Weithio gyd am siaradau i ddechrau'n cyffredinol ar y Minister i gael gwaith hwnnw ac nid o gychwyn na bryd o'r blaenau hwnnw, oherwydd hyn sy'n dymian o gyfailiau a melanogau ar y £4barnadau. Dy anchordd am gyllid leol, oherwydd ddegweithio i ddweithredu â ddegweithiol gael hwnnw i siaradau i ddegweithiol ar gyfer mae Gweithredu i ddegweithio i gael gwaith hwnnw. Thank you for inviting me today to discuss spending on the national care service programme. Let me say to begin with that this government remains committed to delivering a national care service to improve the quality and consistency of community health and social care support across Scotland. Through our summer co-design activities, we've heard from hundreds of people with real experience of both accessing support and delivering it, and it's clearer than ever that the system needs to change if we are to deliver the services that people need. Having said that, we're in a different situation from when the national care service bill was introduced in June 22. The timings for the bill have changed, we originally expected the bill to be completed by now. That is given us additional time to have deeper discussions with key partners and stakeholders, as well as advancing the co-design activities. It's also obviously affected the profiling of expenditure with development activities taking place over a longer time rather than moving on to implementation. We're also, of course, in different fiscal circumstances than we were in June 22. There's an increased pressure to find different ways of working to make the best use of public funds available. The NCS programme had a small number of consultancy projects during its initial stages to provide research and advice, but this has been significantly reduced in the current year, and we're focusing on providing the skills required through our own staff. In addition to the internal spend on developing national care service, this Government is increasing spend on front-line social care. More than £1.7 billion has been provided for social care and integration in 23 and 24. We are committed to increasing spend on social care by at least 25 per cent by the end of this Parliament, an increase of over £840 million. So far, spend has increased by £800 million since 2021-22, so we are well ahead of this target. However, simply spending more will not deliver the improvements that people are calling for in the quality of social care support and in giving people choice and control over the support that they receive. We need to change the system, and I believe that the new approach that we are developing with greater national oversight and strengthened integration at the local level is what we need to achieve that. Thank you very much for that opening statement, which was very helpful. I think that it's interesting to see where we are compared to less than a year ago, and I think that it's now broadly accepted that if a financial memorandum was brought before us, we're simply not up to the job. I think that it's good that the Scottish Government has a complete rethink on that. Obviously, what's important for us in terms of financial memorandum is that we are able to scrutinise it effectively. On the ninth of May, you said that it's your intention to give us four weeks in order to scrutinise that. Is that still the Government's position before the stage 1 debate? Yes, it is. Thank you. I think that it's very important to get that clarification on the record. One of the things that's of concern to myself, and I'm sure that other members will raise it, is that the costs that we have been provided with, for example looking at the costs in 2021-22, 2023 and the current year, don't really tell us much other than a top line, and I think that it would be useful to try and dig down into that. I'm going to do a wee bit of digging and I'm sure that colleagues will do even more as the meeting progresses. I'm just wondering if you can explain to us, when you talked in your opening statement there about the need to look again at profiling of expenditure. If we look at 2021-22, we see in the annex the actual costs after revision, which are obviously the most important, that staff was £1.387 million was spent. The following year, that increased quite dramatically to £9.8 million, and one would anticipate that because obviously a lot more work is being done to flesh out the legislation. However, in the current financial year, in the first quarter it seems to me that seems to have fallen back quite significantly to £923,000, which is perhaps only about a third of what the quarterly spend had been in the previous financial year. I'm just wondering if you can explain to us why there's been such a dramatic change in those figures. Much of the staff costs attributed to the programme are around training and travel, and there will have been more training at the start of the transition compared to as we progress through it. I don't know if you want to give a little bit more detail on what that is. There will probably also be something on outturning and reconciliation. Yes, there are various reasons. Again, we're happy to give a fuller breakdown in right and afterwards. Part of it is also the reduced use of contractors. Wherever possible, we've brought in permanent staff within the core team as civil servants, which have less cost than external contractors in terms of filling specific roles. We've been keen to upscale permanent staff, which will also have an impact on cost. Again, we're happy to provide any more detail on the breakdown of those staff costs between specific teams. Yes, I know that consultancy figures are about £246,000 less than anticipated. It seems an awful lot of money to be training people on a bill that we don't actually know how it's going to look at this point. One of the things that's made clear in terms of the papers that we've received is that a lot of the co-design work is still taking place, and we'll continue to take place. I'm just wondering what the staff training was on. The new method of developing legislation is not—we have used it before in the Scottish Parliament and in the Scottish Government—but some of the training costs will have been on co-design methods to ensure that people were aware how to engage with lived experience and how to make sure that that lived experience made its way to the heart of the legislation. I'll ask Donna to give you a little bit more detail. In addition to the support for the co-design process, the national care service programme is quite a big and complex programme. We've also ensured that staff have a good understanding of programme management, a good understanding of scheduling. There has been financial management training and various other aspects. One other thing to add on the costs for period 1 is that there have been some adjustments made to that, in terms of what is included in the programme and what is not. Once we have that breakdown that we'll very happily provide, we can give you any understanding of changes to what has been included in the programme and what has not. I'm sure that Ms Todd would be happy to expand on that. It is quite difficult to differentiate between the work that is going on to improve social care and integration right now and what the improvements are needed to create the right conditions for the national care service and what is specifically attributed to the national care service programme, because that is all very, very connected. There has been some adjustment to what is included in the programme costs and what is not. I understand that that makes scrutiny quite difficult. One of the points that came out of the letter 9th of May was that the minister said that it is not possible to separate costs relating to provisions of the bill and those that result from the wider NCS programme. That makes it very difficult to assess where the public money is being spent effectively. I'm just wondering if he can give us a wee bit more information. One of the reasons that the financial memorandum caused such alarm to the committee was because we weren't really getting those breakdowns and because of the size and scale of the monies involved. With the exception of a very small, dedicated bill management team, the majority of officials working on the national care service are involved in teams that combine policy development, co-design and implementation across a range of areas. Those activities will inform the development of the bill but also the more detailed development for the national care service, which will be set out in secondary legislation guidance and practice in many areas that also feed into improvements of the current service. You'll have heard me say many times that we don't need to wait for the national care service bill, we don't need to wait for primary legislation, we can make improvements in this area now and we are seeking those areas that we can improve without legislation on a regular basis. Officials continue to review priorities in line with the current fiscal position at all times to focus on improving services for people who access social care support. I'm more than happy to furnish you with as much detail as we possibly can. I want you to be able to scrutinise this bill, we're not trying to hide anything from you, we are keen to use your scrutiny to improve what we do. Okay, in terms of that, I'm going to go into the figures again a minute or two before I let colleagues in. One of the things that's being said is that an initial consensus proposed between the Scottish Government and COSLA on behalf of local government has been formed in a partnership approach that will provide for shared legal accountability. This one proved the experience of people accessing services by introducing a new structure of national oversight to drive consistency of outcomes while maximising the benefits of a reformed local service delivery. You're going to talk about the formation of a national board to provide national oversight and governance of social work, social care support and community wealth. Can you let us know just how that's going to actually work and when that body is likely to be up and running, so to speak? The final details are still being decided, but we have made this agreement between the Scottish Government, COSLA and the National Health Service that there will be shared accountability. I would envisage a board with other people on it as well, including, for example, lived experience. I would expect staff side to be represented on that board. I would expect the national social work agency to be on that board. That board will oversee and scrutinise the national care service as it is delivered. Importantly, I would expect to build it with some teeth so that, if there is service delivery failure, action can occur, action can be taken in order to ensure that service delivery is successful. We haven't quite finalised negotiations on that national care board, but that's an absolutely crucial part of the oversight. I find it frustrating at the moment that I am regularly held to account for the delivery of social care across the country. Of course, I have no legal responsibility for it. It sits entirely with local government, and I have no powers to change what goes on. That aligns with Derek Feeley's vision as per the independent review of adult social care. It also aligns with what the country told us in our consultation, which is that it wants national government to have some say and oversight of social care. One of the figures that draw the eye is the expenditure on engagement. For example, it was envisaged that, in the last financial year, that would be £475,000, but it turned out to be £1,026,000, and it's declining to a very small £7,000 in the most recent quarter of the current financial year. I'm just wondering why the Scottish Government got those figures out of kilter with regard to engagement. Why has it been such a decline? Does that mean that, with co-design, I would have thought that there had been more engagement rather than less? I'm just wondering what the thinking of the Scottish Government is with regard to that. I'm not sure who's most appropriate fuel now, perhaps, to give you a bit more detail, but I think that's about the reprofile of the spend. When we introduced the bill last year, we expected the bill to have completed its passage through Parliament by now. We expected to have a bill and to be in the implementation phase. That is not what's occurred, so that's why the predictions of what the spend at each stage has not turned out to be the case, because we've done things at a very different pace. We've taken the opportunity to develop expertise within Government to ensure that we have the best value for money as we go. I don't know if you want to say more about that. Another factor is the timing of grant funding. Part of that engagement line includes grant funding for some disabled people's organisations to support engagement, for example the People-led Policy Panel. Part of that is the timing of when the grant expenditure is recognised as that process has worked through and paid out to the people receiving it. As the year goes on, again, we can update that spend each month as we have that, but that is part of the reason for the change in profile because of the grant expenditure. It would be useful to have more detail on that. I will let colleagues in. Minister, do you agree that the bill now seems to be more one of evolution than revolution? The big bang that we saw last year in which we hit the rocks of a financial memorandum that simply didn't add up has now been transformed and the Government is looking at something that is radically different from what it was a year ago. I would agree that it is less of a big bang, but it is still pretty bold and transformational. People have been very clear, particularly over the course of the summer when we have engaged with people with lived experience, people who access social care and people who work in social care. They want change, they want the system to change. The status quo is not good enough, so I still think that what we will deliver will be bold and transformative, but it will be a more phased approach. We are very keen to take people with us on that journey of transition. Certainly, when I became minister just six months or so ago, we were in a very different place. It was not just the financial memorandum that was causing people concern. There was lots of opposition to the bill. We have worked really hard to work with our partners over the course of the summer to ensure that we are all agreed in the direction that we are pulling in, and we are now all very focused on delivering that transformative change that the people of Scotland are telling us that they very clearly want. The objective remains the same, it is just the path to it that has changed. The pace. Before I ask my main couple of questions, I just wanted to pick up on a question earlier about training. It was said that it involved programme management training, particularly around FM and scheduling, but from my experience of many years ago being a programme manager, those fundamentals and delivery cannot deliver anything without a basic knowledge of scheduling financial matters altogether. That worried me a wee bit. What on earth made you think you could deliver before without having that basic skill set in place in the first place? I completely understand that. I would be worried if that were the case. We have some very experienced people who have many years of experience in the programme management world. What is really important is that everybody is approaching the programme in the same way. We all have a common understanding of what is required. We have new people who are involved in policy development. We have people whose background is policy development. That was about upskilling everyone