Welcome back to the second meeting of the NetSera Energy and Transport Committee in 2023. Those of you who joined earlier will have known that we moved on to a gender item for as the cabinet secretary had been unavoidably detained in traffic. So, we are now back in session moving on to a gender item to which is budget scrutiny, That is an evidence session on the Scottish budget 23-24 and I refer members to the papers under that item. On 15 December, the Scottish government published its annual budget, which sets out its tax spending plans for the coming year. Today we are joined by Michael Matheson, Cabinet Secretary for NetZera Energy and Transport, to explore the budget within his portfolio. I welcome you, cabinet secretary, and thank you also for your reply just for i gael prifodol o'r llwylliau pre-budgettwyllol, oedd hynny'n gwneud yn rhan o'r gweithio fel ydych chi'n ddweud allan i gael. Rwy'n gweithio'r Cyfrifolwyr, yng ngynghwm, y ddebethau cyfrifolwyr, cyfrifolwyr, cyfrifolwyr, ac yng nghymru cyfrifolwyr, John Rathden, y ddebethau cyfrifolwyr, cyfrifolwyr, cyfrifolwyr, cyfrifolwyr, ac cyfrifolwyr cyfrifolwyr, a'r cyfrifolwyr, cyfrifolwyr, cyfrifolwyr, Scottish Government and Kerry Twyman, the director of finance and corporate services for Transport Scotland. Thank you all for attending. We have allocated around 90 minutes for this item, but before we start with questions, cabinet secretary, I believe that you would like to make a brief opening statement. Good morning and thank you, convener, and my apologies for being delayed this morning in arriving fully committee's session. The portfolio draws together many of the key strands required to deliver on this Government's ambitious and world-leading plans around climate change, biodiversity and transition to net zero, while continuing to support the most vulnerable in society and deliver a safe, accessible and affordable public transport system. Our 2023-24 budget comes against a difficult financial backdrop, as we work collectively to tackle the acute cost crisis facing the country, while managing inflationary pressures across our budgets. That has required re-prioritisation towards those programmes that most effectively deliver on our key outcomes. The 2023-24 budget will spend over £3.5 billion on transport, including investment of over £1.4 billion to maintain, improve and decarbonise Scotland's rail network, including the provision of £15 million to allow the exploration of a pilot looking into the removal of peak-time rail fares as part of our fair fares review. We will invest £426 million to support bus services and their users, providing access to free bus travel for over 2 million people, including all under 22s. We will continue to increase our investment in walking, wheeling and cycling, allocating £190 million in the 2023-24 budget, as well as spending £440 million to support our lifeline ferry services, connecting our vital island communities and supporting priority harbour projects. We are providing recommend investment to protect and restore nature, including our peatlands, and to tackle the causes of biodiversity loss. We will also continue to support our forestry bodies to deliver the Woodlands creation target, which will see 16,500 hectares of new planting in 2023-24. We recognise that substantial investment is needed in delivering on our waste and recycling targets. In this budget, we are investing over £47 million to drive Scotland's circular economy, reducing reliance on scarce resources and reducing waste. We are committed to taking strong action to meet the climate challenge, investing over £81 million on climate action, including through the Just Transition Fund, to accelerate the development of a transformed and decarbonised economy in the north-east and Murray. Finally, we will continue to provide significant budget for energy to make our homes and buildings warmer, greener and more energy efficient, and increasing funding to help to support the fuel poor through our heat transition. In the short term, we will continue with our fuel and security fund next year, with some £28 million of investment. The portfolio budget delivers on an ambitious agenda, but it is not without risk, such as the on-going impact of Covid on public transport patronage and revenue, and inflationary pressures across the portfolio are impacting significantly on areas such as pay, infrastructure projects and contracts. I can, however, reassure the committee that I will continue to re-prioritise within my budget not only to meet our legal, statutory and contractual commitments, but to achieve value for money against a challenging financial position. Of course, I am happy to respond to any questions that the committee has. Thank you very much, cabinet secretary. The first questions are going to come from Monica Lennon. Thank you, convener, and good morning to the cabinet secretary and his officials. I want to begin by asking about the fair fairs review. There has been a lot of public interest in peak rail fares and the announcement about the abolition of peak rail fares as part of the fair fairs review. Given that public interest in the committee's interest, cabinet secretary, could you explain the rationale behind abolishing peak rail fares? Some people have pointed out that rail travel is most frequently used by men, people in higher incomes and older age groups. Can you provide some comment on the socio-economic rationale behind that decision? The fair fair review stems back to our national transport strategy when it was one of the key priorities that we set out that we would take forward as an area of reviewing our transport policy moving forward. The fair fair review was to look at how we can address aspects of what are anomalies in the fair structure, whether it be in rail or in ferries or in buses. We are trying to identify ways in which we can remove those anomalies and how we can also look at trying to streamline some of the ways in which fares are set within different transport modes. That is the background to where the fair fair review actually comes from. However, the national transport strategy was published in pre-Covid. Since then, one of the most significant things that has happened has been the big change in patronage on public transport, which has continued to this point when we have not saw full recovery, particularly in areas such as rail, in patronage levels. The idea behind having a pilot in removing peak fares is to see whether that would help to make public transport, in rail in this case, more attractive to more people making use of it and to test that out as a hypothesis of potentially could have a positive impact. The £15 million that we have allocated in the budget will provide for that. We are now taking forward a range of work to identify the most appropriate way in which to carry out the pilot, because it is important that we do it in a way that is meaningful and that we can be confident in the outcome and the findings that come from that. There is a bit of detailed work going on behind the scenes between Transport Scotland and ScotRail in trying to identify an appropriate route for the pilot. The fair fair review overall should be completed in the spring of this year, which we intend to set out some of the proposals that have come through the review process, which will involve a public consultation exercise, which will allow stakeholders, Parliament and the public to have a say on some of the findings from the fair fair review and some of the work that we are planning to take forward and alongside that carrying out the issue of the pilot on the peak fairs. If you want to look at public transport from a social economic point of view, the vast majority of people making use of public transport is on bus. I am about the point where almost half the population in Scotland are able to travel on the buses for free, which obviously has a significant financial benefit to those who make regular use of bus. If you want to focus on areas that will help people in lower incomes to access public transport, I suggest that bus would be the number one priority, given the social demographic profile of those who make use of buses and the significant numbers that make use of them compared to rail, which is why we are now at the point where, as I say, almost half the country is now able to travel for free on buses in Scotland. I am keen to come on to buses in a moment, but sticking with rail and the six-month pilot that we are talking about in terms of peak rail fairs, does the Government hope that that measure will help to widen access? Will there be any work done during the pilot or in advance of it to make people aware so that we can see more people from different backgrounds using rail? I think that that is why we have to be quite careful and we have to take our time in making sure that we are running the right pilot. I think that there is a danger here that you could spend £50 million running a pilot where, at the end of what we say, levels have increased. Is it just people who are always going to return to use rail anyway? Is it the same people who are already using rail anyway? Is it making it more accessible to those on lower incomes as a result? We need to be quite careful in making sure that it is meaningful. That is why the work that has been taken forward by officials in Transport Scotland and with ScotRail is going to have to demonstrate how we can make sure that the pilot is going to provide us with a level of data and understanding as we are looking for. I want us to take our time to make sure that we make the right choices here and that we have the right process in place to be able to evaluate it effectively, otherwise we will lose that opportunity. That is helpful. Can you tell us a bit more about how the community bus funds will work in practice and what funds will be available this year? How can it help local authorities to establish municipal bus companies? In the region of just over £60 million being provided to help to support bus services, which includes an element for the community bus fund. The overall figure is within it. There is a provision that is £5 million of capital funding and £1 million of resource funding, which is accessible to local authorities to look at developing initiatives that are aligned with the powers that are within the 2019 Transport Act 2020. The funding that will be provided for bus in the next financial year has a provision that is specifically to support local authorities in developing proposals and to work through some of the details and how they might want to develop them with the powers in the Transport Act 2020. Thank you, cabinet secretary. You said yourself how important bus services are to our communities and also to net zero, which is the committee's focus. Do you feel or does the Scottish Government feel that enough progress is being made in establishing municipal bus companies in Scotland, and what further action can the Scottish Government take to support this development? We know that there are funding pressures. You have itemised some of the amounts here—£5 million of capital and £1 million of resource—spread across all the local authorities. I do not