Economy, Energy and Fair Work Committee

Meeting date: Tuesday, March 24, 2020

Official Report 653KB pdf

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Subordinate Legislation

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Public Appointments and Public Bodies etc (Scotland) Act 2003 (Treatment of Non-executive Directors of the Scottish National Investment Bank plc as Specified Authorities) Order 2020 [Draft]

Item 2 is consideration of a piece of subordinate legislation. I welcome Fiona Hyslop, the Cabinet Secretary for Economy, Fair Work and Culture, and Christopher Nicholson, Scottish national investment bank head of governance and policy.

The broadcasting staff who operate the microphones are working remotely today, so I ask members to wait for me to introduce them and then wait for their microphone light to come on before they speak.

I invite Fiona Hyslop to make an opening statement on the draft order.

Good morning, convener and committee members. The purpose of the order is to enable the Commissioner for Ethical Standards in Public Life in Scotland to regulate the appointment of non-executive directors to the board of the Scottish national investment bank. That will take place prior to the new body coming into effect in the second half of 2020, and it follows the appointment of the chair designate in November 2019 and the Scottish National Investment Bank Bill receiving royal assent last month.

Putting the order in place is a vital step towards ensuring that the board of the Scottish national investment bank has the right skills and expertise and that members are in place for day 1 of the bank being established. Appointing the right people with the right skills is crucial for any organisation, and that is particularly the case for the Scottish national investment bank. The bank will be a cornerstone financial institution for Scotland, and its success will depend on the skills and credibility of its leadership. We also want to ensure that there will be a diverse and strong field of suitable candidates.

Equality is of course an integral part of the Scottish Government’s business. As the Gender Representation on Public Boards (Scotland) Act 2018 is now in force, we will be working towards equal gender representation on the board of the Scottish national investment bank. We also want to ensure that the appointments are made on merit following an open, fair and impartial process that will be publicly advertised. The full participation of the commissioner’s office will help to ensure that.

The commissioner’s office has been fully engaged to date. It will assist with interviews and will be involved in a widely publicised advertising campaign that is designed to attract a strong and diverse field of candidates. The draft order will allow the appointment process to be progressed with immediate effect and, we hope, will enable the board of consumer Scotland to be in place by July 2020.

I hope that the draft order will receive the committee’s support. My official and I are happy to take questions.

Thank you. We will move to questions from members.

Cabinet secretary, you mentioned consumer Scotland. Is the order not about the Scottish national investment bank?

It is about the Scottish national investment bank.

Okay. There has been some concern about the fact that the chair of the Scottish national investment bank was appointed without the oversight of the Commissioner for Ethical Standards in Public Life in Scotland. The committee previously wrote to the Government to ask for that oversight to take place. In evidence that the ethical standards commissioner, Caroline Anderson, gave to the Standards, Procedures and Public Appointments Committee in February this year, she said that she would have been happy to do that, but that no order under section 3(3) of the Public Appointments and Public Bodies etc (Scotland) Act 2003—the type of order that we are dealing with today—had been laid and therefore it would be ultra vires for her to do it.

Why was a section 3(3) order not laid before the chair was appointed to ensure that the appointment came under the scrutiny of the ethical standards commissioner?

Clearly, the committee was involved in the process of establishing the Scottish national investment bank. Technically, legal convention dictates that a section 3(3) order for a new body is not laid in Parliament before the bill to create the new body has parliamentary approval. To do that would pre-empt the will of Parliament and undermine the process.

I am not sure whether Mr Wightman was a member of the committee throughout the process of establishing the bank, but the previous cabinet secretary certainly engaged with the committee on the issue. In a letter of 13 June 2019, in response to a request from Derek Mackay for the commissioner to be involved, which I think followed a request from the committee, the commissioner said:

“I understand why the Committee may wish to see some form of oversight for this appointment process but regret that it is not something that I would be able to do.”

She was clear about that, and it was accepted by the committee at the time.

It was. She could have done that had there been a section 3(3) order, but your position is that there was no order because convention dictates that you do not lay such an order before the bill has royal assent. Is that correct?

The organisation did not exist. The commissioner has a list of what she can and cannot do in her operation. Therefore, for the order and the process of referral to the commissioner, it is important to have the body in place first. It is a chicken-and-egg situation. Obviously, we first want to ensure that we have the body in place, and we then have the process for the other non-executive members, which is what we are doing today.

We felt that, in order for the bank to hit the ground running, it was important to have a chair designate in place. That was laid out fully and frankly. After coming into my new post, I obviously looked at the process. Over many years, I have dealt with a number of appointments for many different organisations. It is clear that the previous cabinet secretary had positive engagement with the committee on the process.

I will bring in Chris Nicholson to address the member’s particular point.

Can you slow things down slightly so that the broadcasting staff have a chance to know who is speaking? I do not mean that you should slow down your speaking; I mean that we should slow down when we move from person to person.

Okay. With your agreement, I will ask my official Christopher Nicholson to address some of the points that Andy Wightman has raised.

Thank you.

As the cabinet secretary mentioned, the approach that we outlined in the first letter to the committee on 24 April last year was that, following the guidance for the set-up of new bodies, we wanted to have the chair designate in place to make a meaningful contribution to the development of the programme to establish the bank. That meant proceeding with an unregulated process prior to the bill receiving stage 1 support, so that we could go out to advertise immediately. That is why a section 3 order was not sought at the time.

I do not want to be pedantic about this, but I am trying to get it clear for the record. A section 3 order could have been sought immediately after the stage 1 consent.

That is correct, but if we had sought an affirmative order after stage 1, we would have had to wait for it to pass in Parliament before we could even go out to advertise. That would have significantly delayed the recruitment of the incoming chair, given the timetable that we are operating to. For the reasons that are outlined in the correspondence with the committee, we thought—and the committee agreed—that it was appropriate to proceed on the accelerated timetable. Our two objectives were to get the right person, which we have done, and to get them in early so that they could start to be involved in the key decisions for the development of the bank, which they have been.

Are we happy and content that, despite that unregulated aspect of the process, it followed the code of practice?

Yes.

Thank you.

Are there any other questions? Are members satisfied with the evidence that they have heard?

Members indicated agreement.

We move on to agenda item 4 and I ask the cabinet secretary to move motion S5M-21312.

Motion moved,

That the Economy, Energy and Fair Work Committee recommends that the Public Appointments and Public Bodies etc. (Scotland) Act 2003 (Treatment of Non-executive Directors of the Scottish National Investment Bank p.l.c. as Specified Authorities) Order 2020 [draft] be approved.—[Fiona Hyslop]

Motion agreed to.

In light of the timing, does the committee agree that I, as convener, and the clerk should produce a short factual report on the committee’s decision and arrange to have it published?

Members indicated agreement.

I thank the cabinet secretary, and I thank Mr Nicholson for attending.