rather than a greenfield site, if you like. We have significant experience certainly within the cohort of people who are working on the programme. I am pleased to hear that, but it makes me think that what on earth was happening before a bill of this scale is not being in place. Those are fundamental skills. I have often seen issues where the focus has been on policy but without the associated rigor on delivery. I suppose that the question for me before I move on to the main areas is whether you are now confident that, across the board, that skill set is in place because it is so fundamental to delivery? One of the concerns around the last financial memorandum was the ability to scrutinise it in detail because it is a framework bill. Therefore, my question is how will the new approach that is set out by the convener of evolution rather than revolution alleviate risks and mitigate them? What new risks will it introduce? I think that we will be more able to update everyone as we go along. I think that there will be better communication and information flow, as well as receiving information and taking on boards, lived experience and developing the bill in response to that. There will be more time to ensure that we inform those who need to know what changes and evolution are occurring. There are always risks with a bill of this complexity and I think that there remains risks. I am absolutely confident that we are going to deliver. I am absolutely confident that we have the right people, the right skill set and we are now motoring together to deliver something absolutely transformative for the people of Scotland. I would have to say that it is exciting to be involved. I follow on a question from that. One of our concerns before was about secondary legislation, which therefore lacks scrutiny over what could be significant spend over a long term. Will the new approach in terms of evolution rather than revolution result in more secondary legislation that potentially means from our perspective as a finance committee less oversight on the spend on an on-going basis? Is that not a logical extension of that approach? We have talked a little bit about the oversight of secondary legislation and I guess that there is a set out in the rules of the Parliament and the normal procedure, a sort of minimum level of scrutiny for secondary legislation. I would be very comfortable with enhancing that level of scrutiny in order that the Parliament is comfortable with what we are doing. As I said, we welcome your scrutiny. We want to work with you to meet this, the best bill we possibly can, because we want to deliver improvement for the people of Scotland. I think that we can definitely ensure that there is a level of scrutiny across the board of all the legislation that you are comfortable with. One of the key pieces of work that this committee will be interested in is the business case. That is a dynamic document. As you would expect, we regularly update it and we will make sure that we keep you appraised of how the business case is looking forward as well. I would just put on the record a very much welcome any further opportunities for us to capture baseline costs as near up front as possible, rather than slipping into secondary legislation. I feel free to write to the committee after this with any additional ideas, because I suspect that it is a concern for all. You have spoken about co-designing. That was something that your predecessor was very keen on when he attended the committee on 8 November last year. Can I ask about co-design, for which I think that the principles sound sensible? The trouble is that co-design is obviously on-going, which you have reiterated again this morning. If it is on-going, surely that means that it is very difficult, indeed, to forecast in detail what the costs are going to be at the end of the process? I guess that what I am trying to describe here is a dynamic process of us taking on board the co-design and then coming back to you with more information. The business case is an iterative business case, so I think that we will have lots of opportunities for you to scrutinise and examine what is going on. The idea that we use co-design to develop the legislation is absolutely fundamental to the type of change that we deliver. I say that we are very regularly, if we have lived experience at the heart of our policy and legislation, we are much more likely to get it right. The challenge is always in implementation. We also have a built-in mechanism to hold our feet to the fire and implementation to ensure that not only do we deliver an ambitious policy, not only do we deliver an ambitious legislation but that we implement it appropriately on the ground. I guess that what I am trying to say here is that for me co-design is a co-part of the national care service. I would expect, much like the NHS, that once we have delivered a national care service, it will continue to evolve. It will not be fixed in stone just as the NHS is not fixed in stone in the way that it was introduced in 1948. However, having co-design at the heart of the development, having co-design at the heart of the national care service means that the voice of lived experience will continue to be involved in its evolution even after we deliver the legislation. I agree that it makes it more difficult for you to scrutinise costs, but that requires— That is the point for this committee. I absolutely understand why co-design could be beneficial, particularly for the input of many people who feel that the existing system is not satisfied yet. I absolutely understand that, and I understood it at the time when Kevin Stewart spoke to us. Where I am concerned is that the process of the engagement is still on-going, and we know from the last time that, although many people who are on the front line of the service were concerned about making a change, there were lots of other people who were in the delivery of the service who were quite critical in a few cases of what the Scottish Government was saying and proposing. My point is that it is a bit of the cart before the horse, that if the co-design is on-going for very good reasons, is it not the case that we should finish that process before we come back with what the actual detail of the bill will be, and therefore the forecast of the cost? Would that not be an easier way of doing this? That might be an easier way of doing it, but I think that we can deliver both. We can have co-design absolutely at the heart of our development of legislation, and we can ensure that this committee and others are comfortable with the financial scrutiny. How do you propose to put in front of this committee what the true costs will be? Any financial memorandum cannot be absolutely 100% accurate. We all accept that, but it has to be much more accurate than the one that we were presented with before. My point is that I do not see how we are going to be able to get to that situation given that there is on-going engagement, from which there may become many more suggestions about how the bill might improve. It is very difficult to get to the cost structures that the committee needs to scrutinise. Do you accept that? I am confident that we will be able to provide you with an updated financial memorandum that will give you sufficient comfort four weeks before the bill. I will ask Fiona to give you a little bit more information about what we are doing and how we are going to do that to reassure you today. It will contain a range of assumptions and a range of cost estimates that would be expected at this stage while co-design work continues. We have mentioned the business case process, which again is very important. When we are at the programme business case stage and strategic outline business case stage, we would expect there to be optimism bias built into that, in line with Green Book guidance that is compliant with how we should do things. As we move into the outline business case and full business case, those costs, as expected, would be narrow to be much more specific and much more detailed. We will follow that business case process through, but absolutely at the start, while we have uncertainties while we are working through that co-design process, the agreement with COSLA, there will be a range in there, there will be assumptions, and there will still be risks while that cost profile narrows through the business case process. Minister, how long do you envisage the co-design process taking? How many more months are we going to be doing that? Co-design is the core part of the development of the national core service. I don't expect it to finish by Christmas, I expect it to continue throughout the development of the bill and to be a fundamental part of the national care service going forward. Last on it, to give you a little bit more information. As you would expect, given the content of the bill, we have prioritised the areas that are key to the development of the legislation and to providing information to Parliament and to others. The things that are most important to people over the summer, so there are five co-design themes that are very specific to the development of the legislation. That, coupled with the engagement with local government, trade unions and the NHS, means that we will have a better understanding of what people want from this and what partners want to contribute to the legislation. While the co-design process will be long-term and enduring and will be a key part of the national care service, we are prioritising the areas that have the most impact on the bill, which will enable us to provide you with the assurance that you need. The five co-design themes are keeping care local, information sharing, models of care and, sorry, I have had a mental block there. I should know these, I have been at multiple co-design events. Those are the particular issues around keeping care local, information sharing, which has been the most popular theme, interestingly. The reports are due to be published on all of those, so the committee will be able to review them themselves. I think that prioritisation and doing this on an iterative basis is actually quite a helpful thing to do so that the bill is suitably framed and then, as we get into more detail from the perspective of the framework and secondary legislation, it allows us to engage very proactively in the co-design process on additional detail. One thing that is really important is that this is not service delivery design, so we are not setting out at this point how specific services will operate at a local level. That will very much be for the local partnership arrangements in the future, so that is about getting that broad frame right and making sure that we have the information and the input from people that is required. My last point relates to one of the difficulties that we had last year at this time, namely that there was very strong criticism of the Scottish Government's proposals from people who would be on the front line of delivery. That included some in council authorities, that included some in care services, and that was obviously in a bit of a contrast to those who felt that the actual care site, those who experienced the care, so that there was a bit of a contrast between the views. Have you consulted in great depth those who were critical because they felt that the costs had not been fully set out? Those who were telling you that the bill for the whole thing was going to be much more than perhaps you had predicted, do we actually have some statistics for the figures that people in COSLA local government said were a bit of a concern last time? Has that arithmetic taken place? The focus of the discussion with COSLA has not been around the cost. It has been more around that. They were very concerned about the transfer of staff and they wanted to maintain statutory responsibilities for commissioning and procurement. The focus was less about financial costs and more about power and assets. We have worked really closely with our local authority partners. I think that the Verity House agreement has helped us in that. We have also worked very closely with unions who have been critical of the approach that we took. As I say, I feel that we are in a much healthier place where we are working closely together. We do not always agree, I will be honest, but we are working very closely together with our eyes firmly on the goal of delivering an improved service that works for the people who access care and for the people who are working in care as well. I think that that is very important. I would say that what is even more important is that the costs that go along with those changes have to bring confidence that the bill will be deliverable. That is the area that concerns the committee. I would suggest that there is still an awful lot of work to be done before the next financial memorandum comes back to the committee that we get a much better idea of those costs, given that there is such a widespread divergence of opinion about it. Before I let John in, I am keen to come in with a supplementary question. I suppose that it is just picking up on that point that Liz made, as well as finance here. We have also got public administration. Obviously, we all know that the public purse is just under the most difficult cost at the moment. Arguably, every penny is a prisoner to use the terminology. That suggests to me that the relentless focus on the cost and value must be accentuated. To be honest, I am not necessarily sure that I am yet getting that confidence. For example, the Verity House agreement, we all agree, is a positive, but we do not yet—and that has just been the process—we do not yet understand how that fiscal framework will work and how that work is not being done. As well as the top-down policy-driven and thematic approach that you have outlined, you are also absolutely doing the work to make sure that every single funding line is really managed very tightly. I think that that underpinning is what will give us confidence, not just in the finances but in terms of our responsibility as a public administration part of our committee remit. Yes, certainly. Certainly, when we come back to you, the financial memorandum, I would expect you to be able to have absolute confidence in what we produce. A wee thing off the back of that, we have not gone on to it today and we may well at some point future, but in terms of the national care service board and the governance therein, I would expect to see the same rigor around how the financial governance will operate in the light of current times as the policy element of the standard governance thing. Again, can I ask that you give that just as much attention, in other words a bottom-up as well as a top-down approach? Absolutely, and I am confident that we can improve the local scrutiny of spend. There are times at the moment when it is hard to follow the money and that is sometimes the explanation for challenging situations on the ground. If we empower our local structures and provide them with adequate data and ability to scrutinise where money is going within the system, we will have a system that operates much more efficiently but also much more effectively delivered for people. Being able to follow the money is something that will work for us in a sense, convener. One of the quotes that the convener used earlier on was from your letter from July. It talked about consistency of outcomes, so presumably that is one of the main aims. Sometimes there is a bit of a tension between consistency of outcomes nationally and doing things locally, which we have just referred to as well. I wonder how that will impact on costs. For example, in the Highlands, distances are greater, so if somebody is coming to visit somebody at home, that takes them longer, further to hospital, so that is a different issue. By contrast, in