know how far that goes, but are you content with the level of progress that is being made so far? To be clear, it is £62.5 million that we are providing in support to bus services of that. There is that £1 million resource and £5 million capital within it to support councils on looking at providing bus services in that area. I would like to have seen faster progress and more because bus is the most flexible form of mass public transport that we can get. It is a flexible resource and one that is a real priority for us. It is reflected in our policy programme. It is important that we allow local authorities to look at what is the most appropriate model for their area. What might work in a big urban area would not necessarily be effective in a more rural area. There are a number of different options available to local authorities. One of the areas that I think a number of local authorities are interested in is franchising and having a franchise service in their area, which allows them to set down the services that they want, the frequency to which they wish the services, and the fair rates of which they are set. It gives them much more control. What it does is it removes the need for them to own and run busses, but they control the service. It takes away a lot of the capital costs that are associated with running a service. We need to allow local authorities the space to be able to look at identifying what would be the best way for them to go about doing that. The funding that we are providing is to support them in developing some of that work. It is fair to say that the bus industry has gone through a really difficult time during the Covid-19 pandemic, and that it has not fully returned to the levels that it has been at previously, which is causing the financial challenges. It is in all of our interests to find a much more sustainable approach. If you were to ask me, is the existing model working in our interests? No, it is not. That is why I think that the provisions that we have put in the act give us options to go forward. I would like to start to see some of those options being developed and becoming active models that are being used. I hope that over the course of the next couple of years we will start to see that happening. Thank you. You mentioned industry. That is a good question on that. I am just concerned looking at the future for buses and local authorities. The cost of electric bus seems to vary between £800 and £1 million.  It is not going to be one, but it is going to be hundreds of buses that are required. How is that going to be funded if that is your preferred option going forward? Sorry, I am just looking to the future. It depends. If a local authority is looking to develop an ownership model, a municipal bus service, then all the capital costs that are associated with that are exactly the purpose of the buses, running garages and so on for their maintenance. That is why a number of local authorities are looking at the other model, which is a franchising model. It is where you are going to franchise agreement with a bus operator to provide those services within your area and you specify the services that you want and the frequency and the timetable. Some of the way in which it has operated in real, to some extent. So, just to clarify, what you are suggesting is that it would be more on the London buses type prototype than actual ownership by council? Yes. There are a few local authority areas in metropolitan areas in England that have already got bus franchises. I think that Manchester's got one in place. I think that there are a number of other big cities that have franchising models in place as well. I am not saying that it is the model that should go. What I am saying is that from engagement that I have had from local authorities, some of them actually are looking much more at the franchising model rather than actually looking at setting up their own bus company instead because of all of the capital costs that are associated with that. It is a different model. I think that what the funding we are providing through the bus support funding is to allow local authorities to look at developing some of those models and to put more flesh and bones around what they are thinking of doing and how they might want to take that forward. Thank you, cabinet secretary. Monica, sorry to interrupt you. That is okay, convener. That is not a problem. Carrot, you mentioned industry, so I am keen to know if Transport Scotland is undertaking any research or engage with bus operators to establish that the level of funding provided through the network support grant is sufficient to maintain and develop bus services across Scotland. We are obviously going into a phase where the Covid support is coming to an end for the bus services for bus operators and we have been engaging with CPT to identify a mechanism through the new bus support mechanism, which is replacing BSOG, in order to deliver a sustainable model for them and one that also works for the taxpayer as well. That works on going at the present moment. I do not think that it has been concluded, but I can reassure you that we are engaging with the industry around looking at how we shape that new scheme, going forward to try and manage the transition into a new funding model from the previous BSOG grant system. Cabinet secretary, are you familiar with the term bus deserts? That is a term that we are hearing more and more about communities who are quite pleased that there is more opportunity to have free bus travel, but it is not any good to you if there is no bus to get on or it is not running at a time that suits you to get to work or to get to school or to get around your daily business. Is that forming part of the on-going research and development term bus deserts? Is that worrying to you? There is no point in having a bus pass if you cannot get access to a bus. I recognise the challenges that communities have. In our rural communities, they are probably more adversely impacted than in some of our urban communities where there are alternative options available. I recognise that, which is why, when I made the point, I do not think that the existing model is sustainable. Covid has brought that into even more sharp relief, which is why an alternative approach is necessary. I think that the powers within the transport act can deliver a much more sustainable, consistent form of public transport. If we are to make public transport attractive to people, it needs to be safe and reliable, and it needs to be priced at a level in which people feel that it is affordable to make it attractive to them. Over the course of the next couple of years, there is a big opportunity to reset the way in which bus services are provided in the country. I encourage from some of the engagement that has been taken place with local authorities who are increasingly determined to look at how they can change the model operating in their area. I think that there is the potential to change the way in which services are operating quite considerably. You have some questions that you would like to ask now. Just a couple of questions, cabinet secretary, on electric vehicle charging. Firstly, the climate change committee considers that we need 30,000 public EV charge points in Scotland by 2030. We have currently got fewer than 3,000, I think. Your written evidence to this committee confirms that you do not have a target for the installation, or certainly not the 30,000 that we understand and require. Do you think, cabinet secretary, that the lack of a target could have a negative impact on your ability to set budgets in this area for installation and to plan and ultimately deliver on a comprehensive roll-out? We have got over 3,000 public charging points in Scotland. That does not include the number of private charging points, so there will be several thousand private charging points, including charging points that have been put into what places etc, which are not part of the public sector network. There is a distinction there. The 3,000 plus figure is public sector charging points. I do not know what the figure is for private sector, but there will be several thousand on top of that, which are available. That is a growing network as well. What we have given a commitment to do is to double the public sector charging network, so from the 3,000 plus that we have got at the moment to over 6,000 units over the course of the next couple of years, we have allocated £30 million to support that. We are working with the private sector to leave in an additional £30 million in order to deliver on that expansion of the network. I believe that a combination of further private sector investment, which I think will continue to grow alongside the public sector investment, the public charging network, will give us sufficient coverage for the charging network overall. I am conscious that I have heard this figure a number of times in the 30,000 charging places that the CCC believes are necessary. I am not entirely sure how that figure has been arrived at, but we believe that the combination of public and private will provide us with sufficient coverage alongside looking to encourage people to make greater use of public transport. On that exact point about the public private, there was a written response that came back to the convener's letter of 10 November, which states that the Scottish Government intends to deliver £60 million of public and private investment to at least double the size of Scotland's public charging network, just as you have discussed. Can you tell the committee how much of that £60 million do you expect to come from public sector investment, from which budget line and over what period? It is £30 million that is coming from the public sector budget. Is it over? What is the time when that is over? Do you know, Kerry? I believe that it is the next year or two. It is part of a programme of work that we have taken. I did not hear that, because your microphone did not come on. Do not worry. The gentleman will push it. I just missed it. Sorry, I am slightly deaf, so it would help to repeat that, Kerry, if you would please. We have budget availability over the up-forth coming financial year, and the financial year after that, depending on how fast delivery is required. This is a piece of work that we have taken forward, which we have been working with the Futures Trust on, to look at leaving in private sector investment, and that engagement is on-going just now. That is where the total of the £60 million has come from both public and private together, but £30 million from the public sector. I am going to ask some questions regarding the Scottish Government's response to the energy price rises, and the report that was done. In your response to the committee's pre-budget letter, you listed the home and energy efficiency programmes that have been expanded due to the response to the queries on the escalating retrofit in this winter. Can I ask what the impact has been so far on the take-up of those programmes, and also on the fuel poverty rates? We have gone through a period here in which demand, because it is a demand-led budget, demand has not quite kept pace with budget