has been considered as part of the comprehensive spending review at the UK Government level later this year. It is one of the reasons for the delay, but it also talks to that being wrapped up in other spending issues that will be considered at the UK Government level. That context is not as clear as we would like. As you say, the risk or position is clear. I think that reflecting back on the evidence that you have heard over the previous two sessions from witnesses, you have had, by far the vast majority, been fairly clear that those decisions should be made in Scotland. That is where the money should come and that is where we should decide what the priorities are. Someone might want to come back to this area later, but you mentioned quite a number of times the relationship with the UK Government. I think that we should probably get into that area now, Patrick. Thank you very much. Good morning. You have said a few things, first of all, that there is still very little information coming to you about the shared prosperity fund. I was initially going to say, has that moved on? Has the Scottish Government been given any more insight, but the answer to that seems to be no? Not unless it has happened in the last 10 minutes. You have also said that there will be the consultation. Did you say expert group or working group? Steering group. What is the relationship between the two? Is the steering group then going to receive the outcome of the consultation and decide what to do? There are two consultations. There is a UK Government consultation that was promised at the end of last year and has not yet happened. We are still waiting for that. In terms of the Scottish Government's consultation, the process will be that we will set up in the next few weeks the steering group, which, as I said, will have input from all groups that are engaged in the process at the moment to get the best breadth of expertise. We have some initial ideas around the areas that we might want to consider, which are the fairly obvious ones. We have talked about the regionality, the needs-based, the length of the funding period, the balance between flexibility and control of public funds, all those kind of areas that we have talked about. The steering group will look at those questions and formulate a consultation exercise that will then be put to public consultation in the autumn. That feedback will come back to the steering group. We will have a look at that, and the Scottish Government will engage to see how we want to take that forward as our position in terms of what we think the shared prosperity fund should look like in Scotland, and we would hope to have that wrapped up in the early part of next year to allow us time to move forward into the future funding arrangements. The timeline is that the steering group is set up and it develops the consultation. The consultation exercise is carried out and ministers will decide and propose to Parliament or simply announce what their prepared way forward is. I would expect that that would be through a process of a statement or an announcement of some kind, but I would be very welcome to come back to the committee to talk through that as and when we have clarity on where we are going with that. As I said, I am very happy to keep the committee up to date on how we progress through that process. I get the feeling that from within the people that we have spoken to in Scotland, it is probably not going to be hugely difficult and controversial to arrive at some kind of sense of where we want to get to in terms of how those funds operate. The difficulty will be trying to achieve that outcome with the UK Government. Has the Scottish Government spoken to the UK Government yet about its intention to consult and seeking any kind of engagement with that? We continue to talk to them. I mean, just running back, ministerial colleague Ben MacPherson spoke about that on 13 June. The Joint Ministerial Committee impressed the UK Government for a solution earlier back in March. The Cabinet Secretary for Health and Sport did it at Mackay, pressed for details on alert to Philip Harmond, etc. There is a whole series of interactions at ministerial level and many more at official level where we are seeking clarification from the UK Government on what that process looks like. To some extent, I think that it is important that we do that work because there are a number of areas where it is important to understand the balance that we want to strike between flexibility and strategic intent, etc. I think that it is important that we do that on our own within Scotland, but you are absolutely right that the engagement process with the UK Government has not proved to be as fast-moving as we would like. I am sure that we all appreciate that. That could be challenging. It is going to be difficult to get policy changes immediately from the UK Government, given where things stand. However, over the timescale that you are indicating, a consultation in August, it should be reasonable by that point to get some kind of indication of what the incoming administration, the newly formed cabinet, is going to have as its policy intention in this area. When do you think that Scotland needs that clarity? We needed it once ago that the clock is ticking. Clearly, there is the briefing paper that indicates that it wants it to be based on the UK industrial strategy and its focus on productivity as a mechanism to drive rebalancing of areas that need to benefit from inclusive growth. That is the broad-outline statement, but I think that the real challenge is on the funding magnitude. As I said, that is now tied up as we understand it with the comprehensive spending review, but the mechanics, because you have spoken through and heard from witnesses about the structure that we adopted at the moment, compared to the structures that we adopted in previous programmes, the audit regime and the level of paperwork that is required. There are a whole series of issues that are built on the EU regulations. Where the UK Government is going in terms of the shared prosperity fund, it is important how much scope of work will we have to define all of that ourselves, how much will it be constrained in the same way as the commission has done, or will it be a different mechanism that they want to use? All of that informs the mechanics and the focus and the structure that we are able to design to execute in Scotland. Immediately following up from one of the questions that Patrick Harvie asked, if I have understood this correctly and correct me if I haven't, there will be a steering group over the course of the summer consultation in the autumn, paving the way for Scottish ministers to design and deliver and administer a Scottish prosperity fund that will be announced to Parliament by ministerial statement? You have to remember this in the context of the shared prosperity fund, so it is us laying out the Government's position on what our view is on how the shared prosperity fund should operate. It is the UK Government's fund that is designing the shared prosperity fund and putting the funding into that. Clearly, our red lines around that funding should come to Scotland and we should then be able to operate that, but we are having to work in that context. We had hoped that there would be some framework to allow us to work within that, but there is nothing, so we would effectively start with a blank piece of paper and say that if we had free reign to design that, that is what we would design something that would look like that. I am curious as to how that fits in the framework of the Scotland Act between devolved competence and reserved competence. You are seeming to say that this is going to be a question for the UK to design, and it will be a question for the Scottish ministers to deliver on the ground in Scotland. Is that right? No, what I am saying is that the UK Government, as they exit the European Union, the funding that previously went from the UK Government to the European Union to their budget to fund these programmes, had typically flown back to Scotland to allow us to run programmes here. That funding will be with the UK Government, because they have not sent it to Brussels. They have said that they will set up a shared prosperity fund. Pretty much that is all we know about it, so we need to understand the framework within how that is going to operate or their proposal for that. Clearly, our red lines are laid out, which are that the funding should determine in terms of the funding to Scotland. Those decisions should be made in Scotland because of the impact that has on the devolved area and the way that it has been operating up to now. Do you foresee that this is going to require primary legislation in this Parliament? At the moment, the authority under which the money is dispersed in Scotland is authority that comes from EU law. You have just put your hand on a very thick pile of papers and said EU regulations. I do not know what is in that file, but it might very well be that it is a fragment of EU regulations in there. Once the United Kingdom leaves the European Union, there is no guarantee that those EU regulations will continue to have any legal effect, depending on the terms of the withdrawal agreement, if there is a withdrawal agreement. Do you foresee that there is a possibility or a likelihood that there might be a requirement for legislation for Scottish ministers to have the legal authority to act in