Glasgow, I think that sometimes the feeling is that you have to be in greater need in Glasgow to get an intervention than you do in some other authorities just because the need is so huge. That leads me to think that at the moment that COSLA and the different councils get their funding through a formula, will the national care service override that formula or will finances be targeted at areas of greater need or how will that work? You are absolutely right that you have picked out one of the real tensions in the bill and within the idea of national oversight of the social care system. I am preaching to the converted. I come from the rural West Highlands. I represent the northernmost and biggest mainland constituency in Scotland. I absolutely recognise that care cannot be delivered in exactly the same way, in exactly the same part of Scotland, in every part of Scotland. Even within NHS Highland, the health board area that I live in, NHS Highland has its own model of integration. We have the lead agency model and the rest of the country has a different model of integration. In Alipol, where I live, access and care is a very different experience to access and care in Inverness, which is a city that is much more like Edinburgh. There are really fundamental differences throughout the country. What we are focused on is the unnecessary variation, so there should be a certain thresholds of need that should not vary quite so much throughout the country. There should not be a variation in quality throughout the country. That is not acceptable that people in one part of the country have to accept a lower quality of care. We want the standards to be high everywhere. There are variations in pain conditions, which are really challenging and threaten service delivery in parts of the country. If you look at the social work profession, for example, unlike for nursing colleagues or teaching colleagues, there is not a standardised approach to their pay and conditions. I think that working through the national social work agency, we will be able to improve that. Even in our engagements all over the country, I will use Shetland as an example. I really enjoyed visiting Shetland. I had not been back for a number of years since pre-pandemic, and it was a real pleasure to go back to an area that I used to represent, which has integrated health and social care very well. They were, I would have to say, fairly healthfully sceptical that the national care service would offer them anything, because they are doing things pretty well as things stand. However, we were very quickly able to identify certain areas where a national approach could support that local delivery, so things like support around social work training, things like sharing information sharing, which requires legislative change in order for them to be able to do it and will vastly improve the experience for people on the ground. I agree that there is attention. I agree that it needs to be done very carefully, but I think that it is possible to raise standards generally and to reduce unnecessary variation without impacting too much on the way that people do things locally. One of the other really important things—I often think—and it may again be down to the part of the country that I represent—I often think about young people with disabilities who access care packages, who then find it impossible to move freely around the country because those care packages do not follow them. We need to improve that system and make it more straightforward for them. I want young people in the Highlands to be able to go to university and that almost inevitably means going away. I want them to be able to access education. I want them to be able to choose employment that suits them, and they need to be able to move around. That is something that the national care service can do. It can definitely improve that transition across boundaries that we currently have and that is so impossible for them to navigate. That is a very full answer. I appreciate that. I am largely in agreement with that. Have we got to the detail yet as to how the finances would work? A young person has a care package in Shetland and then goes to university in Aberdeen. Would the money move with them? Would that be up to the individual council? Or would it be so nationalised that it would all come out of a national pot? I can come in on some of that. To your point about the funding formula, that is outlined. We currently have NHS boards funded through NRAC, we have local government funded through GEE. One of the questions that we are working through with COSLA ahead of the bill at the moment is around whether the IGBs or reformed IGBs receive direct allocations. If so, what funding formula would that be on? I think that we are all in agreement that we would need to take nice and sovereignity of demographics in local areas. With the specifics of the funding following the individual, we would absolutely need to work through a mechanism to allow that transparency to follow the money and allow those barriers to be broken down that ministers spoke of. The detail, yes, has to be worked through, but our fundamental point is increasing the transparency through the funding formula to make it clear what services are being funded from which route, so as we can then follow that. We will learn more about that in due course. During my temporary spell as convener of committee, you wrote to me on 16 June. One of the lines there said about supporting improvement and delivery of social care support that are not reliant on the NCS legislation. That split between what we can do just now and what we need the legislation to do. Has that changed then or is it in the process of changing so that we are less reliant on the bill and we could do more without the bill? I think that we are always looking for opportunities to improve the system now. One of the things that I would point to you is the increase of wages to £12 in our minimum funding. That does not require us to wait for legislation. That is a decision of the Scottish Government to deliver that from next financial year. I am so delighted that we are able to deliver that and we do not need to wait for primary legislation for that. I think that there will be other areas that we can improve on, but some will require primary legislation. Overall, we are always looking for opportunities to improve. I think that just this week—perhaps tomorrow—we are getting a review of scrutiny and inspection. We will be looking keenly at that publication and seeing what we can do and how we can take on board the recommendations that come with that. I think that the regime of scrutiny and inspection is one of the tools that we can use to improve quality and consistency so that we can think of the outcomes that we are aiming for from the bill. That is a crucial piece of work, but not every recommendation—I cannot pre-empt it, but it is published tomorrow—will require primary legislation to make the change. We will be looking for changes that can occur without the legislation because we are very keen to set ourselves on a trajectory of improvement in terms of delivery from day 1. I have one minor point for clarity. That annex that you gave us was the letter of 16 June in the figures that were being quoted. There is 21, 22, 23 and then 23, 24. It says period 1. Can I just check if that is the first month or is that the first quarter? The first month. We now have periods 1 to 4, so we can give an update on that. Right. If I was wanting to find the annual figures, I could multiply them by 12. Roughly, yes. Apologies for asking questions earlier. I assumed that it was a quarter. I realised that it was on a wrongfully basis. Mr Ewing, you will be aware of the medium-term financial strategy of the Government's projecting £1 billion shortfall on 24-25, £1.9 billion in 27-28. What has the finance secretary told you that we, as a country, can afford to spend on the national care service? We are working very closely together on what the needs are of the country and what we can deliver. Candage has not set a ceiling, so we are looking to deliver a social care system that meets the needs of the population. She has not given any indication of what the envelope of spending that might be available in that. We set out a financial memorandum this time last year. That was the envelope that was put forward with the original legislation that is changing as we develop the legislation, but we are determined to develop a system that meets the needs of the population. You will be aware that there is a commitment at the Government level to do that, so I will continue to work closely with the Deputy First Minister to ensure that we are able to afford and deliver a national care service that works. Spice, Fraser of Allander, the Institute for Fiscal Studies, all commented at the time of the medium-term financial strategy that pointed out that missing figures for this policy were not included in any of those projections. Whatever you are being given to spend in that area for making that happen is not included in those figures. I suppose that it comes to that kind of question in terms of what comes first in that question. You are talking a lot about co-design and putting in place the right system, but I am not getting a sense of real confidence that we are working in a financially prudent way to think about what the limitations are. How much are those financial limitations informing the co-design process? I do not know if any of you want to come in on that. I think that we can reassure you when we bring forward the financial memorandum. I suppose that what you are missing in your question is the value of social care in some ways that you are looking entirely at the acquisition cost. If we get social care right, what it delivers is of a huge value to the nation. I would expect that it makes a difference not just to the individual who accesses care, it makes a difference to their family, it makes a difference to their community. There are some gains from spending more, so I would expect to see an increase in productivity, all those people who tell me that they cannot work because of their caring duties. I would expect to be supported into employment. I think that increasing the wages of the lowest paid people in our country will bring an economic benefit. You are only looking at the moment at one side of the balance sheet. I would expect there to be another side of the balance sheet, as well as looking at the current ways of raising money. There may well be different ways of raising money in the future. Of course, that is well outside my portfolio. I recovered it, but it was just to draw the £4 billion that we already spend on social care, as much if not more focus has to be on making sure that we are getting value out of that large amount of expenditure that is in the system. Yes, absolutely within the current fiscal framework, we have to look at minimising the additionality of spend to create the national care service. We have to drive the value through the expenditure that is in the system, and indeed looking at the balance across health and care, so thinking about how we can invest in prevention, which is longer term, will better meet the demographic needs and be a more financially sustainable system. My assumption would be that that is what we would see in the business case in part, in terms of the policy evaluation, that you would see the great social benefit, the preventative money, where we would save money. I am in full agreement with the minister on those huge benefits in a wide variety of ways, but we have to be able to pay for it, is the reality. I suppose that one simple example is that if we can catch people, if we can shift the spend to more preventative, which is partly our intention, we are absolutely determined. Christy, more than 10 years ago, told us to spend money early rather than pulling people out of the water. We want to spend money in a preventative fashion. If we can spend money preventatively, an elderly person who is admitted to hospital and gets a care package, that care package would cost on exit from hospital twice as much as it would have cost if we had managed to catch them before they went in, so we can. If we do that well, there are efficiencies, and I need to provide you with assurance. We all know the huge costs of the failure to eliminate the discharge. Absolutely. Have you taken a decision on the inclusion of children's services? No. Do you have any indication of the costs associated with that? That is thousands of staff, isn't it? There will be a decision on that towards the end of the year. The cost impacts will be included in the financial memorandum. On that, in the timeframe, you are committed in the letter to us to completing stage 1 by 31 January. Working back, the convener has got on the record four weeks prior to that, so we are looking at you by my record in having to provide us with the financial memorandum in about 11 December. Do you have a date in your diaries when you will be sending the financial memorandum to the committee? No. When stage 1 happens, it is not entirely within my control. You will appreciate that. It is more in Parliament's control, but we will certainly finish you with a financial memorandum four weeks before, as promised. I suppose that what I am working towards here is that it is not very long. It feels to me that there is an awful lot of moving parts and questions from colleagues about whether we are still in the depths of co-design. We have not taken a decision on the inclusion of key critical areas such as children's services. There are huge financial issues around that. We are taking into account research by my record in 11 December that we would have to receive that. It is just weeks away. Do we have a draft of the financial memorandum? I suppose that part of the spend that you see on staff that is included within the figures that you have is about all the groundwork to support the decision making. As Ms Todd has already said, the business case continues to iterate, the financial memorandum continues to iterate. Yes, we have a draft, but it may not be the final form at this point. There has been a significant amount of work done on research on children's services and on justice services, some of which has already been published, more of which will be published towards the end of October, beginning of November. That will allow ministers and cabinet to reach informed conclusions. The groundwork is really important to ensure that those decisions are informed and are made up with the best information possible. My last question relates to that specific issue. One of the issues relating to the inclusion of children's services was that most social work practitioners across Scotland had no idea that that was being proposed and that they might be transferred out of their current employers into some form of different employment as yet to be decided. Has any proper engagement happened with the profession? There is a lot of engagement with the profession, but there is not a proposal to transfer employment. I think that the agreement between ourselves and COSLA means that that is no longer necessary for any staff. I am fairly new to this committee, so I am not seeing this for the first time, but certainly it is under depth and detail. I was not here during the discussions. Just following on from Michael Marra's points, and as he rightly said, for all the value, it has all got to be paid for this. Minister, you hinted or suggested, and I am not sure of the exact wording, but other ways of revenue are being generated. Are we talking about tax, new taxes, increasing taxes, new fees to pay for this going forward if those costs are higher than expected? I will be working very closely with the Deputy First Minister to make sure that we design a social care service