allocation, but what we meant was that the level of demand was not quite utilising all the budget that was available to it through whether it would be the warmer homes programme or the area-based scheme as well. Those are a number of reasons for that. One of the reasons, or two of the reasons that have been highlighted to us from the sector, was the combination of skills and materials that had an impact in delivering some of the programmes. What we have also done is to try to help to raise greater public awareness. Back in November last year, we started a publicity campaign to help to highlight greater awareness of the schemes and the availability of the schemes and how people can access them as well. Since then, we have seen an uptick in demand growing as well, and what we are also seeing from the industry is looking to try to develop the breadth of skills that they need to help to drive forward some of those programmes. We have seen a slight uptick, and we are also planning a further public information programme later this year to highlight people about the scope of the programme. The purpose behind us is obviously to help to reduce fuel poverty, so the cheapest form of fuel that you can actually get is a fuel that you do not use. Greater efficiency is a key part of that, and the warmer homes, the Home Energy Scotland programme, the Business Energy Scotland programme and the area-based scheme are all about reducing energy demand and making properties more efficient. That is going to be a continued area of priority over the course of the coming years, not just this financial year, given the need to help to reduce fuel poverty and reduce the demand for energy going forward. How do you think that we can maybe upskill the industry, so to speak, to ensure that we have the proper skills in place? I mentioned broadly two areas, skills and materials for a variety of different reasons. Some of the issue around materials was just because of the close down that you had in some parts during the course of the pandemic, and as demand has started to uplift, there has been challenges in getting access to some materials. It has been one aspect of the challenge as well, but it is not so much a challenge now that it has started. It is not so much of an issue now. The other issue is around access to skills, so there is a real constraint on labour in the sector. There is no doubt about that. I think that I may have said at this committee before that I had a discussion with one of the companies that is involved in the area-based scheme programme in the central belt that we are really struggling to recruit staff into helping them to roll out the programme even faster. A principal reason for that is because they lost access to a significant number of staff that they had from Eastern Europe, so they no longer have access to that staff. They have an apprenticeship-based scheme where they try to train people to hold people in the industry, but they have flagged up to me to paraphrase it as if they could double the budget, but I will not be able to utilise it because I do not have access to skills despite the training that we are doing, the work that we are doing in the industry, because we have lost access to labour from Eastern Europe, which is constraining them. That has a direct impact on them. That is a fact. There is no getting away from that. We have to make sure that we are working with the training organisations, the industry and our colleges to make sure that we are focusing on the skills that are necessary to help to support those industries going forward. Labour constraints are a significant issue still. You said earlier about the uptake on the programmes. It was lower than what you had hoped for it to be. If the demand for the uptake of the programmes continues to go forward, do you have any contingency plans for how the funding could be used? Will the low uptake have an effect on the funding allocation in future years? We have, in the past, been able to reallocate that budget and reutilise that budget, so it is not lost in that sense. However, what we can do is through greater public awareness and understanding is to help to promote the schemes in the programmes, to try to encourage more people to take up the options that are available to them, whether it be for domestic premises or for business premises. For example, my constituency, I have flagged up to a number of businesses that are experiencing very significant energy challenges because of a big increase in price. Through the Business Energy Scotland programme, there may be loans available to them for them to make investment. I will not mention by name, but I know that one of them is at a very advanced stage in actually looking at putting in solar panel systems, which is part of that programme, to reduce their energy costs because they are an energy intensive business. I think that continuing that public awareness and business awareness is really important. It would be fair to say that probably the last year has given people a much greater focus on their energy costs in a way that they previously weren't necessarily as focused on. I think that there is an opportunity to make sure that we are driving forward energy efficiencies as part of how we can reduce energy demand in the future as well. Thank you very much, Jackie. Now, the deputy convener, I think, had some questions on this subject. Before you move off this subject, I would like to bring Mark Ruskell in after you, if I may say. I will come to you first, deputy convener, and then Mark Ruskell. Good morning, cabinet secretary. I am quite aware that, probably compared to other portfolios, your budget is more subject to market conditions outwith your control. I appreciate that. On the issue of energy efficiency, we knew back in April when we started our inquiry, it was public that there would be increased prices in energy. I am concerned that it took to November to start publicising to increase demand for the programmes that we had. Bearing in mind that we reported back in July, why has it taken so long to ramp up the stimulation of demand when we know that there is an absolute need for it because of the current energy crisis? If we cannot do it in a year that we have, how convinced are you that, going forward, your allocation of budget, however large it is, will be able to be utilised properly to get the pace of home energy efficiency that we need going forward? I think that, if you looked back earlier in the last year, we actually ran a public information campaign that was about people having challenges with their energy bills and the range of help and support that was available to them. Within that, there was provision for energy efficiency measures, so that was part of a wider government programme. What we ran in November was something very specific that was around this programme in itself to try and help to create greater awareness on it because the level of demand that we were seeing was not in line with what we expected it to be. I do not know why that was the case, so it is not that we were not doing nothing in terms of making people aware of it, but we actually did even more in November and we are going to do more this year going forward. I do not know whether there was an element of a timeline between people getting their bills and the impact and seeing its idea. I am trying to think of my own personal circumstances, because there was almost a lag in that new things were going to become much more expensive before it actually hit you. I do not know whether that had a bit of an impact on people thinking about it, and it will not be as bad as people think it is. I do not know. However, we had the public information campaign last year, which was about that wider cost challenge and the help and support that was available to people including the website that we developed, which Shona Robison in the community site developed. However, in November, it was very bespoke and specific about trying to get more people to understand what was available on the energy efficiency side. I hope that we assure you that it was not a case of doing nothing. It was just that we did something much more bespoke because we were not seeing a level of uptick that we would hope for. I ask a question about the national energy agency from a budget point of view. Will there be new funding made available to finance that, or will that be top-slice from other dedicated heat and energy efficiency funding programmes? We are getting into the space of negotiations with the finance secretary. There is new funding for it. Right now, it is absorbed within our existing funding within the climate change and energy side of the Government. As you know, it is working in a shadow basis at the present time. We have got the strategic world in place. It will be over the course of this year setting out much clearer actions that we need to take in order to create the dedicated body. Once we have a fuller understanding of where exactly that structure will be like, we will then be in a position to look at how we finance that. Will that be a combination of new funding or coming from existing funding? We will be determined once we get to that point. However, at the present moment, it has been made from within our existing budgets. I will come to Mark Ruskell and then come back to you in a minute, Fiona. Mark, if you would like to go on. To follow up on that, you mentioned earlier on, cabinet secretary, about the importance of area-based schemes, about getting a scale of roll-out. How important is the national energy agency in helping to deliver that? Is it possible to accelerate the development of the national energy agency? It feels like we could be waiting some time before it is absolutely up and running. It is up to full capacity and it is able to marshal some of the opportunities there for energy companies and councils and private sector to come in and do things at the scale that we need. It is important to understand that it is not as though nothing is happening. Although it is in house at the present moment, there is a considerable amount of work being done by officials in working with local authorities, housing associations and other organisations on how we can look at collectively working together to deliver some of those energy efficiency programmes, but also on alternative heating systems. One of the things that we have created is the heat network unit within the directorate as well, which is an important part in helping to bring together expertise around local authorities. House associates are looking at heat networks as well. The national agency will be able to take that up on a much more national scale through dedicated resources, staff and expertise to support local authorities and housing associations in taking forward those policy areas. What we are trying to avoid is getting into a situation in which local authorities are having to reinvent the wheel each time they try to develop a heat network or house associations are having to reinvent the wheel to try to get efficiencies around some of that and to bring together that expertise and skills base that can support them in taking it forward. There are fairly