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Chamber and committees

Economy and Fair Work Committee


Economic recovery - Follow-up from the evidence session

Letter from the Cabinet Secretary for Finance and Economy to the Convener - 15 October 2021

Dear Claire,

Thank you for your letter of 1 October, requesting further information on a number of issues that were not raised during my evidence session at the Economy and Fair Work Committee on 29 September. I am sorry that I was not able to be with you in person, as I very much wanted to be, and am grateful for your understanding of the circumstances.

Scottish National Investment Bank

In response to your question concerning the capitalisation of the Scottish National Investment Bank, I can confirm that we are committed to providing the Bank with £2 billion of capital funding. Our Programme for Government 2021-22, A Fairer, Greener Scotland, confirmed that we will provide the Bank with £1 billion over the current parliamentary session, with £200 million in 2021-22. Next year’s capital allocation for the Bank will be included in the Draft Budget, which I intend to present to Parliament on 9 December, once UK spending figure allocations are known. We will continue to use the Scotland Reserve to ensure our Budget, including Financial Transactions, is managed as effectively as possible through rigorous prioritisation in forthcoming financial years.

If the UK Spending Review gives us less than we need, we will need to look at all of our capital spending plans in the round to ensure we can publish a balanced Budget that best supports delivery of Scotland’s National Outcomes. It would be very disappointing if the UK Government chose to reduce the capital budget of the devolved administrations at the point when we are looking to rebuild our economy.

In relation to the issuing of a Fair Work Direction to the Bank, I can confirm that I issued the Direction on 23 August, meeting the statutory duty set out in Section 23 of the Scottish National Investment Bank Act 2020. Arrangements will be agreed with the Bank for reporting to the Scottish Government on progress towards implementing the Direction. For information, I attach a copy of my letter to the Bank.

Scottish Enterprise

I can also confirm that we are working closely with Scottish Enterprise to ensure that it has as many Financial Transactions as we are able to provide. The level of Financial Transactions available to the Scottish Government going forward is subject to confirmation from the UK Government at its upcoming Spending Review. However, Financial Transactions are not the only way that Scottish Enterprise can support early stage investment - it can also use capital and income generated from its own investments.

On the transfer of early stage capital to the Scottish National Investment Bank, at present Scottish Enterprise remains focused on supporting early stage investment. This will be considered as part of a review of the framework between Scottish Enterprise and the Bank once the Bank has been established for three years. I should emphasise that the Bank and Scottish Enterprise are working together closely to ensure that business and the economy are able to effectively and efficiently access appropriate investment and related support.

Broadband

In relation to the Reaching 100% Programme (R100), based on the most recent data update we anticipate that 32,216 properties in the Central lot area will be connected through the R100 Central contract, with 20,740 properties to be connected through the R100 South contract. Of course, as with any large scale engineering project, these figures could be subject to change, depending on external factors – for instance, properties being demolished and therefore no longer requiring a connection. Contract build is expected to be complete in the Central and South areas by 2023-24 and 2024-25 respectively.

Following approval of the updated Speed and Coverage Template for the R100 North contract, we anticipate that a total of 59,276 properties in the North of Scotland will be connected, with build expected to be complete by 2026-27.

The vast majority of connections delivered through the R100 contracts (100% of build in the South and North contracts, and 96% of the Central contract build) will be fibre-to-the-premises (FTTP). As such, in many ways the programme has now surpassed its original aim, with many properties capable of accessing speeds of up to 1 Gigabit per second (Gbps) – around 30 times more than the original superfast commitment.

In response to your queries on the Scottish Broadband Voucher Scheme (SBVS), as of 24 September 2021, 1,022 connections have been installed – 641 utilising the main voucher, worth up to £5,000, and 381 utilising the interim voucher, worth up to £400. Of those 381 connections, seven were eligible for the additional £250 uplift and all seven have made use of it.

The R100 SBVS is demand-led and un-capped, making it the most generous voucher scheme in the UK. We continue to engage regularly with our registered suppliers to drive take-up and are confident that the scheme is sufficiently resourced to deal with demand.

In terms of the technologies delivered through vouchers, fixed wireless access (FWA) and fixed mobile make up the majority of installed connections – 54% and 36% of total voucher installations respectively. Fibre-to-the-premises (FTTP) has been installed at 6% of properties; FTTP/FWA hybrid connections have been installed at 3% of properties; and satellite broadband has been installed at 2% of properties.

I hope that you find the above information helpful. I would be happy to respond to any further questions you might have.

Yours sincerely,

 

Kate Forbes