that works for the people of Scotland. The Deputy First Minister, as she does in every area of spend, will be making sure that we have sufficient funding to put behind that. That is definitely outside my remit. Sorry, have there been discussions about the need for perhaps new revenue ways of generating revenue for this scheme going forward? There are always discussions in Government about how to generate revenue for public spend, particularly in a time of constraint, such as the moment that I would expect there to be on-going discussion around that. You will be aware of public statements around care and balance needing to be struck, but that is absolutely outside of my portfolio. As Michael Marra pointed out, it suggests that there are a number of areas that have not been fully considered in terms of the bill going forward. The original financial memorandum suggested or estimated the cost of the bill over a five-year period 2022-23 to 2026-27 to between £644 on £1,261 million. Do you consider that still to be the estimates or considerably higher? Well, as I said, we are going to bring forward a revised financial memorandum. Being looked at at the moment? Considerably lower because of the re-phasing of the introduction, particularly of the local structure, so it will be considerably lower over the time period quoted there. It will be lower of that period, perhaps, but you would expect it to be higher going forward? Depending on the decisions taken, particularly in the first financial memorandum on table 8, there was significant cost included about the potential transfer of staff, because that has now been off the table. You would expect that to therefore disappear, so we would expect it to be lower overall. The re-phasing means that there will probably be less spend because there is less need for external consultancy. That might be the answer to my other question that I was going to ask, as regards the cost that you have given here for the 2023-24 period 1 at £971,000 for just one month. The Deputy First Minister said in February that the figure for 2023-24 is likely to be a figure no higher than £50 million, so you would expect that to be considerably less than that. That figure was reasonably close to the lower end of the range given in the financial memorandum, and at that stage we were still expecting the bill to go forward and be completed by summer, which would have meant that the work would have ramped up and been phased completely differently, so there would have been a lot of work going on in that financial year, which has not been needed. With the extension of the bill timetable, it has spread over a much longer time, and that is the process of expenditure that has still been worked through. That is to the evolution rather than devolution. The last question that I had on this was about the VAT liability. Obviously, there were concerns raised about the potential VAT liability and what that might be. Can you give us an update on where that is at the moment? We have updated last time that what we would need to happen is that, if IGBs were to be reformed and we talked about that direct allocation point, we would need to gain section 33 status as a VAT body to have a full recovery model. We have done early engagement with HM Treasury to understand their viewpoint and to introduce the changes that we are looking to make. That will be an on-going process, but the co-design point, as that has worked through, and we understand the final format of integration joint boards and what they might become. We will keep abreast of that from a VAT perspective. However, where we are clear on the boundaries, we have around what would trigger a VAT liability or not, and we are having very early discussions with Treasury around that. That was originally estimated to be around about £32 million, is that correct? In the initial 2014 bill, we would expect with inflation and increased cost and care for it to be between £50 million and £80 million—potential liability. £50 million and £80 million liability is subject to discussion for the HMRC. If we were to not be able to get a section 33 body, but we do not consider that, that would be the option that we would take. Thank you very much. A lot of the correspondence between the committee and the self-minister has been around the lack of available data. You have said that you would provide more information to the committee, but the information that was provided was fairly limited. Why was not there a state where more information could have provided if it was available? I was not minister at the beginning of the bill, but I am certainly going forward from now. The committee meeting today, your colleagues have said that they will provide further information. We have talked about period 1. I think that you said four months more of information. Was that not available when the information was requested for this committee meeting? When we put the letter back in July, we had the period 1 figures at that point, so we now have the period 4. We have split it by year and by category in terms of staff and non-staff and subcategories. We have a range of subcategories that we can split it into, so we are happy to draw down into that. We are keen to work with you, so whatever information you want and those letters back and forth are very helpful. We will try to furnish you with the information that you need to scrutinise this bill, because we want this bill to be the best that it can possibly be. Thank you very much. That has concluded questions from the committee, but I just want to, from myself, to wind up. I assumed that period 1 meant quarter 1, and I know that other members of the committee thought that as well. If it just means April, why doesn't it just say April? We are talking about transparency, mate. That is a pretty basic thing, period 1. Just put April, 2024, and period 4. July, that would be. I think that we all need to talk in simple straight forward language if we are going to be talking in the language of transparency. The question that I was going to ask really was we have talked about this being a framework bill, and there has been much discussion about primary and secondary legislation. Given the changes that we have seen in the evolution of the bill in recent months, where has the balance shifted between primary and secondary legislation? Is the bulk of it now going to be in primary or secondary? Where has that moved over the past few months? I do not know, Don, if you have a longer term view than I do, it is still a framework bill, so we are still expecting the detail to be in the secondary legislation. The balance may shift slightly, but certainly the nature of the bill and its framework nature remains. We are still working through this with colleagues from COSLA, NHS and more broadly. There may be some more detail in the primary legislation, for example, on the national board, which does not appear there at all at the moment. Going back to the original principles around flexibility that the former minister set out, the ability to be more agile in the development and iteration of the national care service has already referenced the multiple changes that have occurred over the lifetime of the NHS, for example. I think that those premises remain, and we would expect the balance to be probably about the same, but we are not at the point where we have concluded that. That would be the same, so what is that? Is it 3070, 2080, 4060? What are we talking about? We are still working through the secondary legislation. As you can see from the current construction of the bill, it is at a high level. The detail will be set out from the discussions with COSLA, NHS and the co-design process, so I cannot give you a percentage at this point in time. I hope that we will be able to have some more detail on that when the financial memorandic, because I am not expecting you to say 63.5 per cent, but if it is two thirds of a half, it would be helpful to know those ballpark shares that we are talking about. Thank you very much. I appreciate the time given by the minister and our officials this morning, and I am not ready for the next session. We will have a wee break until 10.40. On our agenda, it is to continue to get evidence on the sustainability of Scotland's finances as part of a pre-budget scrutiny this year. I welcome to the meeting Rachel Coop, deputy head of policy, Federation of Small Business of Scotland, Sandy Begby CBE, chief executive officer of the Scottish Financial Enterprise, and Louise McLean, business development director, signature pubs Scottish Hospitality Group. I intend to look to 75 minutes for this session, and if witnesses want to come in and be brought into discussion at any point, please indicate to them yourself, Florida Clarks, and I'll call you. You don't all have to answer every question, but if you do, if I'm asking one individual, just feel free to say that you wish to comment. Okay, we have submissions, so we'll just go straight to questions and, of course, I'll open out first of all, so any, any, any, any more. Who am I going to ask first? Okay, well let's take a look at the FSB, the FSB and indeed Hospitality Scotland has talked a lot about the issue of support for businesses, and I think that's obviously fundamental importance for your own sector and indeed the Scottish economy. So, for example, first of all, let's see where we are. I mean, the FSB has said that more than half of the businesses who responded to your survey don't feel Scotland is currently an attractive place to start up a business. So, two things, one, how does that relate to other parts of the UK or Ireland or anywhere else indeed, because it's important to get that in context, and secondly, if you can just talk us through what you feel the Scottish Government could do to make Scotland a more attractive place in which to do business. So, we'll start with Rachel. Yeah, of course. Thank you, first of all, for inviting FSB Scotland to today's committee session. We're glad to be here to be talking about the sustainability of Scotland's finances. So yeah, particularly on entrepreneurship, we know that new business formation is one of the key drivers of economic growth. High business birth rates drive up levels of innovation, productivity, competitiveness that we want to see post recovery is particularly. Currently, those Scotland does have one of the lowest birth rates that's seen for businesses in 11 years, and there are still over 2,300 fewer businesses operating in Scotland currently than there was at the start of the pandemic. So, I think that really pulls into picture frame where we're seeing the businesses slip through the net of the economy at the moment, and as you had discussed about the fact that we've seen that more than half of small businesses across Scotland said that they don't feel it's currently an attractive place to start up a business, and more than two thirds of Scottish small businesses cited the economic uncertainty and the overall cost of living crisis as the main problem at the moment as to why that is the case. So, despite that, just to be more positive, we have seen that over three-fifths of our SMEs that responded to our survey are hoping to grow within the next two years, but current cost of living crisis is going to be one of the biggest barriers to that growth. So, I think for us it's important that we don't go unrecognised the hunger and growth within the small business community. They want to be doing well, they want to expand, they want to invest, and they want to be part of their local economies, but to do that we are going to need to see support, and as you can see from our submission, we're looking for businesses to not be de-prioritised. We understand that the fiscal stimulus right now is difficult and the economic prospects that they're working within and government budgets are very challenging, but there are ways that don't always have price tags to ensure that we are targeting things like entrepreneurship. Just recently we know there's been a review of the national outcomes in one area that we've called for within that is that we see a sole focus on entrepreneurship as a national indicator and a national outcome itself, because currently there isn't one that exists, so we aren't really measuring the progress of entrepreneurial nation despite that being a huge part of the Scottish Government's remit to see a part of their national strategy for economic transformation to see entrepreneurs. We're really looking to make sure that, for instance, the £15 million that was put forward as a programme for government for entrepreneurship, we don't really know what that entails yet, so we really want to unpack the detail of where that funding is going to go to make sure that we're removing the practical barriers to entrepreneurship, childcare, flexible working, all those things encompass making it more of a attractive place to start up. We've seen as well particularly the growth that over 82 per cent of our respondents, 18 to 34-year-olds, were the ones that want to grow in the next two years, so there's a younger generation of entrepreneurs coming through, and we need to make sure that that doesn't go untapped to potential, and through that we need to make sure that we're targeting what does entrepreneurial nation actually mean for Scotland, and we need to see that attractive talent, and we need to make sure that there's business support in place to make sure that that's not difficult at the moment to start up a business, but overall economic uncertainty, rising inflation, spiral and energy costs is really preventing, I think, from people looking to start up a known business. It's a difficult time, and I think that we really need to understand that this budget sets out targets to make sure that we're specifically spending, but also looking at other ways that we can encourage entrepreneurship in Scotland, as I'm saying, start to make a national indicator that measures those performance targets as well, and also looking to make things a wee bit easier for startups in the current climate through that kind of one-door approach of support, because right now it's quite a cluttered landscape of what we've heard previously, so enterprise agencies and things like that, to make sure that we make it more available to people to know what's out there and make it simple and effective. You didn't answer my question, though, about how Scotland compares to other parts of the United Kingdom with regard to attractiveness and setting up a business. In terms of that, I don't currently have the exact statistics on Scotland versus other parts of the United Kingdom as such, but we know from our small business index monitor that business confidence is at a low. We're in negative territory across the entirety of the UK, so it's not solely a Scottish issue at the moment. It's across entirety of the UK economic uncertainty. That's across the board, across FSB in Wales and England and Northern Ireland. So we are seeing that there's been a problem. Our survey that you referred to that specific stat is obviously a Scotland-only survey, so the half of respondents that don't think Scotland's an attractive place to start up, I don't have a direct comparison of what entrepreneurs think in England or Northern Ireland, but it's clear to know that I think we know the overall cost of living crisis is affecting that. I'm happy to get back to the convener to find out what the exact kind of comparison would be. Okay. Has the FSB had discussions with the Scottish ministers with regard to those £15 million on to be neural fund to see how it could be spent, how it should be spent? Not at the moment. We are looking to kind of have those discussions as we go on to kind of now we've just returned from recess. We've obviously got the new deal for business group, which we are part of, that we're