this area? To be honest, it is not something that we considered because expectation would be that it is a funding stream and that the funds would flow, as I said, to the Scottish Government, which would then design a programme to execute on that, but I will go and look further into that and consider whether there are reasons why that might need to be the case. I think that it would be helpful because we know that there are disagreements between the Scottish Government and the UK Government about where certain legal powers will fall after Brexit, in particular, that does not appear to be yet any agreement about whether state aides regulations will be reserved or devolved. In terms of the legal authority that underpins the interventions that the Government can make to support prosperity in the form of EU structural funds or in the form of a UK or Scottish prosperity fund, having a clearer sense than I currently do of the legal framework of that and how the Scottish Government foresee the legal framework of that rolling out would be helpful. I will certainly have a look and consider and reflect on that. Clearly there are many funding streams that operate without needing primary legislation, but we will reflect on the question. There is a question about reporting requirements. Before we started taking evidence, there was probably a bit of a belief that a lot of the bureaucracy around reporting requirements originated in Brussels, but as we got into this, the reality was slightly different. A lot of the bureaucracy seems to be homegrown and created by the Scottish Government. I had an organisation in the constituency of South West Aberdeenshire Citizens Advice Bureau, who came to see me last week, and there is still a waiting clarification from the Government of what the new reporting requirements will be for in-for monies that they paid out in 2017. It seems to be very much a case of moving the goalposts after the game is finished and everyone has gone home. My question is, are you aware of those issues and what have you learnt from them in looking at how you would construct a new system? I would not accept that the Scottish Government invents bureaucracy for no good reason. The Scottish Government operates within the regime that we have here from the European Union, which determines what we have to deliver on. That regime and the execution of it is tightly audited at all levels, and we have to comply with that. I would not accept the premise of the question that the Scottish Government is creating or inventing bureaucracy that is unnecessary or putting in place barriers that do not need to be there. I know that there are specific issues around citizens' invasions that you are talking about. I know that there are issues in terms of the funding relationship and some challenges in terms of the communication that they are having with Aberdeenshire Council, but as a lead delivery partner for those programmes and those projects, it is to council that is having those conversations with CAB, not the Government. It is important to understand in that context that it is the lead delivery partner to move that forward. In that specific case, it is important to understand that in terms of the generality around the bureaucracy that is striking the balance between making sure that we spend public money correctly, as everyone would wish, but also allowing as much flexibility as possible for organisations to execute on what they are delivering, but all of that has to sit within the context of the European regulations that are there. If there are specifics that they want to look at, we can go into chapter and reverse on the regulations and the Scottish Government's management system and understand exactly what the problem is, but, as I said, that is the context that we are operating on. I do not know if there is anything that you want to add on the specifics on that. Just perhaps for some context, it is important to be clear that the managing authority, which is my team within the Scottish Government, manages the funds through the lead partners, so there are 45 lead partners across Scotland, including all 32 councils. They, in turn, deliver the projects through the delivery agents, such as citizens and vice bureaux, to do very valuable work. It is for us in the managing authority to ensure that the lead partners comply with the monitoring, reporting, compliance and audit regime that all member states have to do for the European Commission. That is then audited by the audit authority on behalf of the European Commission and also directly by the European Commission themselves. Thank you. I think on the first bit where you say that it is all being directed by the EU. I think that we might want to go back and look at some of the evidence that we have heard, because a lot of the delivery teams that we spoke to, when they met with delivery teams in other European countries, were surprised at the different levels of bureaucracy that were being imposed on them. However, they did seem to be an element of choice up to the Scottish Government compared to other Governments and other countries that were imposing reporting requirements on delivery teams. You might just want to go away and look. I think that you have to remember that, across different countries and different programmes, there will be different structures designed to suit their requirements, so there will be differences in the way that things are done. That is the nature of the different types of projects and programmes that will be executed there. However, if there are any individual specifics and they have got examples from other countries where things are specifics are done differently, then they believe that there is something that is unnecessarily cumbersome in terms of the way that the Scottish Government is managing that, then we will be very happy to look at the specifics. James, you are a supplementary on this area, on the whole issue around the allocation of funding and processes. The issue that has come up recently is that £22 million of funds have been frozen, and it seems to be a suggestion that it was due to issues around audit process. Can you give some background on that? Yes, sure. The current situation is that there is a pre-suspension in place on the ESF funds. I do not recognise the £22 million. The £9.6 million is the amount of money that is in the process that has been claimed by a lead partner of the Scottish Government, but we are unable to claim that back currently from the EU. There are a number of issues in that. It talks to the complexity of the regime that we are working under. There are four main issues around that to do with the flat rate costing and three other to do with procurement issues. One of those is to do with a public versus private issue and some confusion about how those were defined. There are issues around the grant award versus the public procurement process and how those were defined and interpreted. There is also an issue around the match funding in the level at which that operates within the structure. There are a number of complex technical issues in that where the EU looked to that from an audit perspective and had some questions. As a consequence of that, the pre-suspension is in place, but we are very confident that that will get cleared in the next few weeks and be able to move on. To be clear, the EU took a view that it had issues with some of the processes that the Scottish Government was working through, and that was the reason for the money being suspended. To be clear, the lead partners are continuing to pay delivery agents, so it is very important to understand that. No delivery agent should not be paid as a consequence of the pre-suspension. You have given some general commentary around that, but it is a matter of concern that money has been frozen. What specific action has the Scottish Government taken to address it to ensure that those funds get released? The solution to all those four issues that were raised by the audit is a move to a unit cost system, and that is something that has been agreed in principle by the EU. At the moment, we are working through the details of how that would exactly operate in the Scottish context. I will put it in clarity on that. The European Union made a change recently, which allowed us to move from a system whereby we had to have a specific national unit cost structure to something where we had an off-the-shelf unit cost system that was available across the whole of the European Union. That change has allowed us to move much easily into that unit cost system, so as we move towards that, that allows us to clear all four of those blockages around the process issues that I have identified. The conversations with the European Union are moving forward on that, and officials are engaged almost on a weekly basis. As I say, we are expecting that to be cleared in the next, certainly before November, but it should be—we will get everything resolved prior to that. We will all be resolved in that timeframe. However, as I said, the important point to recognise is that that is to do with the flow of funds from the EU to the Scottish Government to the lead partners. The flow from the lead partners to the delivery agents on the ground has continued and has not been affected by this pre-suspension. How does a unit cost system work? From the point of view of an organisation receiving funding, it will receive a block of money. How does a unit cost