ambitious targets on what we are trying to take forward around heating buildings as it stands at the present moment. If there are ways in which we can see from the Committee on Climate Change's report at the end of last year about the infrastructure ramp up or action in this area, if there are areas where we can speed up that process, we will not be slow in making sure that we do that. I hope that I can give you reassurance that there is a work on-going just now. We are not waiting for the standalone agency to be created in order to make sure that we are driving forward. I want to move on to hydrogen. The hydrogen action plan states that production of renewable hydrogen from onshore renewables by the mid-decade is the key focus of our hydrogen investment programme in this parliamentary term. Does that mean that green hydrogen is taking priority over blue hydrogen for funding from the Scottish Government, or do you see blue hydrogen as a bridging technology to help to support green hydrogen? That is an area that has changed dramatically in the course of the last year. If we were having this discussion last year, I would suggest that I would be seen to be committed that blue hydrogen would probably play quite a big part in the early development of the hydrogen economy. What has significantly changed over the course of the last year is that because of the gas prices and so on, there has been a big switch in the sector in being much more focused on green hydrogen because the cost of it and the potential production cost of it have dropped significantly. That means that companies who may have been looking at blue hydrogen previously are now looking at the cost base for doing green hydrogen as dropped sufficiently just to go straight to green hydrogen. Where I think that blue hydrogen will continue to play a role is in the energy transition within some of our big energy-intensive sectors, so for example in Grangemouth, so they presently use grey hydrogen. I would see that you can see the plans in years have got to move towards blue hydrogen, which is aligned into the Acorn and the Scottish Cluster project as well. For some of them, it will be a bridging technology before they move to green hydrogen in itself, but I would say that the priority is going to be over the course of the coming years, which is going to be much more on green hydrogen. Not just because that is what is happening here, but because that is what is happening at a European-wide basis. For example, if you look at the repower programme from the EU, the big focus is on low-carbon, but the big focus is on green hydrogen being the priority going forward, that blue is a bridging technology in some energy-intensive sectors, so you can now see the pattern of travel, which is why in the hydrogen action plan you can see your focus much more on green hydrogen going forward, particularly because of its export potential, because there is significant potential for us to be a major exporter of green hydrogen and hydrogen derivatives, so ammonia, methanol and the development of liquid organic hydrogen carrials, which we are involved in working on with Rotterdam and the NATO technology centre. I would say that green hydrogen is becoming more and more of a focus and will play a bigger part than I would have said to you this time last year. I will be in mind my previous remarks, as market conditions have more of an impact on your portfolio than others. Sticking on green hydrogen, one of the issues is how do we in Scotland benefit from the potential jobs and will your budget be allocated more for attracting inward investment that may or may not depend on market conditions? Obviously, we have European and other competition in there, or will you be allocating funding to help generate Scottish-based companies to be able to produce hydrogen to secure jobs, and that is part of that just transition from the traditional energy sector? The first thing to say is that the gateway to delivering on the hydrogen economy is onshore and offshore wind, so to provide cheap renewable electricity. Our priority is to make sure that we are creating opportunities to produce renewable electricity. That is one of the areas where Scotland is more advanced than many other European countries. You will see many European countries and other countries beyond Europe setting very ambitious targets for the production of green hydrogen, but many of them do not have the renewable energy projects in consent, leased sites and so on. They are quite a bit behind us, which is why we have an advantage here in some ways. There are European countries that are in a good place, but we are one of the few that has, for example, Scotland leasing round, has already been completed. If you are somewhere like Norway, they are still to do that, so they are probably about two years behind us in that process, and they want to go into green hydrogen production a big way as well. That renewable energy element is really important. One of the things that we have in the budget is that we are creating a much more resource to help to support the consenting process for both on and offshore wind in particular, so that we can deal with consents effectively and efficiently, while also dealing with the environmental aspects that go alongside that. The additional resource is going to be in my directorate to support that. On the hydrogen element in particular, there are a number of pieces of work that we are taking forward, so what will be really important here is that we do not just become a production basin, we also become a manufacturing centre for the components and electrolyzers, etc., that go into the production of green hydrogen, which reaches out with my portfolio, although I have a direct interest in that, which is very much within the economy side. My colleague Ivan McKee and I work very closely together in how we can maximise the opportunity to attract inward investment, but also to support businesses in Scotland that could pivot into hydrogen production to do so. Last year—I think it was last October—we published our hydrogen prospectus, which was our proposition, which sets out the opportunities for businesses in Scotland and beyond to look at manufacturing capacity that has been developed in Scotland. We have had quite a bit of engagement through SDI and through SE at an international level on that, which has attracted quite a bit of interest, it would be fair to say. We have also had work being taken forward by account managers in SE with businesses that have engineering expertise but are not necessarily in the hydrogen space in helping to make sure that they understand that you could pivot into the sector. Last October, we held an event in Edinburgh bringing together interested stakeholders and companies, both from the energy side and from the manufacturing side, to discuss our proposition and to look at how we can scale up that opportunity. There is now a considerable amount of work, and it is one of the six key priorities. You probably know better than I that SE now has is that hydrogen is one of them. There is now a significant amount of resource from an SE, SDI point of view and from trade policy point of view in seeing hydrogen as a major strategic priority for us going forward as well. We are now looking to get a specific piece of work that has been taken forward in my portfolio and also in the trade portfolio to look at making sure that we are doftailing all that work collectively together. We have a further meeting on that this month, so we are combining the key elements of production capacity here in Scotland, along the energy side and businesses that want to go into it, alongside trade and investment opportunities and business growth opportunities, so that all that starts to knit together in a way that is much more consistent with maximising the opportunity. It is very helpful for a wider context of the work of the committee. My final question is on the budget. Is it fair to say that, in order for your hydrogen strategy to be effective and the reliance particularly on offshore and onshore wind in terms of green hydrogen production, that the enablers in terms of spend are not within your budget, the prohibitors could be skills, could be in relation to planning consensus, as you have talked about, and also for domestic company development, so that Scottish companies can develop capacity. Those actually lie in the portfolio, the economy portfolio, and what confidence have you got that the priorities for those that are spent to enable the energy generation that we have talked about are there because I suspect that those budgets are under more pressure than your budget? You mentioned three areas of our skills, domestic companies, domestic level and planning. Planning not so much because planning elements will rest largely with us, which is why, in terms of offshore, because if you look at a lot of the big offshore developments that are planned over the course of the next 10 years, quite a number of them have hydrogen projects or potential hydrogen projects associated with them. I am very conscious of the need to make sure that we have got in place the right supports to support that. There are some changes taking place within my directorate to facilitate that. That includes bringing in new staff, recruiting additional staff and also a strategic lead at a director level and driving that forward. That is happening just now, and the budget provides £5 million of additional resources in there to support the development of this element. That is the planning consenting aspects that sit within my portfolio. In terms of skills, I think that there is a challenge there, not just a challenge here in Scotland, but a challenge globally. If you look at it over the course of the last year, 18 months, countries across the globe—let us just take Europe—the scaling up of offshore, wind and onshore wind is quite marked. It has become a more of a priority during the challenges of last year because of energy security issues. I think that there will be a number of challenges here. There will be a skills challenge because of restrictions on access to labour in itself. I think that there will also be a materials challenge. Some of the raw materials that are needed for the manufacturing of those products will become constrained because of the level of global demand that is going to be experienced. I also think that there will be a capacity constraint on industry in manufacturing. Some of those components will be given the level of demand that we are potentially going to see as well, which is why, in my view, having a clear effect of consenting process is extremely important to give the industry confidence and the process that we have here in Scotland in rolling out those projects to see that it has been a priority area where they can be taken forward in a timely fashion. I think that there are going to be challenges there. I do not want to speak for Ivan McEanus, but I am doing a lot of trade work as well now because the whole energy area over the course of last year has increased dramatically. Demands on ministers from overseas Governments to meet us, our businesses in Scotland looking to invest overseas