looking to really have those discussions and get further clarity and part of the subgroups as well that form that, and the recommendations put forward for the new deal for business group is something that we are committed to seeing follow through as well. Okay, and is £15 million a realistic sum of money? It's hard to tell if £15 million is going to be enough. We obviously welcome a cash injection of any type into making sure that we're helping startups to scale up, but it's really difficult to understand if that's going to be enough, particularly right now where we don't know all the details of what £15 million is going to look like. Is it going to be forms of grant support? Is it going to be for enterprise agencies? We don't know at the moment, so until we start to see that in practice, we're not really sure, but we welcome any additional support to reach Scotland's becoming entrepreneurial nation, which is a Scottish Government target, and we are looking to see if there are other means, as I'm saying, to small business bonus scheme helps, making sure there's target procurement spending, things like that. There are other ways as well on top of the cash injection that can really help set up Scotland to be a more of a attractive place to start a business. Sandy, where do you stand on issues such as investment of public money in terms of setting up new businesses, supporting innovation startups, etc.? I'll come back to your first question about investment and also how we can deal with the rest of the UK. Our sector has regularly outperformed every part of the UK, Ireland, London and the south-east for investment into our industry, and that's measured annually by the EY Fund Direct Investment Survey. Therefore, you would argue that it's quite an attractive place to start a business or to invest in a business in financial professional services. The three main reasons that come forward are the strength of the ecosystem, so what already exists. People can plug into it quite straightforwardly. Secondly, it's human capital, so strength of the skill base here in Scotland, and then third is when you put those together, the cost and quality around it. If you consider one of the main comparisons with London, then you've got a wage arbitrage about 25 to 30 per cent benefit for Scotland and you've obviously got reduced commercial property prices on that, and the quality that you get is of equal quality, as you would get elsewhere. Scotland's financial professional services are compared to the other parts of the UK. We obviously hear a lot about Belfast, Bristol, Manchester and Leeds, etc. However, when we touch on, maybe later, the on-going piece around the relationship with public finances and the areas of strength that we need to invest in. You have brought a question around startups and scale-ups. To be honest, to echo what was already said, we do a banking barometer. That west produced their regular survey, confidence in small businesses is low at the moment. Generally, the economy is, as we know, not growing particularly strongly. What we see is that, while we have a reasonably strong performance in startup businesses coming out of the university sector, for example, we fail to convert those at the rate that we should be into startup scale-ups into bigger businesses. We are not performing strongly in that space as we need to be. I attended your reception a couple of weeks ago in the garden lobby, in which you spoke, Sandy. What was interesting was that BlackRock pointed out that it would increase a workforce in the end of the year from 1,000 to 1,500. 13 per cent of it was a workforce, but 30 per cent of the economy, if you like. Financial services punch as well above its weight, which I thought was very interesting. If BlackRock is employing another 500 people, we know that they might have some 10 trillion or whatever it is, if it may be a fund. The base is very strong, but it is about trying to ensure that we continue to maintain that competitive advantage. It is important to have startups and to support innovation with new businesses such as Rachel's End. It is also important to ensure that larger businesses continue to grow and thrive. Start-up scale-ups entrepreneurship has to be part of the future of the Scottish economy, but we will probably have a handful of businesses at scale as we sit here today in terms of that contribution to the economy. Given the position that is well documented around public finances, our ability to, in the next few years, to be able to support and scale those businesses further has got to be a real key part of that economic strategy. We employ about 150,000 people in Scotland and almost 10 per cent of GVA, almost 15 billion, exports of 9 billion. It is important that the whole economy benefits, but your point about, for example, how do you generate more economic growth in the relatively short term, then it is going to come from some of those existing larger sectors as we continue to grow other sector space in parallel with that? Louisa, the share of the economy from hospitality is smaller, but in terms of the number of people employed, it is actually larger. You have raised a number of concerns about going forward, and you have talked, for example, about non-domestic rates and release there. I am not really seeing any pound shillings and pens being applied. It is always frustrating for finance when people talk about what needs to be done but without saying what additional resources should go into supporting the hospitality sector. You mentioned a number of areas where it can be supported, but what additional funding is the sector looking for across Scotland and how would that be financed? The main thing about hospitality just now is that we are on an absolute precipice. I am sure that it has not escaped your notice the number of closures we are having just now. It has never been harder to operate in hospitality. I have been in the industry for far too long. It is a double whammy. We did feel slightly persecuted during the pandemic. Recovery has been painful, and that recovery is not showing any signs of getting any better. We are hit with the energy costs and we have extraordinary recruitment challenges. Not only is there a lack of confidence in the business sector, there is also massive lack of confidence in the consumers because they are seeing their own pay packets not going as far as it once might have. For hospitality to survive—I genuinely mean that word—we would need some form of funding and some form of support. What we had hoped for is certainly to get a relief on non-domestic rates that will allow our profit margins to fund expansion. It was almost what Sandy was saying about not seeing the new entrepreneurs coming into hospitality. I am not seeing anybody thinking that this is great and that I am going to put my savings in and open a new business. The trade is getting older, but the consumers are not any older. How do you stay relevant? I would love to see the new guys coming through, but there is no incentive to do it because it is almost impossible to make money just now. By making money, I mean breaking even, not making a loss and not going bankrupt. The whole purpose of that is to try to present to the Scottish Government a report whereby we say in the next financial year that those are the priorities that the Scottish Government should take forward. We know that there is a £1 billion funding gap at this stage. We know that finances are challenging. It is very easy for witnesses to come along across all sectors. We have already said that we should spend more money in our sector or in our sector. That is simply not possible unless we raise taxation significantly, which, frankly, other witnesses have suggested that we do. What additional relief are we talking about? I am trying to think about the latest figure in rates relief, which is £693 million. How could that be changed? How could that be increased? How could that be funded to deliver more for the hospitality sector in Scotland? After the pandemic, England put in its rate relief, which we did not benefit from in Scotland. We would like to see that coming into play. We understand that that might cost around £85 million, but that money has come through the Barnett consequentials. It is in the system and we would like it. In areas where Scotland is an advantage, for example, in terms of a small business bonus scheme, we should pay additional rates relief, but in areas where the UK is an advantage, we should ensure that all Barnett consequentials go into the sector. It is a double win for the sector, but that would obviously have impacts on other areas of the Scottish budget. If we were to do that, if that £85 million was to be brought into hospitality in other sectors, where in the Scottish budget should the Scottish Government take that? That is certainly not from my understanding what I would be asked for. I am here to present where we are with hospitality. There are 200,000 jobs and a massive amount of tax paid through the system from duty through to income tax, through to corporation tax and everything. Everyone pays their taxes. We want to expand and employ more people. We want to support communities by ensuring that there is still a hospitality provision there. I fear that, without some form of support, what I have just said will not be possible in the upcoming year. For example, let's not talk about—perhaps I can understand what this has been reluctant to say where in the Scottish budget we should come from. I mean, we probably do not have the same understanding of the Scottish budget as we do. I mean, why would you—it is not your job to do that, to have that level of understanding, but in terms of the philosophy of the Scottish Government, should it look to try and hold spending, reduce spending and increase spending, and, if so, should that be through, should we think about increasing taxation, for example, to provide additional funding? One of the things that Sandy could argue is that more money spent in his sector will produce greater growth and therefore more taxation, more money for public services. You have heard the figures already. 13 per cent of Edinburgh employment is 30 per cent of the contribution to the economy, and that is money available for public services. However, as you have mentioned, 200,000 people are a lot of people, many of them want fragile communities where there is no other employment, etc., etc., and they help to bind some of those communities together, particularly rural areas in my constituency and many others. Where would you want to pitch to the Scottish Government in terms of whether we need additional funding? That is where we think it should perhaps come from, broadly, taxation and lower spending elsewhere. I do not think that we particularly want to see a trade-off. The point is that we want to employ more people. There is a massive desire to lift people out of poverty. The hospitality is no longer a poorly paid industry at all. Even the hourly wages for our staff are really, really good—I am not speaking for the whole industry, I will speak for signature—and our staff are at the entry level. We will earn anything between £13 to £15 an hour, which is really, really good. That is your K.P. That is a kitchen porter. That is anyone. It is putting more jobs into hospitality, allowing us to expand, allowing us to employ more people and, hopefully, lift more people out of poverty. Rachel, one of the things that the STC said when it gave evidence to us is that they do not think that the Scottish Small Business Bonus scheme actually necessarily works. It has been saying this for years, instantly. When I was chair of this committee from 2011 to 2016, they had the same argument. They are saying that that is money that should perhaps go more directly into public service. I am just wondering what you would say to that. The other thing that they would say is that it should be tied to fair work if small business bonus money is to be spent. What do you feel about that? Over a third of Scottish SMEs, at the moment, will maintain some level of small business bonus scheme relief following the recent reforms by the Scottish Government. We believe that FSB argued that the small business bonus scheme should be maintained at least in its current threshold in order that the scheme remains the most generous of its kind in the UK to help SMEs to grow. As we know, SBBS is a redistributive measure. Racable values tend to be lower in areas where trading conditions are more difficult, so it is a huge support to allow invaluable and supporting local economies. I want to first note before we get into the fair work conditionality that over three-fifths of SMEs currently pay at least the real living wage. Those who do not offer the real living wage are at the minimum capacity of a financial barrier to do so. SMEs have also been known to employ people further away from the labour market. They have also historically been known to support employment and economic growth in a post-decession economy. They give back to their local communities and support flexible working. First of all, we need to take a step back to remind ourselves today what the value is that small businesses are in Scotland's community. They make up 99 per cent of enterprises in the private sector. They bring £110 billion into the economy and employ more than 1.2 million people. Any conditionalities that we are thinking of putting on a business at the moment really need to be taken in mind of what the value is. SBBS would be hesitant to look at it as some form of handout. The small business bonus scheme is a relief for businesses right now. At the end of the day, businesses at the moment need all the relief that they can get. We have pulled away a lot of the safety nets of support. The Government has done its best to mitigate the risks of the pandemic, but we know from our survey that most of our respondent site 2022 is just as difficult as 2020, if not more so. That is because we have seen support wind up that was an injection during the pandemic to help recovery. However, now that we are into 2022 and we are in the current economic crisis that we are in, we are really struggling to see where businesses can afford to lose any more support. SBBS is currently that relief that businesses need to remove that safety net of support, which could mean hampering and losing more businesses to our economy, which in turn will affect growth. One of the areas that we are very keen to see is why we have suggested that there be a small business impact assessment, rather than just a business regulatory impact assessment, but one that solely focuses on small businesses, so that if you were to consider reshaping, reforming or putting any conditionality of SBBS on, we would have done that with a first focus of what that means for SMEs in mind, because currently there is not a small business impact assessment. That is in Northern Ireland and we have seen it in England. We want to see one up here to ensure that anything that we are considering doing to take away or change support to businesses is fully taken account for what that impact might look like. I would be hesitant to say that SBBS is something that we should just remove, particularly in the current climate. We stand to want to maintain it as it is currently threshold. That is absolutely fine. I am just looking to see your view on that and the importance that you put on that. One of the things that you have said in your submission is that you want a more sensible approach to regulation, but you have not really spelt out what you mean to what regulation. What regulation do you think hampers small businesses in Scotland that we could devolve and try to remove or change? That is understandable. As we have said, our survey found that over a tenth of small businesses already spend more than