system apply? That works on the output. For example, you are training a number of individuals. It will be based on so much per individual that you have trained, rather than on a system at the moment, which has typically been round about a flat cost, so it has been either the actual cost or the cost for the number of people that you are employing directly and then a percentage added on top of that for your indirect costs. It is a change in the structure, but it resolves a number of the audit issues because there was misinterpretation round about how that flat cost system operated in the current context. The unit cost system is a solution to that because the EU has changed the process and the rules round about that. Recently, it has allowed us to move towards that system and it will clear the audit issues, but that has been agreed in principle with the European Union and we are just working through the mechanics of how to roll that out. On the issue of ESF money being suspended, I have asked written questions for a list of projects in the west of Scotland that are affected by the suspension. I do not expect you to list them today, but I can expect an answer. On the delivery bodies on the ground, the answer is none, because the flow of funds, as I said, is already from the lead partners to the local organisations that are continuing. What are your things and outcomes? Thank you very much, minister. You were talking earlier about having to get the process under way in the absence of any guidance on the SPF and what is potentially in it. I think that you are quite right to do that. You were talking as well about the European Union 2020 targets and how you neatly align with the Scottish Government targets. What happens if we proceed down that route to develop the approach that we would prefer to take? At some stage, we get presented with an entirely different approach from the UK Government. It sounds as though that could be a pretty major moving of the goalposts at that stage. What is your view about that and how we would potentially try to resolve those differences? It is unfortunate. I reiterate the point again. The reason why we are moving forward at this point with the consultation and the steering group is because we had been waiting, asking and encouraging the UK Government to give us more detail so that we knew the context in which we would be working. However, in a position where, as I said, we are starting effectively with a blank piece of paper and having to design something from the ground up, we are absolutely right at any point through that process over the next three months. The UK Government could come along and say, this is what we think it should look like. Now, they have said that they are going to go through a consultation process, so I suspect that that will run perhaps in parallel with their process. Who knows, we will see how that looks like, but you are right at some point that they could come along and say, this is how we see the structure of the shared prosperity fund working at a UK level. Clearly, we have laid out our red lines in that context in my discussion to be hard, but even just looking at it, even if we have accepted all those red lines in terms of the funding value and how the level of control etc, they could come along with their own book equivalent to the EU book, which we would then be in a position of having to figure out how we have worked, taking what we think it should look like in the context of the rulebook that they would be wanting to implement. It could be messy at a number of levels, from the very detailed level up to the more overarching considerations. Are you getting any indication, though, that the UK Government is willing to continue to embrace the principles of cohesion and social inclusion that we are familiar with in a lot of those programmes? Are you getting any sense that they are divergent from those principles to something else? As I said, what we do know in terms of the statements that they have made is that it will be based on the UK industrial strategy and will have a focus on productivity as a mechanism to drive more or to support or help develop least developed communities. That is the overarching focus on it, but, clearly, as you get into the detail of that, how well does that align with the Scottish Government's focus on inclusive growth and the economic strategy that we have and the focus that we have? For example, around our focus on climate change and low carbon, which has been a part of what we have driven in the existing current programme, a very large part of what we might be doing going forward and how we would deal with that with what the UK Government would be coming from. There are potential points of discussion there as we move forward. Could you just finally gaze into your crystal ball and maybe give some idea when you might know? I would not like to hear to comment if we know anybody who is able to do so, but we do know some. We might encourage them to go along to one of the Conservative leadership hustings and ask the candidates what their view on the shared prosperity fund and how they see it moving forward is going to be, because the reality is that we are kind of stuck until a lot of those larger issues kind of shake down when we understand where we are in a bigger context. George, I missed out you in the round of questions. Do you still have a question on allocation of fund? Is it ready yet answered? It's more or less been answered. Can I ask a question? Some of the groups that we have spoken to who are very passionate about the way that they delivered the European funding was the leader groups. As far as your steering group is concerned, will leader be represented or representatives of leader are beyond that steering group? Our evidence taken is involved a fair bit of evidence on the leader as well. I just have to be clear on that. The leader group follows outside my portfolio. It's treated in that, the Rural portfolio. That is a point of discussion that we will have with ministerial colleagues about whether the scope of the consultation should encompass that, because clearly I'm only empowered to set up the moving forward with the consultation, ESF, ERDF funds. There is a discussion to be had with ministerial colleagues, and that will be part of setting up the terms of reference that the steering group will operate under. Clearly, there are two ways to look at that. If leader is in scope and Rural colleagues are comfortable with that approach, then clearly there will be an input there. I also take your point that there could be learnings from the way that leader has operated. There may be added value in a generic sense to the work that we are doing, so that is certainly something that we will consider if there are individuals there who could add value to that consideration. On the steering group itself and the terms of reference, I'm assuming that you will write to us when that's in place so that the committee can at least understand where we've got to in that particular journey. Is there any other questions that any other members want to raise at this stage on this matter? There have been no other questions. I therefore suspend this meeting of the Finance and Constitutional Committee to allow for a change over of witnesses. Thank you very much, minister, and your witnesses. The second item on our agenda today is evidence from the Scottish Government officials on the referendum Scotland bill. I therefore welcome to the committee this morning, Rebecca White, who is the referendum's bill team leader, Perry Curtis, who is the deputy director of elections and FOI. We've got Colin Brown and Graham Fisher, who are both solicitors in the Scottish Government. Before that, I welcome Rebecca White, if you want to make any opening statement. No, we're quite happy not to. At this stage, I can also welcome to the meeting for the first time in public Dr Alasdor Clark from the University of Newcastle, who will be advising the committee on the bill. Given that there has been no opening statement, I think that I have just asked some very simple questions at the beginning. Can you tell us in simple terms why the Scottish Government is proposing this bill? What is the aim and the purpose of the bill? Does similar legislation exist anywhere else in the UK? Perhaps just to help for the record purposes, you could fill in some of those questions for us and for the rest of my fellow members of the committee. I'll start out. What the bill does is propose a legal framework for holding referendums on matters within the competence of the Scottish Parliament. Broadly, it is a technical bill that sets out rules, including the franchise for any referendum, the rules around voting and conducting a poll, for designation and participation in campaigns, rules on spending and donations. The legislation is largely based on existing legislation within the United Kingdom and Scotland, so it draws on the rules set out in the UK prepara, but also the rules that were used in the Scottish independence referendum act. We very much started from the basis of existing legislation reflecting processes that worked well in 2014. The referendum was considered to have been well run and it has been adapted to reflect changes and practice since then. Putting a framework in place for referendums in Scotland was a recommendation of the independent commission on referendums and reflects the fact that electoral law is very dispersed, and