as well has increased dramatically as well. When I was in Japan last year in November, a lot of it was about a combination of inward investment from Japanese companies here, and Scottish companies investing in Southeast Asia in renewable energy. That has scaled up very significantly. I know that Mr McEanus has found that challenging because of the demands that are placing on him, which is why I am doing some of that work as well. Other ministers have been involved in it to take up some of that demand. On budget provision, at this stage, I am comfortable that we have sufficient budget provision to meet those demands. It is more about refocusing some of the staff who are involved in some of the broader energy work being much more focused on the key areas that we need to prioritise at the present moment, rather than being a need for any more extra resources on top of that. The work that we are doing to try to bring together the trade, investment and energy aspects is all about trying to knit that together much more effectively to be much more focused and also much more efficient in our use and our resources. Some questions now from Mark Ruskell. I wanted to switch a bit into the process of the development of the budget and the climate proofing of the budget and the implementation of the joint budget review on climate. Firstly, it is welcome getting the letter. Yesterday, I think that I just updated the progress that the Government is making on that. I wanted to ask you about each of the three strands. If we could maybe take the first strand, which was introduced into this year's budget, which was the climate change narrative—I think that it is very welcome seeing not just a carbon assessment but much more of a narrative that explains some of the policy choices that were made this year within that. Can I get some of your reflections on that and how you think that that narrative may change going forward as more work is done to actually develop more data? I think that this has been a good piece of work. It has taken some time, obviously, that it has been led on by the Fraser Valander Institute and it is a joint piece of work between Government and Parliament. I am very keen to make sure that there is much greater transparency around spend across Government on meeting our climate change targets. From the strand 1 work, this year, if you take the carbon taxonomy that has been used, you can see that the proportional spend in low-carbon has increased while the proportional spend in high-carbon factors has declined. We will start to get greater transparency around that. I think that the challenge for the high-level strand 1 work that we have this year provides a bit more detail and overview of how we are spending our resources in tackling climate change. Both strands 2 and strands 3 will give us much more detail, but what it will also do is it will make it much more bespoke to individual portfolios. I am conscious that a lot of the burden falls on this committee when it comes to climate change. However, the economy committee, I would have thought, would have a particular interest in what is happening within the economy portfolio in investing in tackling climate change, likewise in other portfolios. It is important that we get strand 2 and strand 3, which will deliver for us, a level of detail that individual committees beyond the committee will be able to see much clearer exactly what an individual portfolio is doing in order to help to deliver on climate change targets and how it is investing and funding to help to support that as well. That is what strand 2 and 3 should help to deliver. I think that strand 1 has been helpful in being applied to this budget, but there is clearly more that we need to do and that will be done over the course of this year. In terms of strand 2, that taxonomy feels a bit rough and ready at the moment. It is very much restricted to capital rather than looking at resource spend and what resource spend does. With the future taxonomy, the next big addition to the budget process and the next tool that committees will have is going to have quite a bigger breadth covering both capital and resource but I am wondering what depth it can get into. Is it going to be possible for us to look at individual capital infrastructure projects and say, oh, we can see now not just what the climate impact will be in terms of construction but we can see what that contributes in terms of net zero and there is a clarity there and an appropriate level of budget spend so that we can actually get our heads round the direction of travel of spending but also what the choices have been within that? I think that we will have to wait to see the work that is taking forward over the course of the year and whether we are able to break things down to the level that you are referring to, not just the actual capital investment programme, but the construction elements of it, et cetera. My answer to that is that I do not know just now and we will have to see how that work is developed and taken forward in strand 2 and strand 3. The intention is that strand 2 will expand the taxonomy and will give you more data and more understanding to provide much greater scrutiny of what is happening in different parts of the Government and its spend in tackling climate change. So strand 2 will give us an extra depth of understanding or committees an extra depth of understanding on that. Obviously strand 3 is to give us the net zero assessment so that we can have that level of assessment. I think that this is going to be really important and again in the back of the Committee on Climate Change report at the end of last year about having much clearer, much greater transparency between policy options choices and their impact. I think that it is important that we have that in the budget that you can see that where we are spending and investing, how that is impacting on climate change. So between strand 2 and strand 3, I would hope that we have a much greater level of detail. How granular that will be is that I do not know. I am conscious that this is a new area that has been developed and managed. The more granular it is, the better. I think that it will help us all in scrutinising the budget and in policy decisions that we take forward. I would hope that we will get a level of detail that committees feel is sufficient for them to properly scrutinise the overall budget allocations. I appreciate that that work with strand 2 will be taken forward in strand 3 to give that much more granularity. You mentioned the climate change plan and the recommendation from the climate change committee that they need to see explicitly within the next climate change plan that we developed this year and what the carbon impact will be of certain policies. I wonder if that gives us an earlier opportunity to in particular take things that will go into the draft climate change plan and assess those through the budget process. If the plan is having to be very clear on what the carbon impact policies will be, surely it would be relatively simple to extrapolate from that and say that, if we are spending on a particular policy in a given year, then that is what the climate impact will be. Does that give us a starting point with the climate change plan this year to start to build some of that work into the budget so that we can see a follow-through from the plan right the way through and to spend? The two of these come together. They might not be entirely aligned time-wise, but I think that the two of these come together in a way that I think will be helpful in providing that level of scrutiny. I very much hope that we will be in a position with the climate change plan update being published, the draft being published later this year, that, if we have strand 2 and strand 3 in place for the next year's budget, we will be able to see exactly how does a budget deliver on the climate change plan, because the climate change plan will have to be much more detailed for different portfolio areas, whether it be transport or agriculture. We can set out very clearly the actions and the policy impact. Any question will be whether the strand 2 and strand 3 allow us to give that level of transparency in the budget process that align with that, then committees will then be in a position where they can clearly see whether what you're saying, your climate change plan fits with what you're actually setting out in your budget. That's ultimately where I think committees will want to get to and the Parliament will want to get to, and I would certainly want to get to so that we can get that transparency right across the government. I think I'd be very welcome. I mean, previous committees have looked at the climate change plan and found it absolutely impossible to work out where the cuts and emissions are coming from at the time. I think we were told that the times model that's used is just very complicated and so many interdependencies, so it's impossible to work out. It would be good to see that transparency going forward. Recognise this in an area of international work, international interest, Fraser Valenda report has highlighted a number of international examples. Is your department continuing to make connections with other Governments, including the New Zealand Government, about their approach to this and how you can learn from each other, because it feels like, in some ways, we're groundbreaking, but we're also learning from Governments that have already broken some tariff on this. It's a piece of work that's been taken forward on a joint basis, so with the finance committee, the DFM and myself, the Fraser Valenda are obviously the lead body that are taking this forward. I'm not sure what engagement they've had with other Governments. I know from the briefing that I had with them they'd been looking at international examples, although there are a limited number of international examples in this area as well, but I don't know whether, for strand 2 and strand 3, there's plans for further engagement around that, but I'm more than happy to take that away to find out whether there is further work with other countries around the approach that they have taken to their budget process. Very briefly, if I may convene, Cabinet Secretary, I just wonder if you might clarify something on budgeting for me. I asked the finance Secretary which budget line was going to be reduced to allocate, as he wishes, to a further £60.9 million for halls 801 and 802 in the draft budget, but his answer completely failed to address that point, so I'm still none the wiser. Given the pressures on your budget that the Deputy convener rightly identified earlier and given especially the transport aspect of your portfolio, are you able to help me to understand or help the committee to understand whether that £60.9 million is coming out of your budget or not? I'm not sure what that £69 million is. I would have to see the answer that the DFM has provided, the finance secretary has provided, and to go away and check that for you, so I don't have that off the top of my head unless Kerry can say some more about that. Yes, so it wouldn't specifically have come out from any particular part of the