eight hours per week, equivalent to a full working day on regulation. We can see regular constraints coming in in any kind of shape or form that rateable values come in. They need to make sure that they are applying for SBBS. They can do things like understanding the system that they are working within. As a current example of regulation that is coming in is the visitor levy. We have spoke to a lot of members recently and done a submission to the consultation to that bill. If that was to come in, there is another burden, particularly the accommodation and hospitality sector itself, in having to work within and then apply a levy to their charges. It is not so simple for small businesses that do not have accounts and bookkeepers. They are the bookkeepers themselves, so they need to carry out any changes that the Government implements. We have seen from things such as DRS when implemented regulation comes forward, businesses have a lot of work to put in towards understanding first what it means and then carrying out in practice. Regulatory pressures such as short-term lets, visitor levy, DRS, all those things that are coming down the line or have been in the past, have an impact on businesses' day-to-day operations. Historically, we know from statistics that small businesses do not tend to have a lot of time and capacity, financial resource and time capacity to carry out such tasks. What we are saying about regulation is that it needs to be simple and effective. For instance, with the visitor levy we have said that if that is going to be something that changes across all different local authorities, if you have a business that works between one local authority and another that has to implement different charging schemes for accommodation providers, that can be quite a complicated system to work within. All that we are arguing for is that simplicity within regulatory frameworks that come into place down the line to ensure that businesses themselves are working within the most simple process. There are no penalties or any kind of burdens that come as a result if they are not working or not making sense of the jurisdiction that they have to work within. We know through, as I am saying about that small business impact area, that we want to understand what those regulations mean, because at the moment we do not fully appreciate what those levies and interruptions of those regulations mean for businesses. Sandy, what can we do through this budget to ensure that the Scottish financial sector remains competitive? I think that it is less necessarily about funding in terms of support. As an industry, a lot of our players are UK players and global players, and they will make decisions and fund operations as they see fit. For us it is about making sure that Scotland continues to be an attractive place to establish business. If you look at the global financial centre index that we look at, it is produced twice a year, and if you look at it, it is done by cities, if you look at Edinburgh and Glasgow, the two. Positively, Edinburgh is in the top 30, has consistently been a global financial centre anywhere in the world. This index looks at over 160 centres globally. Glasgow has moved up from being in the 80s into the 40s, so it is a significant step up. I mentioned earlier about the reasons why businesses are here. Your Black Rock example will tell you exactly that, which is that they are adding another 600 jobs over the next couple of years because of the quality of people predominantly and that whole cost and quality angle. Our concern, therefore, is more around the broader business environment and making sure that we do not under-invest or take those assets for granted. If we take human capital, for example, we think that a lot of the reviews that are going on are broadly in the right direction, but they need to be implemented. It is important that our education sector aligns with the needs of the economy over the next five to ten years. Skills such as data, AI, automation, things like that are going to be in huge demand, not only in our sector but in other sectors. We would question whether or not the skills system is set up to deliver against the needs of industry. I think that another one is about infrastructure. It is the one on the Global Financial Centre index that Edinburgh and Glasgow do not score as well on. Infrastructure is around connectivity, it is around connection with other parts of the world. It is about being able to travel around all that infrastructure that we know and other cities around the world are bluntly better in that area than we are. On the basis that we can be great at everything, we do have assets but we need to keep investing in them. It is important that we continue to be competitive, not only with the rest of the UK but globally. You cannot just look through that one lens, which is just absolute tax. It is also about what businesses are getting in return for that and the ability to attract people here. It is important that we keep a rounded debate around that, but everything has its tipping point in some regards. For me, it is not necessarily about our industry needs from Government in terms of funding, but it is more about the broader business environment and making sure that we continue to be competitive. In terms of taxation with regard to it broader, what is the tipping point that you have referred to? We look at tax not only from a Scottish perspective but from a UK perspective. We have called out the fact that it is a co-operation tax, and changes put us at a disadvantage. We have seen firms that have chosen to move elsewhere. Citibank is a good example of building a European head office in Dublin while in London, part of that is co-operation tax related. You have examples of where that has driven investment elsewhere. As it relates to Scotland, we have divergence in income tax and land and buildings tax. We know from some of our larger members that that is creating some challenges internally about moving people to Scotland. There is little evidence that people are leaving Scotland, but given what you have seen in some of the submissions and some of the demographic challenges, bluntly it is that young professional population of 25 to 35-year-olds who may be based in Leeds or Manchester, may work with big consultancy firms or whatever, are questioning why they would come to Scotland for five years, especially when they are only being asked to be in the office two or three days a week, and part of that is because they are paying increased tax and increased tax for buying a property. Those are live conversations, and I can give you a list of 20 or 25 firms that are having that. That is exactly the type of population that we want to attract to Scotland, so we should be doing everything that we can to attract them. And bluntly, free university prescriptions, etc. They are all great, but for that population they do not really mean anything. They do not carry any value. That is very helpful. Just the last question to your siblings before opening up to colleagues, which is you have talked about business rates, for example, and the need to perhaps look again at those in terms of supporting the hospitality sector. That is obviously a blunt tool, although I welcome one release. What other help can the Scottish Government provide to grow and ensure the long-term survival and prosperity of the hospitality sector? It is encouraging the next group coming forward. If there were young 25-year-olds coming into the city and coming into the sector, we can make it attractive place to do business. That is what hospitality venues are. Yes, they provide infrastructure into a community, but ultimately they are businesses and they are there to drive expansion. To be successful is such a measure that is hard to quantify, but for a lot of people it is about how many people we employ. We are very, very proud of that and we are very proud of the number of people that we have managed to employ through the hospitality sector. If we can do more and more of that and have a thriving hospitality sector, which we used to be famous for, I mean, there are numerous songs about Scotland's hospitality. I think that we have lost that during the pandemic. I do not think that we have a thriving hospitality industry anymore. I think that it is bordering on surviving. I would like to see it flourishing and that would be massive endorsement from our Government that this is an industry that they want to protect and that they want to nurture. That is what the ask is, can we nurture hospitality to allow it to develop again because it has not developed in any way now for four years? Okay, thank you. I think that we would all agree that we need a lot more 25-year-olds in Scotland in our working population. Okay, I am going to open it up now. Ross, to be followed by Michelle. I think that we could do with more 25-year-olds in Parliament as well. I am interested, just in the first instance, on some of the questions around the small business bonus scheme. Rachel Bintris, in your point of view on that, there is not a credibility issue with the small business bonus scheme insofar as it is not just small businesses who get it. There are shooting estates owned in tax havens owned by billionaires that are receiving a tax relief that is at least in terms of its name supposed to be for small businesses. We lose £5 million every year in small business bonus scheme relief that goes to shooting estates. Truly the FSB agrees that there needs to be some reform of the system so that a tax relief design for small businesses only goes to small businesses. I think that that point is valid. As with any system that comes in, particularly around tax relief or tax systems, there is always some form of issue with it that needs to be reformed. We are all for reforming whatever support is in there. We want the support to be directly to small businesses. That negative side of perhaps the SPBS that you are talking about there is valid in the sense that we do not want to see that either. We would like to see SPBS directed to the smallest and micro of businesses that make up most of Scotland's private sector economy and, as I have said previously, employ and give back to the communities. That is where we want to see SPBS being used for good towards growth. As I have said, I cannot stress enough, although there might be a select number that is somewhat abusive of the relief. Most of what comes to our members and the members that we are dealing with are small and micro medium-sized enterprises who heavily rely on the support to keep their communities going. It is people on the high streets that are looking for that small business bonus relief. We talk about death at the high street. We talk about 20-minute neighbourhoods reviving town centres. That has to go hand in hand with schemes like that to be introduced to ensure that small businesses are getting the best benefit from that to give back to the smaller communities and local economies. That was useful. You also mentioned that visitor levy is an example of additional regulation. Is your issue with it in terms of how it is implemented rather than the principle of the levy itself, or is the SPBS position in opposition to a visitor levy at all? We submitted a consultation response to that just about two weeks ago. Our small business base is obviously very diverse. It is not a monolith. We have diverse opinions on how people feel about it, but generally we welcome the levy coming in place. Our standing is that there is little detail at the moment in the bill of how that is going to look like in practice and how it is going to be implemented. There are also discussions about a flat cap rate versus a percentage charge. We need to understand what that is going to look like for our members, so we are not opposed to that. We just want to make sure that there is more detail in what it is going to come around to and how it is going to look like in reality. To ensure that it does not have a negative adverse impact on our businesses, so one of the examples is the Bria carried out. We are concerned that VAT, for instance, could bring some of our small business members over the VAT threshold, but when the Bria was carried out, only less than two businesses under the threshold of 85,000 were consulted upon, so we are concerned that there has not been enough of a picture. Because VAT is fiendishly complicated and it is a reserved issue, there was not a cost impact associated with that. However, we are concerned that when the levy comes in place, what that might mean for incurring an additional charge on to our members who are currently sitting below the VAT threshold, they could be brought into that. That is why a long-starting request of our to the UK Government is to increase the threshold to make sure that it can cushion some of the blows of things like that for our smallest of businesses. Great. Liz, you mentioned in the context of potential additional non-domestic rates relief. If I mentioned, signature groups can have minimum wages of £13, £15 an hour, which sounds really positive, and I presume that that is regardless of age, that is a starting salary, whatever the age of the worker would be. I am interested though in your written submission. I think that you mentioned it in your evidence just a moment ago. It includes an argument that additional non-domestic rates relief for the sector would be effective at tackling poverty and low pay. I presume that, given that, the hospitality group would be relaxed if an additional relief was brought in, that it was conditional on businesses paying at least the real living wage regardless of age. That is absolutely up for discussion. It depends how that real living wage is going to be made up. Does it include service charge and tips? What does it include? I welcome a wider discussion on that once we have the parameters of it. Why should it include tips? Tips are something that workers receive directly at the discretion of the customer. It is the employer's responsibility to make sure for them to pay their staff directly—in this case, at least a wage that they can live on. Administratively, I cannot see how you would, but regardless of that and principle, I cannot see why you would bring tips into it. Surely, if a business is going to pay its staff at least a livable wage, it is on them to pay their staff at least a livable wage and not rely on the discretion of customers. A lot of people use a trunk system, so trunk is a service charge that we have no control over. We brought that policy in. We have a 10 per cent service charge—a great discretionary—on everything. We brought that in as a policy that goes 100 per cent to our employees. What would be great is to see more and more businesses doing something like that, which raises the money per hour going to every single member of staff—that is front house, that is back of house, that is everyone. It would come down to economics, if there was a case that it had to be the real living wage, there would probably have to be some form of another price rise for the consumer. We are now up at three price rises a year. There is a ceiling for what people will spend on fish and chips, and there is a ceiling for what people will pay for a burger. It is a bigger equation than just a trade-off of real living wage and non-domestic rates. It is understanding the wider picture of what we are trying to achieve. We all want to see people getting a good wage, and that is why we brought in service charge. I would say that 1 in 1,000 people object to it, and that is probably when they have not had very good service, and that happens. However, it is discretionary and it can be taken off, but every single one of our staff will love the fact that we brought it in. On that point of the wider picture, not just seeing the trade-off between those two