that brings it together for a single framework in Scotland. What the bill does is ensure that we have the rules in place for any future referendum in Scotland. At the point of that framework being used, the debate can be about the actual referendum and the merits of that referendum itself rather than the technical detail of the rules. Thank you for that general overview. There are some differences from the 2014 referendum bill. I would like to know why the Scottish Government has proposed that secondary legislation is being used to initiate specific referendums, and in particular in the area of the question that might be asked of the date set, rather than using the primary legislation, especially given that the scrutiny period for primary legislation is obviously in terms of its length and intensity, much greater than it would be for Parliament as far as secondary legislation is concerned. Why have the Government chosen to take that direction? The primary reason that we have proposed in the bill that the powers are to use secondary legislation is around the certainty of the timetabling using secondary legislation and the affirmative procedure. That ensures that we have a predictable timetable from the point that secondary legislation is introduced. It still ensures that Parliament has the opportunity to scrutinise that legislation and to agree or not with the question date and so on that is proposed. I do not understand that answer at all. What is it about the timetabling of secondary legislation that is clearer than the timetabling of primary legislation that requires you to act in that way? The time for considering secondary legislation is set out within the parliamentary procedures, whereas there is a lot more flexibility in how long a bill can take to proceed through those parliamentary procedures. Last standing orders restrict the amount of time that we can spend deliberating on secondary instruments. The Scottish Government thinks that it is appropriate to restrict the amount of time that Parliament can consider referendum questions rather than having that in primary legislation. No, we are not looking at it from the perspective of restricting that time at all. It is very much about the predictability of it to enable a referendum on a certain timescale, but it is not at all about restricting the time for scrutiny of it. What outstanding orders do is to restrict the amount of time that Parliament can consider secondary legislation. Is that not correct? It certainly puts a fixed timetable around that. It restricts the amount of time that we can spend looking at secondary legislation and there is no equivalent restriction with regard to primary legislation. Is that correct? That is my understanding. That is correct. The intention behind section 1 of the bill, which allows Scottish ministers to make regulations providing for a referendum, including, as the convener has said, the date of the referendum and the question. The intention behind that is to restrict the amount of time that Parliament can scrutinise those issues. I would not characterise it that way. That is not the intention for why we have taken that decision. It is not about restricting the scrutiny of our driver. With respect, your answer to the convener's question is not going to be my line of questioning. Your answer to the convener's question was that the reason why the Scottish Government wants to proceed by way of secondary legislation rather than primary legislation, your answer to that question was about predictability and predictability of timetabling. That took me by surprise. I said at the beginning of my questions to you that I did not understand it, but what you are saying is that what you mean by predictability is that, unlike for primary legislation with regard to secondary legislation, this Parliament is restricted in terms of the amount of time it can spend considering the instruments in question. That is certainly not what the intention behind that is. It is, you are right in how I have described it, that there is predictability behind it, but the intention there is absolutely not about restricting scrutiny. Clearly, Parliament has the ability to scrutinise in there and, indeed, to agree or not with whatever is brought forward in that legislation. However, the effect will be that there is a restriction on the amount of parliamentary time available. That is understood. What other countries in the world legislate for referendums in this way? That is to say, what other countries in the world confer on their ministers the power to make regulations setting out referendum questions? As I am sure you know, there is a very wide range of different approaches to administering referendums in different countries. It can be difficult to draw exact parallels between the legal systems and the ways in which referendums are run. In developing the bill, we looked at different jurisdictions that have general legislation covering the administration of referendums, including Denmark, Ireland and Poland. Some of those have general legislation that provides for some types of referendums, not others. For example, in New Zealand, Governments can initiate non-binding referendums. They have citizen-initiated referendums, but binding referendums cannot be used under that framework. We looked at a number of different examples on the issue of what a framework does. I cannot at this moment give you specific descriptions of examples that have processed exactly analogous to the secondary legislation process in the Scottish Parliament. No, I know that you cannot because there is not an example anywhere in the western world of another country that proposes to construct a framework for referendums in this way. This is unprecedented, is not it? As I have said, I cannot give you a specific example on that. Because there is not one, there is not a precedent or an example that you can point to anywhere in Europe or anywhere in the Commonwealth that enables ministers to set the date and question of referendum questions in the way that is provided for in section 1 of the bill. You talked about binding referendums. Is it the intention that referendums that are established under this legislation will be binding? Because the referendum framework intends to provide for any referendum that you might wish to hold within devolved competence, it is silent on the question of whether referendums are binding or not. That is to ensure that there is flexibility for the different circumstances in which you might want to run polls for different decision-making purposes. Does the Scottish Government understand there to be a difference between a referendum and a focus group or an opinion poll? What is that difference? I guess that a way of reframing that question is perhaps what scenarios referendums would be used in. Is that what you are asking? My understanding is that referendums are devices that decide things and decisions by their nature are binding. Is that the Scottish Government's view? I think that for the framework, given that there might be referendums in different circumstances, setting out a process in the legislation that says that this is how things will proceed once the referendum has been conducted, we felt that it was not appropriate to set out a singular process that does that. The idea is that the framework can be used for different polls and therefore requires some flexibility around the circumstances in the packaging. The intention behind the bill is that some referendums that are under the bill might be advisory and non-binding, and other referendums that are under the bill might be binding, but we are not quite sure on whom they would be binding. I don't know if it is worth saying that there is certainly no provision in the framework for making a referendum binding legally, in any way, as with the independence referendum, for example, in 2014 under the 2013 act. That is certainly the legal position. Is the legal position under the bill as introduced? Yes. As with the 2013 act, it is not binding in that sense, but any referendum might have a significant political and moral force behind the decision of the people in that, I suppose, section 1 of the act provides for the referendum to be held throughout Scotland, so it would be a vote of those who live in Scotland. As introduced, the bill does not resolve and does not seek to resolve the uncertainty that exists in the Atty Kingdom at the moment, including in the Atty Kingdom law, about the binding nature of referendum decisions. No, I think that is great, yes. That is the final question for me, community, if I may. I think that it was yesterday, certainly within the last few days, the constitution unit at UCL published a blog on the bill that we are talking about, and I want to read you a quotation from that blog and ask you to reflect on it. This is the quotation. I am aware as the author of No Well Functioning Parliamentary Democracy that gives ministers blanket authority to call a referendum by secondary legislation. The proposal, he is talking about the proposal in section 1 of the bill, the proposal runs counter to the principles for good referendum design advocated by the independent commission on referendums and the Council of Europe. Both emphasise that the decision to hold a referendum is a big one and ought to be subject to exhaustive scrutiny. What is the reaction of the Scottish Government to that? I think that we have set out the reasons why we