budget, so the way we did the capital process this time was there was a full reprioritisation, obviously you'll all be aware, rising inflation, excuse me, has meant cost increases across the board, so we've looked again at profile of capital spend, where there might have been some slippage in delivery because of some of the issues we were discussing earlier around labour shortages and material shortages, and so there was a full kind of reprioritisation exercise, so where there was additional budget required in other portfolios that will have been for the DFM and Exchequer colleagues to have looked where there was availability, but it wouldn't have specifically been pinpointed to come from any one bit of, for example, the NSET capital portfolio, so we wouldn't be able to give you a specific answer on, as I say, which line that would have come from. I'm very grateful for that response. Are you able, just Kerry Twyman, just to help me fully understand, so there was an exercise that looked across the portfolios and looked for, let's say, underspends—my word, you'll correct me if that isn't the appropriate word—and moved that money from those budget lines, from various different budget lines, into the £60.9 million for the ferries. Is that a fair reflection of what you've said? Yeah, and probably not as specific as that, so it was probably more of a reassessment of where capital needed to be spent and what our, effectively, requirements were for the year, and then, based on that analysis, DFM, with assistance from Exchequer colleagues, would have looked at what the allocations were for each portfolio. So all we would have seen as a portfolio was what our allocation was for the 23-24 budget year, and we will have then assessed our priority commitments and our legal commitments against that and allocated. So, as I said, I couldn't give you an answer as to how that work was done in the DG economy portfolio, which is where those costs sit. They will have received their own allocation and, as I say, allocated accordingly, including that £16.9 million. I understand. Thank you very much. Thanks, Liam. Ash, I think that you want to come in with a question or two. Thank you, convener. Good morning to the panel. Scottish Government obviously set out its intention to grow renewable electricity production, and I'm wondering if you would agree with me that it would then be useful to improve infrastructure, and I'm thinking particularly in the north and the northeast of the country, obviously, in able to support that transition that we're talking about. We know that there's a number of roads that require upgrading, potentially for that purpose, but also for safety concerns as well. I looked in the budget, so there's a budget line, motorways and trunk roads. That's standing at £801 million. Obviously, that's a reduction on the allocation over the past two years. The other one was road improvement budget line, and that's also showing a reduction. Obviously, we've had a conversation about the financial context, and I understand that. I'm wondering if the cabinet secretary can set out for the committee what's being prioritised under that, obviously, with the reduction in budget and what's being de-prioritised. Okay, so there has been a shift in its reflection of the challenging capital budget allocation, which we're facing. Not only is there a reduction in capital allocation to the Scottish Government from the UK Government, but we're also having to meet significant inflationary pressures within the capital allocations as well. Some aspects of construction inflation are operating at 17 plus per cent, which means that it's not only a more challenging level of capital, but it's buying power is weakened as well as a result of the significant inflationary pressures that we have. We've had to take out some to balance out some of that on the motorways and the trunk networks. There's been a reduction in the budget, which is about re-profiling some of the life cycle maintenance work that's carried out. There's also some re-profiling of some of the structural repairs programme that was being taken forward and there are some aspects of capital land and works which has had to be reduced as well. There are a couple of areas that have continued to be a priority for us. For example, the A83, the rest of the thankful access road to Argyll and Butte, is a continue to be a priority, so that's a continue to have allocations to allow it to continue with the work that it's been taking forward. The area where there has been an increase in funding is actually in the road safety programme, so to continue to build on the progress that we're making around road safety measures. By and large, it's a reflection of a chance that we've got with capital allocations. Effectively, it's not that these things won't happen, it's that what's happening is that they're going to take place over a longer period of time and we'll have to stretch out over a longer period of time around some of the life-safe maintenance work. Okay, that's helpful. Would you be able to share that next level down of detail with the committee so that we were able to have a look at that? Yeah, I'm happy to to provide any further information that would be useful. Right, thank you. Thanks. Thank you very much. I'm just looking around the table to see if there's any other questions. I've got a couple of questions. If there's no other questions, I'll try on my... First of all, before I ask my first one, I'd like to remind the committee that I have an interest in land and in farming partnership because my question relates to trees and therefore land use. Cabinet Secretary, you said in your opening statement that you were looking to increase the amount of area planted. Could you just explain to me how your figures will achieve that, please? The additional allocations that we've made this year for the tree planting programme, as I mentioned, is to see 16,500 hectares of tree planting this year, which is going to be taken forward by Volition and Land Scotland as part of the programme. Will you ask me specifically how we're going to achieve that? Do you mean in terms of areas or...? Well, I'm asking how the budget that you've set for that, which I believe is in this year, is just shy of £103 million. How will you achieve that plant in greater of 16,500 hectares? There's an additional allocation in there for part of the forestry programme to help to support the delivery of that. It's a combination of their existing budget and the additional allocation that we've made. Simon, can you maybe say a bit more from a forestry point of view in terms of how exactly they're going to do that for Simon? Thank you. For the numbers, you're first at £102 million, that's funding for Scottish Forestry. Within that number, the woodland grants scheme that they administer is approximately £77 million next year, so that's growth of around 11 per cent compared to this year. It's through that growth and the wider actions of Scottish Forestry and the separate funding that Forestland and Scotland receive that we would seek to achieve those targets. Sorry, Simon, you've now confused me. My understanding that there was 102.3 million set aside for Scottish Forestry and Forestland Scotland was set aside 23.7 million, bringing a total of 126 million into that area. Is that what you just said? That's correct, yes. Those figures are correct. My question is that, and planting is really important to reach net zero. We're at a stage by 2035 where we won't have enough harvested timber in this country to meet the demands of the sawmills within this country for building and other materials. Therefore, in the last eight years, we've only met the planting targets one year in the last eight years. The increase that you have projected in the budget for forestry planting is about a 10 per cent decrease per hectare on the actual cost for last year's budget. How, if there is a decrease per hectare in the amount of money for planting, are we going to increase planting when costs have obviously gone up? The expectation from the discussion that we've had with Forestland Scotland is that it can be managed within that budget settlement that we've provided in meeting the 16,500 hectare target. I'm slightly concerned if that is the expectation on the fact that they've failed to meet any of the planting targets with the budgets that they've achieved. If you're cutting the money per hectare, you must actually reduce the amount of hectares that will be planted because people are not going to plant more for less when costs have gone up. From the budget allocation that we've made to this particular ailment, the discussion that we've had with Scottish Land and Forestry is that their expectation is that they can meet that target of 16,500. Cabinet Secretary, we could argue whether that's going to be achieved or not. Time will tell in a year's time. We will see whether we've reached the 16,500 hectares that are planned. If I can move to railways, the cost for running the railways has gone up. On the basis that the major public transport budget has gone down, the rail franchise costs have gone up and rail infrastructure has only gone marginally up. Are you comfortable that the cost of £1.4 billion is going to be sufficient to run the railways with the peak fares reduction, you're saying, and all the other costs with passenger numbers coming down? Well, passenger numbers have increased, but they haven't returned to peak pandemic levels. To emphasise, it's a pilot that we're running on at peak fares, so it's the £50 million to run a pilot for six months on a particular route or routes to test out whether removing peak fares has an impact on people's travelling behaviour on the railway network. It's not removing them from across the network. It might be a pilot, but it's going to cost £15 million. That's the estimate that we've told, and I'm asking if that's within the budget of £1.4 billion. That £50 million is within that, but the £50 million is for the purpose of the pilot, so specifically it would cost more than that to remove peak fares from across the whole of the network. Before arriving at a policy decision on whether we were to remove the peak fares from across the whole of the network, we would have to look at the cost of that and then whether there was budget allocation that could actually provide for that. So what's happened to our railways? We haven't had the passenger return level, so the fare box has not returned to the pre-pandemic levels that we've had, which is why we're having to put additional investment in to help to support both the ScotRail and also the Caledonian sleeper. There's budget allocation in the £1.4 billion to achieve that. The cost base of rail has increased, so the fixed rail network charges have increased from network rail, which is having an additional cost impact. There's budget allocation within the £1.4 billion to meet that additional cost that we're facing as well. There's also provision for continuing with a level of enhancements, for example at Thornton, Levenmouth and so on, so that the projects can continue. Given the existing capital constraints that we're facing, there will not necessarily