things, I think that you accept that low wages, wages below the real living wage, have a cost both to the public purse but also to the wider economy. Obviously, a worker who is on below the living wage is not going to have much discretion to spend on power themselves. There is not much that they can spend on fish and chips on a Friday night. No, I absolutely agree with that. If everyone in this room had a magic wand, we would not be here. However, we have to accept what we are playing with and how the cake is made up. However, the way we cut it, what we want to be able to do is fund expansion and fund recovery of our trade. We would love to see nobody in poverty. I think that hospitality has made great strides in what we have done to elevate how people view the industry and need more people coming into it, because we have the largest recruitment gap per 100. It is still not seen as that attractive, so we have a lot of work to do with that. We have done a lot of work, but now we are talking about survival. I cannot see how a lot of businesses will be able to survive without it. I completely appreciate the difficulties that the sector is under. This is a question of survival for some businesses. It is a very literal question of survival for workers who are being paid a poverty wage. Part of the challenge that we have as a committee in the Parliament has overall is really compelling asks that are made of us for further expansion of the social security system. There is no reason why, in a country as rich as this, one in five children should be in poverty. We spent £450 million on the Scottish child payment, so we lifted 90,000 children out of poverty. There are hundreds of thousands more children that we could lift out of poverty if we spent more money on that. That money needs to come from somewhere. That larger comes from income tax, which is the biggest tax lever that we have. However, Scotland has, relative to the UK as a whole, relative to London and South East, a low-wage economy. One of the ways in which we can tackle poverty both directly at source but also raise additional tax revenue that we can spend on direct interventions is by boosting wages. The challenge that I am seeing, particularly when I look at media coverage, I believe off the back of a question that Liz asked that has just been answered by Tom Arthur, where the Government floats the idea of additional conditionality to existing, potentially to existing, non-domestic rates relief around the living wage. There are comments in the press yesterday and today, I believe, from the Scottish hospitality group objecting to that. I am really struggling to square the circle here of business sectors who are coming to Parliament making a perfectly compelling and legitimate case for more spending in their area, for more tax relief in their area, but who are not willing to take on the conditions that I think could be reasonably associated with that to tackle those wider structural issues in our economy that also have a very direct impact on people's lives. Should it not be really straightforward just to say, yes, you know what, we do want additional tax relief, but we are willing to take additional conditions alongside it to play our part in driving up wages? I agree that there can be additional conditions, but it does not work if it is. At the moment, we pay—I am just with my signature hat on—all of our staff the 1042 rate, so that is the over-23 age rate, regardless of how old you are. If you are 18, you are coming in and you are getting that. On top of that, you then get service charge, which can be anything from another £2 an hour up to £4 an hour. We are a really, really good employer. The Scottish hospitality group, because we represent the independent industry within our sector, most of us are doing that. If all of our staff are getting a really, really good rate, it is just about the cake. If we want to ditch service charge, we pay the real living wage, £10.90. We then have to put our prices up, because we have to balance the books somehow. We took a look at it for signature, and even if there was 50 per cent rate relief, that would be £500,000. To move our staff would be £424,000 up to the real living wage. Our staff would probably be worse off, because we would have to lose service charge. It would be a backward step for us to go to a real living wage, because they are already getting more than that. I am just speaking for the members of the Scottish hospitality group, but not all of them, because everyone has a different way of running their own business. I am not trying to be difficult. I am just trying to say that there is not a one-size-fits-all in this room. Wider discussion is needed and perhaps more for us in the hospitality sector to be more explanatory about how our business is made up, because it is not all straightforward. The price rises fluctuate between geographical locations. I would welcome more discussion on that, because it is not as straightforward as going to go and pay the real living wage, because we are already doing more than that for our staff. There are a lot of other staff benefits to get. We do free food on shift, so if you are working, you get a meal free. In January, all our staff can come and eat any of our venues for free if they are struggling. They have overspent Christmas on their credit card. They get staff discounts everywhere. We offer a massive range of benefits to our staff. I think that this is the forward thinking, this is the new way of hospitality, as opposed to your Pat Butcher, where there are gin and tonic and niceness lice in the Queen Vic. We have moved on so much, and I would welcome the chance to sit down with some of you and explain how much we have moved on and how the welfare of our staff is at the forefront of every single decision that we make. You have made a very compelling case to anybody who is watching and considering our own hospitality for the signature group's vacancy page. I have a couple of other questions, but I am conscious of the time, convener. Is that okay? That is one for Sandy, so feel free. Yes, I did not want Sandy to feel left out. Interested in your thoughts on whether or not the Scottish Government is getting best value for money from things like grants, public procurement, etc. Quite a lot of public money goes out the door to the private sector every year, entirely necessarily. Is the Government doing enough to make sure that the benefits of that stay within the Scottish economy? Naturally, some of that goes towards larger companies, for example, multinationals, etc. Again, unavoidably so, but is the Government doing enough, for example, through public procurement mechanisms to make sure that it is maximising the benefits of that to the Scottish economy? I am not sure that I can really answer your questions specifically. I think that what I do here is, particularly from SMEs, and also from, I do a lot in the third sector, is that public procurement processes are particularly cumbersome and particularly challenging, and do not necessarily always end up with the right outcomes. I think that you tend to find that there are different local authorities while running slightly different procurement processes, so there is an efficiency point in all that for me. Personally speaking, I am not engaged directly in the procurement process, but, as I say, I think that at times people find it really challenging. You mentioned the impact on SMEs, and some conscious Rachel might have something to contribute on that. Definitely, on procurement. Our survey just showed that the majority of Scottish SMEs have never tendered for or run any public contracts. Two thirds of Scottish SMEs have found the process complex and challenging, as Sandy had said. A lot of them feel that it is geared towards larger businesses, and over half of Scottish SMEs do not believe that procurement spend by local authorities and public bodies is currently sufficient with micro and small businesses. We have seen generally that procurement is lacking and that there is a lot of untaffed potential that we are not seeing a larger procurement spend with the small businesses. We obviously know that the community wealth building legislation is coming in, and we want to make sure that that supports local authorities to spend better with their micro businesses, but we also want to see that we talked about things that do not have price tags on them as part of the reform and sustainability of the finances. Realistically, we could look to be creating a procurement target, a national indicator that sits within a national performance framework, which allows us to measure just how many procurement contracts are being won by SMEs. Therefore, the more we measure that performance, the more we can start to understand why it is geared towards larger businesses, why it is too complex of an area and how we can simplify that to make it more efficient and have more of that local spend and local economies thriving. Just so that I am completely clear on that, is the issue at the moment that we are not even completely clear—we could all probably guess why and have plenty of anecdotal evidence—but we are not completely clear exactly what the barriers within the procurement system are to SMEs. Therefore, we need to do that basic data collection first before we can come up with policy proposals. As you are saying, there is a lot of anecdotal that we hear from members. Their first-hand experience is generally that the system is very complicated and can be very convoluted to try and work through everything. For businesses that do not have a lot of capacity or time or the know-how to understand to bid for those contracts, that larger businesses do have. You are definitely right that there needs to be more data. As a policy person, I am all for backing and increased data. We know that business data is lacking in Scotland. The committee has taken evidence in the past on that. It has been spoken about by many organisations, including ourselves, that we need to increase the business data that is out there. We can address and hone in on the issues that exist for each individual business because they are not a monolith and it is not a one-size-fits-all. For procurement and local authorities, each need is different across the board, so we want to see that improved data and performance measurement in those areas. We started this conversation with the convener asking about confidence. What do you see as the impact in investor confidence, both in themselves and in other products of your sector, Rishi Sunak's recent U-turn around net zero commitments? That is a good question. What investors are looking for is a consistent landscape for making investment decisions. Whether that is those decisions, whether they are right or wrong, all it does is create a degree of uncertainty in investors' minds. You have heard some of the reactions from some of the car firms as a good example. I think that what is really important for investors is to have the confidence around the business environment that they are investing in. The more you can do that, the better. You can see in places such as Ireland, for example, where the consistency of the business environment is almost transcends even the changing government. Again, it is not a political point, but things such as windfall taxis as well creates uncertainty. You have seen some of that happening in oil and gas, changes in co-operation tax and so on. Changes like that create uncertainty in investors' minds and may choose to invest elsewhere. If any, despite the protestations of continued focus from the Scottish Government, do you think that that will inevitably flow into funding flows, given the nature of how that operates out of the city? Do you think that that is inevitable, that lack of confidence and therefore change in funding flows, despite the protestations of the Scottish Government to continue with the path that they have set out? Yes, it may be early days, but it may well do. Capital can flow anywhere in the world. The provision of capital at the moment is not the problem. There is money out there. I think that what we consistently hear from investors that we have members is about the provision of investable projects. Having those projects that they can invest in and about the environment in which they can invest in. Things such as planning and other things are supportive of that. Thirdly, there are skills to execute on the investment. I have said that many times. Those are things that we could usefully tighten up on in our business environment. On the theme of confidence, I am interested in the nature of confidence in your measures of women-led businesses. How is that distinct from male-led businesses and what is your data telling you? With our big small business survey that we carried out earlier on this year, it is one of the most extensive surveys that we have carried out. It was both for our members and wider SMEs across Scotland for anybody to take part in. We were really fortunate that we got a pretty 50-50 even split across female and male respondents. We have had that gender disaggregated data to have that comparison. When it comes to confidence, we have seen quite a lot of even splits across male and female-owned businesses that do not feel like Scotland is a great place to start the business. Both genders have felt that the overall economic uncertainty and cost of living crisis seems to be a blanket feeling. Where we have seen the real issue with women-led businesses is that they do not tend to tender for procurement contracts at all, as opposed to male-owned businesses, and that they do not tend to apply for external finance. We have seen that that does not, and we know disproportionately that small businesses rely on external finance to help cash flow investment and expansion. If we do not have women entrepreneurs looking to apply for that external finance or struggling to get that, we will see a huge loss in the economy. As you know, there is a lot of data that exists about the fact that if women are not doing their job in the economy and are not getting the same equal opportunities, that is really hampering growth. One of the areas that we think that could be really beneficial is the Scottish National Investment Bank. We have asked for previously that we would like to see 20 per cent of its annual investment budget targeted toward SMEs, but as part of that we would really like to see the measure in and publishing of the proportion of loans that are giving not just to disabled and ethnic minority entrepreneurs who are also less likely to apply for accessible finance, but women themselves. We want to see more women entrepreneurs. Entrepreneurship can be a difficult thing to get into, as we have spoke about, and I am sure that other committees have addressed the issues around childcare, flexible working arrangements, self-employment SMEs tend to offer more of that option of flexible working and can fit into that childcare arrangement, but it still remains one of the largest barriers into employment opportunities and entrepreneurship. When we talk about entering the labour market, it cannot just be getting a job, it should also be about creating your own job, it should be about entrepreneurialism and where we can see those barriers being removed, and that is where we want to see women being encouraged to apply for external finance to start up their own business and to become young entrepreneurs in themselves, but at any point in their life to be able to support their own dream of having whatever business they want to do, but that is going to come down to the fact that we need to see more access to finance, more cash support provided to women entrepreneurs, but their confidence in the access to finances is where we are really seeing the issue and obviously that leads to, as I am saying, a