have proposed a secondary legislation power. Clearly, Parliament will want to consider the provisions that are in this bill and how it might want to take evidence on that and consider it in its scrutiny as we go through the bill process. Do you accept or do you not accept that the proposal in section 1 of this bill runs counter to the principles for good referendum design advocated by the independent commission on referendums and the Council of Europe? I do not particularly want to get drawn into the pros and cons of the policy that has been set out in the bill. That would not be appropriate for me to do so. It is something that you will clearly want to be taking evidence from ministers as the bill is going through the process if you forgive that. It would not be appropriate for me to ask you that, which is why I am very careful not to ask you that. I am asking you whether you accept or do not accept the view published on the UCL's constitution blog that, as a matter of fact, the proposal that is in section 1 of this bill runs counter to established international standards of best practice with regard to referendums as set out by the independent commission on referendums and the Council of Europe. Does the Scottish Government accept that verdict or not accept that verdict? I am not entirely sure that I do accept all of what is set out there. I think that, as I set out at the start, there is still a process for scrutiny and approval of what is in a referendum question timing and so on. We are not trying to circumvent that with the legislation. I think that the purpose of having this debate around whether that is appropriate in this bill and in consideration of the bill gives me a degree of confidence that that is tested as we are going through the process. I have a couple of supplementaries in this area. Patrick? Thank you, convener. Just on the initial questions that Adam Tomkins was exploring there on the question of timing, the regulations would be subject to the affirmative procedure. I wonder if you can tell us whether the Government has given consideration to using the superaffirmative procedure, which would allow more time and flexibility for scrutiny both inside Parliament and beyond of any regulations that were proposed. We have not done it at this stage, but I am sure that the committee will want to consider as it is looking at the legislation. That is not something that the Government has ruled out. It is not in the proposals that have been brought forward in the provisions in this bill, but we recognise that the committee is going to be looking at it as it goes through its deliberation. Tom, you have got a supplementary in this area as well. Thank you, convener, and good morning. I just wanted to clarify about the issue of scrutiny. It is just a very simple question, but just for my own benefit. In section 1, the Scottish ministers must consult the electoral commission before laying a draft. Then in section 3, subsection 2, in relation to consulting the electoral commission, there is a need to lay a report before Parliament. That would have to take place over a pre-scrutiny before it even reached Parliament in the first place. Is that fair to say? That is fair understanding. There is nothing at three places that the Government consults more widely within the legislation as it is drafted, is there? There is nothing in the framework that excludes that possibility. There would be an extensive period of consultation with the electoral commission, potential for further consultation more widely. Then, via the process for secondary legislation as set out in Parliament, there would be a 22-day period for the DPLR committee, which would scrutinise it thoroughly on technical grounds before a further 40-day period for a lead committee to report on it, likely this committee where a motion to annul a negative or to reject affirmative would be possible. Is that correct? Is that an understanding? Correct. I just wanted to clarify around what room the Parliament had for scrutiny. That's fine. Thank you. Thanks very much, Ruth. Just before I ask my question, could you just remind us that the European Union referendum was also advisory? Yes, it was. Thanks very much for that. Could I ask you for your views about overlap with reserved matters? The bill proposes a 28-day period and so on. It also talks about control of financial donations during a referendum. It talks about electoral registration and potential surges of registrations in how systems might cope with that. How we can make sure that the UK Government, which would have a clear interest in a referendum process in Scotland, how that can be respected during the period of period. How we manage issues about concerns about broadcasting and data protection and so on and so forth. Could you just give us a flavour of what your thoughts are about potential overlaps with reserved matters here, please? I'm happy to say that. Do you mind if I take the registration one first? Is that okay? As you say, aspects of the registration system, most notably the websites through which voters register, is reserved to the UK Government. Since the devolution of elections powers in the 2016 Scotland Act, the Scottish Government has been working with the UK Government to ensure that where our policy intersects with reserved matters, there is good co-operation and close joint working to ensure that that system, while controlled by the UK Government, is able to flex to allow for Scottish policy decisions. The best thing to point to is that there is a specialised user journey for 16 and 17-year-olds through that website, which was put in place after the reduction of voting age acts. On registration matters, it would be a matter of negotiation and co-operative working with the UK Government. On the issue of perder, the framework includes provisions that are analogous to some of those in preparer that limit the activities that public bodies can undertake in the 28 days before a poll. That, within the competence of this bill, can only legally bind Scottish public authorities. If we were organising a poll where there was a UK dimension to it, then any restriction on UK public bodies would be done by negotiation with the UK Government, as happened in the Edinburgh agreement and was respected by different public bodies. In relation to some of the aspects around donations and permitted participants being able to check registers, they will have access to publicly available versions of the register for UK registers. Any further access would require agreement of the UK Government. I suppose that there was some pressing conflict during the process. How quickly can one party influence or stop a process that it is unhappy with, instead of waiting until it is too late to post the process to complain about it? How quickly can the system respond to concerns that are perhaps expressed by our site? Is that in relation to breaches? I imagine that it was a broadcasting assure, or we discovered that there was a huge financial denation coming from somewhere, and there was an objection raised to that by any party. How quickly can the system respond to deal with that during the process, do you think? During the period in which the Electoral Commission is acting as regulator, it carried on monitoring of campaign activity during that period. For instance, taking your donation, if it was felt that there was a suspicious donation, that information could be passed to the Electoral Commission and they can take action as they consider appropriate. The bill also includes provision for something called a stop notice, which is effectively a notice to a campaign group during the campaign period, activity that they are undertaking is going to be in breach of the campaign rules and that they should not do it. There is provision for ensuring that any issues that are identified during a campaign period are dealt with. The Electoral Commission is very familiar with dealing with reports of any sort of issues to do with campaign regulation from its work on other elections and referendums. Did you touch on broadcasting? The broadcasting framework legislatively would remain within the control of the UK Government anyway. In the detail, we are likely to be subject to the broadcasting regulators, as was provided for in the section 30 order in relation to the independence referendum at the time. Similar provision could be made by the Scotland act order, whether under section 104 of the Scotland act, or otherwise to provide for broadcasting regulation if the UK Government agreed in consequence of the framework bill. We have to obtain an agreement rather than... I have a question about section 3 on the interpretation of referendum questions. Subsection 5 says that the Electoral Commission has to publish a report on the wording and the intelligibility of any question. Subsection 7 then goes on to say that the whole section 3 does not apply if the Electoral Commission has previously published a report on the question or the suggested wording of question of statement. That potentially could be interpreted as obviously the Electoral Commission ahead of the 2014 independence referendum published a report on the question that was being considered. Subsection 7 could be interpreted that that report stands and that, in terms of any new independence referendum, the Electoral Commission does not have a role in terms of looking at the question or the wording of any statement. I just wondered