be in the future the same level of enhancements and expansion of the rail network that some people may wish to see happening because there's just not the capital provision to be able to do that. So to meet what we have to over the next financial year, the budget allocation is sufficient to achieve that, but it is having to deal with a significant number of inflationary pressures from both the cost base and also from the fixed access charges from the network rail, which we're having to meet as well. I'm slightly confused, cabinet secretary. What was the income from rail tickets on the railways last year? I don't have that information before, but I might have to check that for you and come back to you. I don't see that figure in the budget, so what you're saying in one breath is that you're going to bear the costs for the loss of income out of the existing budget, but you're not showing the income from the tickets within the budget. Sorry, Kerry wants to come in. So the line that you see for the rail franchise subsidy is effectively a net figure. It's the net subsidy that we provide to ScotRail, which covers effectively their costs, net of any revenue that comes in, and that will be ticket revenue but also revenue associated with some of their properties and things, and then also that will include the fixed track access charges that the cabinet secretary has referred to that are paid directly from ScotRail across to network rail. That is a net figure, so what we have done within that figure, you will see the 15 million has gone directly into that subsidy line to cover the loss of income that we anticipate from the peak fares pilot. It also includes an uplift for ScotRail themselves to cover inflationary pressures, and then includes an uplift, as we've discussed, for those fixed track access charges where they're linked to inflation. Okay, so just following that back, the franchise charges before that would have been considerably less than the figure shown in this year's budget. Indeed, because revenue would have been much higher. Was it? Yes. You are confident. Perhaps I'll need to look back at those figures, but I cannot find roughly where the £184 million in ticket revenue is going into, but you're saying it's offset in there. Exactly, exactly. If you were to look at ScotRail trains accounts, you will see within those accounts specifically their costs laid out and revenue coming in and that net figure, which then effectively, as I say, is covered with a subsidy from the Scottish Government along with the fixed track access charges and various other elements. Okay, so if I look at the 2019 accounts where we're not, the £184 million is basically a 60% reduction on what they were receiving in 2019 on the basis that we've lost 40% of passengers according to the figures that we have. So I'll need to follow those figures through and I'll maybe take that back with the Cabinet Secretary. Just then on that basis, Cabinet Secretary, and on the basis that it's actually costing us more to run the railways and we've got slightly less services. Do you think the public performance measure for the railways is sufficiently at a high standard at today's date? So I think it's important, though, just to correct something here. We've got reduced services as is the case right across the whole of the UK because of reduced demand. So there's no point running empty trains or trains that have not been utilised. So it's not because we have chosen to reduce services as because of lack of demand. So if patronage returns to pre-pandemic levels, we were going through a process. So prior to the pandemic, we were actually ramping up services, we were delivering more services per day than we had historically. So there was an expansion of the rail network and the frequency of services. What we've had to do obviously during the pandemic is ramp all that down, but because patronage is not returned to its normal levels is that there is no point running what they often refer to as ghost trains, is it trains that no one's on that previously prior to the pandemic would have got in revenue. So that's what's happened. I totally take that point. There's no point running empty services, but the fact that if you're running less services, the railways are less crowded. So there's more chance that you should meet the PPM. My question is, are you reaching a satisfactory PPM with the budget that you've got? If you look at PPM, very often PPM is not closely associated with the financing of frequency of services. PPM will often be affected by infrastructure impact on the operation of rail services or it could be on staffing levels. So I'm confident that we have, in terms of resource allocation, sufficient funding for ScotRail to be able to staff the services sufficiently. However, as you will know historically in this committee, if you look at the biggest impact on PPM, it's infrastructure failure that has a marked impact on it. The question might then be is whether there's sufficient investment going into infrastructure in order to reduce the impact—the adverse impact—that has on PPM. That continues to be an issue. My view is that I think that network rail can do much more in terms of value for money for the level of investment that goes into and the cost associated with infrastructure investment in the rail services. However, the key factor for anyone who, in detail around the rail industry, is that the biggest impact on PPM is infrastructure failure. That requires the investment from network rail to try to help to reduce that, not just in terms of bringing in new technology and updating digitalising systems but also making sure that there is a proper maintenance programme that helps to reduce the risk of failure. Is there more that we can do to try to help to achieve PPM? Yes. One of the biggest impacts that we have on PPM just now will be on industrial action, which will have an impact on it. I am confident from a ScotRail point of view that we are making investment that allows them to be able to operate the level of services that there is a demand for and also to have the staffing levels to be able to achieve that. However, I still think that there is more that can be done in getting greater efficiency of network rail around infrastructure investment. My problem is that, on 21 February 2019, the First Minister very much said that the ScotRail franchise should be judged on passenger satisfaction targets PPM. Hamza Yousaf in 26 June said that the set of targets contained in the ScotRail franchise is a challenging but realistic contractual regime to ensure that the punctuality of our rail service is at the forefront of ScotRail's priorities, therefore putting the pressure on the franchise based on PPM. It was on the very fact that it did not meet its PPM, one of the reasons for its nationalisation. The problem is that, if I look at the PPM performance of the railways in November or December, it is 86.2, which is lower than the ScotRail performance in the same period in 2019, whether we are running more services and achieving a better result. I have to question whether the budget is realistic and whether passengers are getting value for money. I think that you are confused by a number of different things here. PPM is not measuring passenger satisfaction, it is measuring punctuality of the train service. There is a passenger satisfaction survey that takes place every year that ScotRail runs that. It may be through Transport Focus Scotland that they run it. I need to come back to the exact detail on that. PPM is not measuring passenger satisfaction. I recognise that a lot of passenger satisfaction will be linked to punctuality of the train service. There is a real danger that, if you were to compare January's performance in PPM this year with January's performance in PPM in 2022, there are a whole range of different factors that can have an impact on that. That is not about resourcing, so it could be adverse weather that had an impact on it. It could be industrial action that was taking place at the time. Events that are lards out with the control of the rail network. To make a comparison like that, to some degree, it is not meaningful. If you look over the course of a year in PPM performances, you will see that there will be months where it is more challenging than others. The winter months are traditionally more challenging because of weather events, the impact that it has on the rail infrastructure that causes problems for the network rail, whether it be freezing points or issues around the slippage on the rail network, which has an impact on trains performing. The vast majority of impact on ScotRail's PPM is due to infrastructure challenges, rather than the lack of rolling stock being available. Cabinet Secretary, if I can just come back in. I understand that the public performance measure that the PPM shows is a percentage of trains that ran their entire journey calling at all scheduled stations arriving at their terminating station within five minutes or ten minutes for long-distance services. I absolutely understand that, but the problem is that you are running less trains on a service that therefore is less crowded and you are getting a worse performance than a Belio was. I am just asking if that is acceptable to you. No, it is not acceptable. The reason for the large part of that is because of infrastructure failures in the part of the network rail. That has the biggest impact on operating the rail network. There is no getting away from that. It is standard understanding within the industry and recognised within the industry. If you look at the majority of the factors that have an adverse impact on PPM performance, it will be due to infrastructure matters. What I would say to you is that there is a continued failure for network rail to provide the level of resilience and demand that is necessary in order to get the level of PPM performances that operators can have. Who runs Network Rail in Scotland? If you remember the time when we made difficulty with the HSTs coming in, because WebTech, who were responsible for the refurbishment of the high-speed passenger trains, was way behind in the programme. It had an impact on the availability of seats in particular routes that led to overcrowding and challenges and all that. That was a ScotRail problem because it was about rolling stock and being able to have seats available. However, when it comes to points, line challenges and so on, it falls to infrastructure. Most people in the industry know that. Right now, from a ScotRail point of view, it is not a rolling stock challenge that it has. It is not a crewing challenge that it has. It is an infrastructure challenge that it has. That infrastructure challenge lies with Network Rail and what I think is an unacceptable level of performance in Scotland because it does not make the level of investment in Scotland that I think is reflective of running a national railway because it views as being a region. It is treated as a region in terms of its investment programme. Is Alex Hynes still on the board of Network Rail and runs it for Network Rail Scotland for which he gets a salary? He is employed by Network Rail. He is on the board of ScotRail because they are the major infrastructure provider to ScotRail. He works for and is employed by Network Rail, not by ScotRail. I will leave it there. Are there any other questions around the table? There aren't. First of all, I would like to thank you all for taking part in today's session. That concludes our part of the public meeting. We are now going to go into private session. Can I ask committee members to be back here at 11.30? We are now moving to private session.