lack of women becoming entrepreneurs themselves. You have led me on to my next area. It struck me that £15 million is a relatively low figure for entrepreneurialism given some of the figures that were being bandied about before the 2021 election. In terms of the new deal for business and off the back of a very good report by Mark Logan and Anna Stewart in terms of encouraging female entrepreneurship, I appreciate its early days and you said that in your statement earlier, but what sense are you getting about a relentless focus on enabling half of our, in fact, over half of our population? Rachel, I will come to you first, but I think that you may have a view, Sandy, as well. I think that you mentioned the report. That is an excellent piece of work that has been carried out. It has really started to paint that picture because I think that there has been a bit of, like, there has not been a lot of clarity on that area in particular in Scotland. And we know, I think, we are aware that small businesses themselves are struggling, but what that means for struggling entrepreneurs is different. And as you are saying, £15 million, as I have said earlier, we welcome any cash injection in any form, particularly in the current climate. Every penny is a prisoner at the moment, and we need to make sure that we are making the most of that. But I think that we are seeing that lack of support. As we are saying, there are institutions and there are levers already there to be pulled. That £15 million is great, but there is the bank sitting there with an annual budget to invest. We need to pull on that lever and maximise its disposal to make sure that there is a target towards women entrepreneurs. And without those targets and measurements getting put in place, I think that we are really going to struggle to leverage that part of our economy in itself. And I think that that is where that is why we are arguing for the bank itself to be more disproportionately including women in their loans, particularly to micro and small businesses that it currently does not do. So we are looking to really bolster where we can see women coming into entrepreneurship. And I know that there is not going to be a silver bullet to that, because as we are saying, things like childcare is a big area, particularly for women in the workforce that we need to see. Provisional hours given in programme for government did make a bigger commitment to that, and we are welcoming of that. That is a huge area that we have heard from a lot of our members, but particularly women, that childcare is an issue for them. I appreciate that it is a very big area, and you are coming off the back with questions that I myself have asked of SNP on the economy committee. Sandy, and I want to bring in Louisa as well, in terms of your reflections around a focus on women in your sector. Of course I am aware that there is a lot of work that you have done in your stats are different, but I would like some reflections from you in terms of entrepreneurialism. That is some of money and particular challenges for women in your sector. As Rachel High likes, there are lots of other elements of the system that need to be in place to support females into entrepreneurship. I have always maintained this. I think that it is a relatively average performance in entrepreneurship at the stems in schools, so I think that there is a lot of work that needs to be done in schools. If it was up to me, I would put Young Enterprise Scotland in every single school, secondary school in Scotland, because you also find that there are young people in schools who may not connect educationally or academically that actually do really, really well in those types of situations. I think that we need to step further down the track and encourage females and others from other minority backgrounds to be involved in entrepreneurship. In our area, entrepreneurship is in ffintech space. If Nicola was here, I would tell you that there are a lot of females who are involved in that space, so you are starting to see more females coming into that. I contribute to Anna's work at the time, so I think that you are starting to see some of that come through. To Rachel's point, there needs to be a lot of other parts of the system that are there to support females as they go through, because there are huge benefits that have already been articulated. Last question to give you a chance to come in, Louise. I imagine that there are very particular challenges for women working in hospitality. I will return to the original theme of this session in terms of what specifically can the Scottish Government do in your sector for women working in it? We have quite young people. The nature of the beast is quite young. We have a 50-50 split of general managers for women's men, which I am really proud of, because that was not the case 10 years ago, and we have really pushed on with that. There are quite a lot of females in our senior team. I think that there is definitely a higher percentage of men, which is also encouraging. We encourage every single general manager to put through an entrepreneurial shift every single week. It is one of our values, which makes me sound so corporate, and I do not mean it to. It is huge. We want our general managers to treat those businesses as if they were their own. The biggest compliment to me is somebody who goes away and sets up on their own, someone who has come through our business, takes the leap and goes up and sets up on their own. We work really hard to encourage that. We pay them every week to put one shift through where they can drive their own desires. That might be competitive research, that might be research and development, but we really push it hard. For women in the sector, I think that they are very well supported. We do not really have a gender bias within hospitality, which again I am very proud of. We are flexible as much as we possibly can be. Broadly speaking, being a female has not held me back in any way, and I came through the brewing industry, which is very male dominated in the 90s. I think that the female workers in the country are very well supported. As it was the Deputy First Minister of the time, John Swinney was with the committee on the last budget scrutiny. He flagged up three really critical issues. One of them was entrepreneurship, second was about regional support and business, but the third one, to which he accredited very considerable importance, was about the numbers of people who are economically inactive, who have come out of the workforce in Scotland. That was really causing a lot of difficulties. Perhaps that is people who, since Covid, have decided that they no longer want to work full-time—they are only doing part-time. Some of them have come out altogether, taken early retirement, and he was very concerned about how we attract more of those people back in. Can you offer us some suggestions as to what you would like to see in the approach to the economically inactive? There is obviously a waste of talent of not having those people. I would love to see older people who have skills of life, who know how to talk to people, who are not entitled, who know how to graft. I would love to see more of the older demographic getting back into work. I do not know how we do that. When I went down to London quite a lot just after the pandemic, I noticed that there were a lot of 60-70-year-olds serving breakfast shifts in bars and in hotels. That would be wonderful to be encouraged. My own mum is 72 and started working in one of our bars yesterday, nine hours a week cleaning it, because she is bored and she wants to go and do the brasses. She is working in St Andrew's now for us. That is absolutely fantastic. Anything that we can do about creating—it is making it attractive enough, and it is giving people the confidence. A lot of people, once they are out of work, their confidence takes a real knock. How do we make it so that you are like, guys, this is not about pulling pints, this is about contributing to your own mental health, your own welfare, and supporting the other businesses. Brilliant opportunity would be delighted to get behind it. I will echo what Louisa said. There is a piece around data. Scotland, based on UK numbers, has more percentage inactive than other parts of the UK, so what is driving that? That is really important. For me, employers need to be more open minded. There is something about how all sectors step up. There is evidence around people with disabilities, particularly physical disabilities, and employers are too closed in their mind around different people who are currently inactive. I think that there is a piece about that. The third thing is how do you make that attractive? How do you—because I think that there are perceptions about certain industries that people who are inactive might say, that is not for me. Therefore, how do you break down some of those perceptions and encourage people to think about those as viable options? We need to do something, because I remember hearing John saying that he reckoned that there were about 150,000 people in Scotland who, with not a lot of encouragement, could probably find themselves back in the workplace. That is why I am asking the question, because he was very strong, in fact, to be impressed by what he said about that. Those are people that Louisa has rightly flagged up, whose skills we desperately need and who have got this wealth of experience, to try to ensure that they come back into the workforce is critical, because it has a productivity angle as well. Rachel, do you have any— Probably not much more than what the other evidence sessions have said. I think that, to be fair, as I have said already, SMEs tend to hire people furthest away from the labour market. I do not know, statistically speaking, what that would mean in terms of the economically inactive coming into the labour market, but in terms of what SMEs can offer employees in terms of flexible working around that kind of community spirit, their local economies. We know in Scotland that we have an ageing population, and we also have an issue in Scotland where a lot of people do not work where they live. They are commuting out, or they are leaving certain local authority areas to get work, particularly in the younger generation, but I think that that is also true of the older generation in Scotland, where we are seeing a lot of people what is on their doorstep. They should not always have to come into the big cities to get jobs. They should not have to come into the more affluent local authority areas that might have a thriving high street, as opposed to others that have a more dwindled high street. We have a huge problem where, in each area of local authorities, we have different needs, but how do we inject that life back into our local areas to encourage people to then have a job in their area that they live in? SMEs can play a part in that, but if SMEs close their doors because they do not have support and they are struggling to keep their business afloat, they are not going to be there to offer the labour market opportunities of bringing people back into that workforce. Again, FSB would be very much involved. We would love to be part of that discussion around how we encourage the over 50s and the economically inactive to come into the labour market, because we know that that is an issue that has been raised before. We definitely think that there would be a key player amongst our small business community in addressing that issue. Do any of you think that there is any sign that there is a slight movement within the economically inactive people who are starting to look at jobs, or is it just a very difficult landscape? The stats would tell you that there is a slight turn down in terms of the numbers of inactive. Listen to the Bank of England, a lot of that is to do with people who have chosen to date themselves out of the labour market, who have now realised that, because of the living and inflation, etc., they probably need to put themselves back into the labour market because it is not working out the way that they might have wanted to. There is a bit of that, but clearly the long-term ill-health angle does not seem to be a lot of evidence to suggest that that is changing. Difficult. I wanted to ask also about our high streets. Perhaps you are probably best to answer this, because it is a great concern to many of us who represent particularly rural communities that our high streets and our smaller towns are really decimated. What else do you think we can do to try to reverse that trend? It is hard to give one solution to that. It depends as we have spoken about local authorities having different needs. That needs to be addressed with small businesses as well. What works for businesses as we know from our own data and other data for rural businesses does not necessarily work for urban businesses. We need to really see that because a lot of our survey findings showed that a lot of our businesses said that support is not always recognised in the different needs of what businesses it is. Rather than treating them as a monolith, we need to start really looking and digging down deep into the data that we can gather and general information around what it means for businesses in certain areas of Scotland, what are their challenges demographically and geographically that they do not all have in common. I think that trying to get more data would be a start on that area, but we need to see that support for businesses. We are talking about visitor levy again as another area that we are generally broadly supportive of, but if that means that it becomes more difficult for one local authority and it is a competitive disadvantage, then that is going to become an issue. We are going to start to see more of that divergence between local authority areas and businesses in their local high streets. We need to see a lot more of that simple and effective approach to understanding what businesses need. We need to see small business impact assessments, and I think that another area is just that round of that support. The small business bonus scheme that we have already touched on is a huge rate relief, particularly for areas where we are seeing businesses struggling on the high street. SBBS is something that, if that was to be taken away or changed anyway, that could close further doors on a local high street that we do not want to see. It is maintaining the support that is there, not cutting it and not deprioritising it, but also just starting to refine what support we provide for each area and how that looks in economic partnerships and economic development. It is a huge thing. At FSB, we have development managers who work across different regions of Scotland. We continuously hear that they all have very different issues coming to their doorsteps of their businesses in that area. If Clackmannanshire Council has just shut facilities on their high street or put in parking charges, that is going to be a problem for that area alone. We need to make sure that we are aware of what different local authorities are putting in their local areas and to make sure that we are not causing those competitive disadvantages or a bit of a postcode lottery when it comes to if a high street is going to survive or not. John Tuw will fall by Jamie. Maybe starting with hospitality, Ms McLean, you indicated that the sector is struggling. I wonder if that varies geographically. In Edinburgh, it seems to me that hotel prices are quite high and that indicates that there is a lot of demand. Last September, I could fairly easily get a hotel for a night for less than £100. Now, I could not find one this September for less than £100, and some of them are not that fancy hotels, I would have to say. Is it patchy around the country? Presumably, we do not need to support hotels in Edinb