what your interpretation of that was. What was the policy intent of that? The policy intention there is where questions have already been tested, have been used, are familiar to voters and understandable to voters, is not to put a requirement in there to test again. Partly the process of question testing is quite an expensive one in probably an excess of £100,000 to do that. However, our main policy intention in there is not to do anything that gets in the way of voter intelligibility around that question. In terms of the example that I gave about another independence referendum and the Electoral Commission's role around the 2014 referendum, would the Electoral Commission be asked again to look at the question on any potential statement? The framework would not require ministers to get the commission to test the question again if they were seeking to use the same question again. That is quite clear, but I think that there will be an issue about that. It is a political issue. I am interested in the length of time for referendums, because we have seen that there has been various 10 weeks, 16 weeks, 14 and a half weeks, depending on what referendums have been presented. Obviously, we need to make sure that spending and donations are transparent and traceable and clear. Is the intention to follow what the Electoral Commission recommended, which would be a 16-week, or would there be flexibility in that? As the framework is designed to accommodate a range of different possible referendums, the referendum period is not specified in the legislation. That is something that would be set by the regulations that established a particular poll. I have a week's up also about the binding versus advisory. If we were asking a question that was based on a reserved matter, for instance, there seems to be a difference in where Scotland might want to use a public health policy for drugs and alcohol, and the Scottish Affairs Committee is looking into that right now. Currently, drug policy is reserved to Westminster. Could a question be asked in this bill that would be based on a reserved matter be a better way to gather the information from people in society, which would be more stronger than a focus group, but it would not be binding because it is a reserved matter. Is that an example that is understandable? The basic answer to the question is that the framework bill is intended to be used for questions within the competence of the Parliament. The bill would not allow a question about a reserved matter in that way at all, I suppose. I have missed it, but the most important bit is missing. How do you decide the winner does not seem to be provided for in the bill, so I wonder if you can point me to the bit of the bill that is specified, or if it is not specified, how or who is the winner decided? It is decided by those who analyse the outcome of the vote. In the advisory referendum, it produces a result, and those who look to make off it what they wish. Sorry, but I thought you said earlier that the bill could be binding or advisory. If it was binding, the rules around binding nature off it would say what is to happen. The bill, as drafted, does not include rules that specify how a referendum would be legally binding in the sense that people would be obliged legally to follow the result. Picking up the point in relation to majority thresholds, the bill does not set out any provision for additional majority thresholds or other ways of approaching that, which effectively means that, from the bill as drafted, it is a simple majority. So you are saying that if it is not specified within the bill, then the threshold for turnout and victory and majority, qualified majorities and all that would be in section 1 under a discretion of minister. The bill that is currently drafted does not include that as part of the regulations. Graham, I do not know if you can go on. The 2013 referendum bill includes such a definition. No, there is no provision in that either. It simply makes provision for the vote, and then the announcement of the outcome. Did the referendum on the EU act contain such a provision? Just to finish here, given a lot of discussions over the previous referendums of what thresholds should be, have there been any discussions with ministers around that issue? Have they asked you to look at, for example, in other countries of what defines majorities or what are preferred? We have not specifically looked at the question of what different thresholds might apply or turnout, but our approach of ministers fairly consistently has been around to just straight majority in for the outcomes of results. But it is not planning on being specified. We have got no plans to do that. Thank you. There were some in Scotland in 2014, but what would happen if the vote produced a dead heat and the act would not have answered that question? The only referendum in the UK that mandated the specific outcome—I could be wrong, but from memory, I think that the 2011 alternative voting referendum mandated the Government to bring forward some legislation in the event of majority in favour of a particular proposition, if that helps. I think that Patrick Stewart has got a supplementary in this area. Just briefly, given that the framework and legislation for a referendum, there are certain things that it needs to do, explaining how the referendum would be conducted, what the rules for participants are, how the count is to be carried out and announced and who carries out those functions. Is it the intention of the Government to say that the decisions about what to do with the result are political judgments and that, for the Government of the day, we will honour the decision of the people if a simple majority or a two-thirds majority, or we will restrict our actions if there is not a majority, that that is a political judgment and should not therefore be set out in the legislation or in the framework? Is that the intention here? Certainly that is the approach of having that discussion in a political or parliamentary space—it is the approach that has been used in most referendums. That would be quite normal. Thank you. Sorry, I will follow supplementary in this area from Adam. Yes, thanks. Not on the binding nature of the result but on the threshold question, which Alexander Bennett was asking about. If a minister wanted to put a question to referendum and wanted to use the section 1 power to do that, under that section 1 power, could the minister in the regulation set a threshold at more than 50 per cent? So, it would not be under section 1, it would be under section 2. Right, but could a minister, thank you for that, could a minister, using regulation making powers under this bill, establish a referendum in which the result was not 50 per cent plus one but was a higher or indeed a lower result than that? So, the threshold would be a question for ministerial regulation rather than for legislation? Yes, certainly. If Parliament agreed to your Parliament of control over the affirmative regulations, it would have to pass that before it could. And there is no like power in PEPERA. The ministers do not have powers under PEPERA to change threshold or indeed turn out requirements in a way that they would have powers under this legislation if it was passed in this form. Certainly, PEPERA depends on other legislation providing for the mechanism for the vote in that sense, although there are some ministerial powers in PEPERA as well about what can be applied. When you say other legislation, you mean other primary legislation? Yes, PEPERA relies basically on other primary legislation, although, as I said, there are some regulation making powers. Ministers have the potential power under this bill to set threshold requirements or to set minimum turnout requirements for referendums established by regulation under this legislation and there are no like powers in UK legislation. Yes, I provided Parliament agreed to those, because it is affirmative. Neil, on franchise issues. Obviously, Bill will allat with the forthcoming electoral reform and franchise bill. When can we expect that to be published? The electoral franchise bill has now been introduced and published. The electoral reform bill is scheduled, I think, shortly, is probably the best estimate of timing. On the issue of the franchise, the bill has obviously been drafted whilst we are currently members of the European Union. If and when the UK leaves the European Union, is it the suggestion that all EU citizens who are resident of Scotland will have a vote in all future referendums in Scotland? What about non-EU citizens who are resident of Scotland, for example, people from Canada, Australia, New Zealand or America? Yes. On the issue of EU citizens, in the bill, it is clear that EU citizens, as currently happens, would be included in the franchise. Ministers have been very clear in many public statements that their intention is to keep EU citizens in the franchise for all devolved elections. That is a clear policy statement. Even if we leave the European Union? Yes. During on a previous job here, my understanding is that there has been quite a lot of consideration of how to do that and that even in a number of Brexit scenarios EU citizens will continue to be allowed to register and vote in Scotland in those scenarios. But not citizens of Canada, Australia, USA or New Zealand who are resident of Scotland? Yes. Sorry, I will just come to that. The electoral franchise bill has