Hello, everyone. I'm Jen Xie. I'm the CEO of Cryptape, which is a blockchain start-up based in China. And I was a Ethereum developer in Vitalik's research team. But now I'm fully committed to our own blockchain product named CIDA, which is a permissioned blockchain. And today I want to share with you the most important design, the most important design choice of CIDA and why it makes CIDA unique. And the topic is Scalable Blockchain for Enterprise, which is a scalable solution you can use today. With the advent of Ethereum, we can build decentralized applications very easily on Ethereum. And in Cryptape, we provide all kinds of consultancy services to our customers, including notary crypto assets to settlement supply chain. We build all kinds of prototypes. But the most question we've been asked by our customers is, is the solutions you build for us scale? What if the blockchain application becomes super success, and there are a lot of our users using it? Is the solution can handle that much users? But all of us know blockchain has its own scalability problem. Because in blockchain, we need to replicate the transactions as many copies as the nodes in the network and broadcast the replicates to all the nodes. And all the nodes need to process the same task again, again, and again, and then vote. So no matter how many nodes in the network, the whole network, the throughput of the whole network is the same as a single node. You can increase the network throughput by simply adding nodes into the network. So how do we solve the problem? There are actually two solutions. The hard way is what Ethereum or Vitalik is doing now is scale out by sharding, right? What if we don't replicate each transaction that many times? What if we split transaction into groups and we also split nodes into groups? And each group of nodes only need to process a subgroup of transactions. And each group of nodes only need to maintain a substate of the blockchain. That's what sharding is doing. But sharding is hard. If you listen to Vitalik's talk yesterday, there is a dilemma in the scalability problem. You can reach decentralization, scalability, and security at the same time. So in sharding, the most hard part is security. How can you do it in a safe way? So it's very hard. And Ethereum team is working hard on this. And maybe we don't have it today. The other way or the easier way is scale up, right? If the throughput of the whole network is the same as a single node in the network, what if we just upgrade the node in the network? We can use a workstation, even mainframe, instead of a laptop to run a node. Then the throughput of the whole system will naturally increase, right? That's the solution promoted by some big names in this industry. If it's so good, why don't Ethereum just use this solution? The problems of scale up solution is obvious. If you want to build a very decentralized network, you have to make the cost of running a node very low. If you need a mainframe to run a full node, any individual cannot afford that cost. And you may also need very good network condition for that full node, right? So the cost is very high for a mainframe node. And the other problem is centralization. If the cost is so high, then any individual cannot afford it. Then only people with a lot of money can run a full node in the network. So the solution is not suitable for a public chain. But for Cryptape or for a permissioned blockchain, the context is different, right? The users in the network or enterprises, they cannot afford the cost. And in a permissioned blockchain, we can set a barrier for Enter. So if you want to join to be a validation node, we can ask you to buy some minimum hardware to become a validation node. So scale-up solution can be used in permissioned blockchain. And we have an even better way to do that. How? We don't need a mainframe. That's not the way today. We can use the same technique used by all those internet companies. So in CIDA, we redesigned the architecture of a full node to use microservices. We break the functionalities of a full node into many independent modules. And each module can run as an independent process. All of those processes can run on each process can run on an independent server. So you can use a server cluster to run a full node. That's very different from the full node clients of other blockchains today. Because public blockchain client's goal is to have individual run the full node on their laptop. But for enterprise users, they can afford a cluster, and they have the operators to maintain the cluster. This architecture can fully unleash the resources owned by enterprise users. So in CIDA, we have consensus service, which is in charge of ordering all the transactions received by node. And we have executed to process transactions. We have authentication service, RPC service, and all the microservices exchange messages with each other through a message box. Currently, we use Rabia MQ as the message box between those microservices. So we turn the scale up node, we turn the scale up solution into a scale out solution inside a logical node. What is a logical node? Because in CIDA, a full node is not necessarily a server. So we call it a logical node because it may run on a server cluster. So on the right side is a logical node with many servers inside it. From the other full nodes point of view, it doesn't know if the other full node is running on 10 servers or 100 of servers. So what's the benefit? If we break the functionalities into independent processes, we can do a lot of concurrent and parallel optimizations. For example, in CIDA, we have implemented asynchronous transaction validation and execution. What does it mean? When a full node receives a new block, the new block will be broadcast to executor and all service at the same time. And all an executor service can optimistically pre-compute the new block and validate transactions in the new block. It's a concurrent process. And this change will largely increase the system's efficiency. This is asynchrony in a single block. And we go much farther than that. We separate consensus service and executor service completely. So when the system load is super high and all the transactions cannot be processed in one block time, which is three seconds in CIDA, the execution can last across many blocks. And the state route of the final result will be written back to the block when it's finished, maybe three blocks later. And we also do a lot of parallel optimizations in CIDA. So this is a better picture than previous one. Instead of only one service, we can run many service instances for any of the microservice. We can have three authentication service to validate transaction signatures. We can have three RPC services instances to receive requests from clients. And we can have many executors to run transactions in parallel. So this is a benchmark result of CIDA we did one week ago. We deployed a network with 10 logical nodes on a cloud service. And the throughput of the 10 node network is 15,000 transactions per second. And in comparison, some other blockchain solution or the most popular blockchain solution today can reach only 1,500 transactions per second. So it's a 10 times difference. And we found that the throughput of the whole network will increase proportionally to the ability of a single node in the system. Like the orange bar, we use a 4x large server. And in the blue and red deployment, we use twice powerful hardware. And another interesting thing is we find that the performance of blue deployment is almost the same as red deployment. But the blue one uses a single server for a logical node. But the red one uses three lower grade servers for a single logical node. So the result is very promising. And all of this is just a beginning. We are still pushing very hard to increase the system's throughput to do more parallelism in CIDA. And actually, the microservice architecture is the only cloud-friendly architecture today, cloud-friendly blockchain architecture today, because you can fully utilize the server instances on cloud. You can run many server instances to power a full node. And there are many other interesting designs, and I got not enough time. But well, we have native contract other than EVM contract. In the default CIDA stack, we support EVM contract by default. But you can always rewrite your solidary contract with native code. And our native contracts support solidary ABI, and it provides solidary compatible storage API. So you can use mappings, those data structures in native contract. And a solidary contract can call into native contract naturally without any change. This is an example in Rust. By the way, CIDA is written in Rust. And the beautiful of the scale-up solution is that the solution is orthogonal to all the future scaling solutions, like sharding, plasma, state channel. We can use them together. And I believe even in scalability solution like plasma, the root chain still needs very high performance. Still need to do a lot of things like we did in CIDA to support all those child chains. And this is a typical network of CIDA. So we build this network for enterprise users. Each enterprise user can run a full node, which include many microservices. And their users can get access to the network through their full node. This hybrid model deserves more consideration and more research. And we can build decentralized enterprise application on this network. And if you are interested in CIDA, CIDA is fully open sourced. And you can find this white paper. It's all of its code. And we build Docker image. And we provide some symbol bootstrap documents so you can follow the steps and run a CIDA network and benchmark it. We have many customers. Yeah, this is why we need such high throughput, such high performance. Because our customers include like China Banknote Printing and Minting Company. Their product literally has billions of users, right? Thank you.


Everybody forced here ripping twenty one twenty two prison basketball hobby three box number five random team style There's a link for these results in chat currently You can always find them a latent sports cards comm as well by clicking the results quick link at the bottom of the page You can also search the search bar for the results Thanks everybody and good luck Pacers rookie Chris Duarte Rockets rookie Josh Christopher nicks orange. 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It's from last year Jonathan Kaminga Zaire Williams Kessler Edwards Ruby wave for the cabs Evan Mowbly rookie big one there gold Gary Payton Sonics going to the Thunder and purple rookie Jalen Green Tim 99 Rockets that's gonna do it. Thanks again everybody one more three boxer up next