now been introduced to the Scottish Parliament and that includes proposals to extend the franchise to nationals of all countries who are legally resident in Scotland. That would include people from New Zealand. The franchise in this bill at the moment is set to what the current local government franchise is. That electoral franchise bill is hoping to amend the local government franchise. Obviously, we did not want to prejudge the Parliament's scrutiny of that additional piece of legislation. It is an important debate. It is subject to supermajority. Clearly, the Parliament will have a lengthy discussion about the merits of the proposals in that bill. Once that bill has concluded its parliamentary passage, the ability under powers in this act to update this act, to reflect that change in electoral law and, in his statement to the Parliament, Mr Russell was clear that his intention would be to do that to ensure that the franchise for referendums continues to match the local government franchise. You mentioned the local government franchise. Obviously, we are talking about referendums in Scotland here. In times past, local authorities have organised referendums, such as Strathclyde Water and congestion charging. What is the legal position in terms of local authorities running referendums? Would that impact or could that impact on them? That bill provides for referendums that are held across the whole of Scotland. It does not facilitate referendums held in a single local authority or multiple local authority areas. There is existing legal provision that helps local authorities to do that. Given the weight and the gravity of some of the rules, particularly on the campaign side, taking into account wider policy around community empowerment and democratic engagement, it was felt that it would be incredibly heavy-handed to mean that local referendums would have to follow some of the rules in this bill. Are there still provisions for local authorities to hold referendums legally? Yes. That makes no change. Obviously, that would then be out there and local authorities could look at it and decide how they would design a local referendum, but it leaves that for local authorities to determine in local circumstances. First of all, I apologise for arriving late. I was at the Wreck Committee moving amendments to the Transport Bill, so I missed the very start of your session. Can I ask a little bit about the policy intent behind the bill? We know that the Scottish Government has talked about the prospect of an independence referendum. Are there other issues that ministers have discussed with you that they might want to put to referendum? No, ministers have not talked to us about other issues, but what they have been clear about is wanting to have that framework in place so that it is there and available for whatever issues may come up in the future. We know that, in other countries such as Switzerland, there is quite a tradition of putting issues to referendums or referenda. Do you get from the Scottish ministers that there is an interest in pursuing more referenda? That is the direction that we might go in. Ministers have not made any statements about how they see referendums being used more or less or exactly the same. What they have been clear about is recognising that they have a legitimate place in how democratic decision making and involvement takes place in Scotland. That is quite an interesting response that you have just given me, because what is that place? I think that I am just being very thoughtful about how I set that out. Clearly ministers have used a referendum previously on an issue of significant importance within Scotland, so I would point to that as an example. From what the First Minister announced in her statement at the end of April, she announced that we were going to bring forward this particular bill. She also set out other ways that she wanted to involve the people of Scotland in thinking about the future of the country that Scotland is. Beyond that, I do not think that I can offer more around your question. You have just clarified that, as far as you are aware, there is nothing else in contemplation that ministers might want to put to referendum other than independence. Nothing that ministers have talked to us about. Patrick, you have a question of transparency. Thank you very much. I think that there were some questions earlier from Emma Harper about donations. I wonder if I could explore that and also the question of publications and campaigning. Has there been an attempt to learn any lessons from the two big recent referendums that have taken place in 2014 and in any particular 2016? Some of the concerns around so-called dark money, the lack of ability for members of the public to know who is spending what and how, and if there have been attempts to learn those lessons and implement changes, pick out for me what are the specific changes that have been made compared with how we conducted the 2014 referendum to take account of those concerns. Taking the two recent referendums in turn, the draft referendum bill that we published for consultation in 2016 included a number of updates that were intended to respond to issues that had emerged from the 2014 referendum picking up issues from the Electoral Commission's report on the conduct of that poll. Subsequent changes to the bill, which then transformed into this one, also picked up further points from electoral stakeholders and wider debates, one that I can point to particularly is around online imprints, so refining the drafting that was included in the 2013 act to more closely capture campaign activity rather than restricting individual freedom of speech, so there's been some update there. There's also been updates to other aspects of the campaign regulation. Moving on to talking about the EU referendum, as you say, the EU referendum significantly increased interest in and attention to referendum campaign rules and concern about the ways in which those could perhaps be manipulated. We have looked at the recommendations of the Electoral Commission and other electoral bodies and groups with interest in this space. It's fair to say that some of the policy remedies to some of those concerns are still very much under development from bodies like the Electoral Commission. The debate on how best to improve electoral legislation as a result of the lessons learned from those polls is still on-going. As Mr Russell set out in his statement, we are interested in comments on the bill and to consider how we can continue to make sure that it meets the ambition of being gold standard. Do you think that that's achievable within devolved powers, or are there concerns around the limits on what the Scottish Parliament can legislate for to address those concerns? Picking up on the difference between elections and referendums in terms of how the rules are devolved, I think that there is decent scope within the powers of the parliament to make a number of improvements and to help to ensure that the framework is as robust as it can be. In 2016, large amounts of money was spent on online advertising, including graphics created by aggregate IQ and the leave campaign. Many of those have been criticised as extremely misleading and containing outright lies—obviously, an allegation that they would refuse, but the allegation has been made. Political advertising is not regulated and we would clearly be outwith devolved competence to try to change the exemption for the advertising standards authority that prevents it from regulating political advertising. As far as I read the Scotland act, the reservation on misleading advertising in the Scotland act relates to consumer protection and trade and industry. Will we be within devolved competence to say that we are going to regulate misleading political advertising? I suppose that it is complicated, as I am afraid, by the initial reaction to that. The broadcasting framework, generally, including the rules on political advertising in that sense, is reserved. The bill would depend on, as I mentioned earlier, using reserved powers with the agreement of the UK Government as under the section 30 order to make some of the regulation for broadcasting, which is required. However, that said, there is quite a lot of leeway about what the framework can provide for within devolved powers. There are some other complications on that restriction, such as the ability of the Parliament to make any provision in relation to the BBC that is completely outwith competence. That depends on the provision that is being made by Scotland act orders. Any particular provision would have to be considered very carefully as to what the provision itself would be and to explore with the UK Government as necessary to ensure that something robust and reliable could be put in place. Setting aside broadcasting for the moment, let's imagine that there was a referendum on banning cheese. I was campaigning against that and saying that, if we ban cheese, everyone in Scotland will starve. That would be a lie. That would be misleading advertising. People might be unhappy that they could not eat cheese, but people would not starve. Would it be within devolved competence to say that you cannot publish in the print media a misleading advert in that sense? I think that I can say yes to that. It would be devolved. If it is in the print media, I think that that is correct. I would want to reflect on the detail of a very particular proposal. On-line? On-line, again. The bill, as it stands, regulates matters that happen on-line. It is when you get into the restriction on political advertising about which there is particular provision, then they are broadcasting that you are on into the reserved areas. Thank you. Two more up-questions arising out of the things that you said this morning. Does section 4 of the bill require a two-thirds majority in the Parliament to pass? We are clear that this bill does not engage the supermajority provisions in relation to franchise as the protected subject matter is around the Scottish Parliament franchise, rather than the local government franchise. We do not think that it engages that. I have answered the question in the Parliament. I am sorry, but I am thinking particularly of franchise. In relation to your answer to Murdo Fraser's questions and thinking about the other issues that we could see referendums on in Scotland, issues other than independence, what if a minority Government cannot get its budget through this Parliament? Could a minister then lay regulations under the fact, putting that budget to a referendum, and could those regulations specify that the outcome of that referendum binds the Parliament? I suppose that if the Parliament approved the affirmative regulations. So the power in sections 1 and 2 of the bill is potentially so broadly drafted that ministers would be able to use it, subject to affirmative procedure, to bypass a vote in Parliament voting down on the budget. Thank you. If you need to reflect on that, come back to us. I see that as a way to bypass a deadlock, and I invite ministers to bring such regulations. Okay, right. Thank you very much, witnesses, for coming along today and giving us your evidence. I am going to suspend now for about 10 minutes to allow for a change over witnesses, thank you very much. Our third item on our agenda today is to give evidence from the Scottish Government officials on the non-domestic rates Scotland bill, and I welcome to the meeting Karen Sibbled, who is the non-domestic rates Scotland bill team leader, and Anouk Berther, who is in the non-domestic rates team bill as well. I can invite Carol to make an opening statement if she wishes. I am very happy, convener, just to move straight to questions. Okay, as part of the information that we got back in relation to response to the financial memorandum, a considerable number of individuals were opposed to removal of charitable relief from independent schools, claiming that that would result in more children moving to state schools as parents would not be able to afford increased fees, thus increasing, obviously, the burden on local authorities. How do you respond to those claims? It was a recommendation of the Barclay review, which ministers decided to implement. In terms of the analysis that has been done within the Scottish Government, looking at various sources of information that is available to the public in terms of rateable value and the amount of charity relief that is received by each of the affected schools, the breakdown of income between charitable relief and income as a percentage is, across the board, 2.9 per cent of income. I am aware that, as any business, schools have a variety of costs to take on board, rates are just one of those elements. Good morning. Maybe I can pursue that issue a little bit further, if I can. When I saw the financial memorandum, I was surprised that there was no allocation of additional costs to local government in relation to the introduction of non-domestic rates on independent schools. The bill is proposing a £7 million annual tax take from independent schools in an area such as Perthyn Cynros, which is part of the region that I represent. There are a large number of independent school places. There are several thousand many of those independent schools. They are all charities that do not run at a profit, they operate on quite a marginal financial situation. Therefore, to meet those additional rates charges, the only way that they will be able to do that is either by increasing fees to parents or by reducing the availability of bursaries or perhaps the combination of both. Therefore, it is a simple law of economics. If you increase the cost of something, you will reduce demand for it. There will be a number of people currently choosing to send their children to an independent school who will, as a result of fee increases or bursary reductions, not make that choice in the future. That will mean that they will therefore go back into the state sector. There will be an increase in costs to the local authority, such as Perthyn Cynros Council. I wonder why, in the financial memorandum, there is no reflection of the fact that the costs to local authorities, where there is a high incidence of independent schools, such as Perthyn Cynros, or he needs Edinburgh. There is no reflection of that in the financial memorandum. The figures in the financial memorandum, the impact on local authorities, were provided by COSLA. A number of people have made the point that you have made, mainly those coming from the independent schools. There is no reflection. I suspect that, because, in terms of estimating how many are going to come, they may leave one independent school, they may choose to go to another, they may come into the local authority. Local authority monies are sorted out on a needs basis. The educational element of that is based on a number of pupils. If there were to be additional costs, they would be reflected. However, it is something that we are alert to that people have commented on. We can explore further discussions between the Scottish Government and COSLA. Is it necessary to make a change if that is appropriate to the financial memorandum? If there were additional costs, that would be reflected, which is a perfectly fair point to make. It is not in the financial memorandum at the moment. However, if the objective of the change is to raise £7 million in non-domestic rates from the sector, you can easily see a scenario where the additional costs to the public sector exceed £7 million. That ends up being a policy that costs money rather than reduces it. In general terms, if 10 per cent of the pupils currently attending independent schools were to choose to attend a local authority school instead, that would add something like £2 million in additional revenue costs to the local authority, and that would not take account of any additional capital costs that would be required from building new capacity. That is just one council. In Edinburgh, the figures would be much more substantial than that. I know that you have said that you might want to look at the financial memorandum, but can I suggest that that is something that needs to be addressed if the bill and the financial memorandum are going to have proper parliamentary scrutiny? I am prepared to take that point on board. Thank you. Whenever we talk about taxation, there will be some pleading from people who would quite like to pay less tax, thank you very much. Is there any actual evidence base that the Government has available that would allow it to predict or to model the demand for private fee-paying education if the change comes in? Are we just looking at numbers that are plucked out of there, like 1 in 10 or 1 in 30? We do not know, because that is down to the individual choice of parents as to what they choose to do. It depends on how the schools deal with it, whether they use any reserves that they may have, whether they increase the fees, whether they absorb it or how they choose to do it, reduce bursaries. I am not quite sure how you would model the unknowns. The Government does not have any evidence base for saying that this would be the extra cost based on lower take-up of private fee-paying education. In terms of the overall numbers in the financial memorandum, obviously, it totals £100 million over a number of years. The bulk of the two thirds comes from rate payers, about £67 million. Can you give a description of the thinking behind that and how that roughly breaks down? Yes, absolutely. In terms of the non-domestic rates increase in tax bill, that is focused on the independent schools and the cost of adding commercial activity on parks. That is set out in detail in the bill in table 1. The cost, as you said, on independent schools in terms of revenue is £7 million in 2020-21 and totals to £37 million over five years. Commercial activity on parks will be legislated for from 1 April 2020, so that cost is reflected from that year onwards and will cost a total of £5 million over the next three years post-2020. I think that there is the additional cost, the civil penalties, which will, of course, only become payable if rate payers are not complying with the requirement to produce information either to the local authorities or to the Scottish assessors. We should say that we make it quite clear in the financial memorandum that the costs for the penalties can only be illustrative at this point. We have on-going discussions with councils and assessors on the use that they could make of those penalties, but that depends on rate payers' compliance and what councils and assessors decide to do with those powers. No other members indicated a wish to ask any questions, so I thank our witnesses for being here today. I know that it's a short session, but I'm very grateful for you taking part. I now close the public part of the meeting. Thank you very much.