Official Report 781KB pdf
Our second item of business is our final stage 1 evidence session on the Community Wealth Building (Scotland) Bill. I am pleased to welcome Ivan McKee, Minister for Public Finance. Accompanying him from the Scottish Government are: Stephen White, head of community wealth building; Laura Moffat, community wealth building policy and legislation manager; and Caterina Capaldi, solicitor, all from the Scottish Government. As always, members and witnesses should keep questions and answers as concise as possible.
I invite the minister to make a short opening statement.
Thank you very much, convener, and good morning, committee. I am delighted to be here and to take over responsibility for the bill from my colleague Tom Arthur. The synergies are strong between the bill and the work that I am already taking forward across the wider public service reform agenda, so I am delighted to have it in my portfolio.
In leading this work, I aim to connect the economic dimension with key elements in my portfolio, including procurement, planning, community empowerment and, of course, the PSR strategy. As I am new to this, in answering your questions, I am keen to listen to ideas and views that are influenced by the significant number of responses to the committee’s call for evidence.
Community wealth building is about making local economies work better for people and communities. If money flows into and is kept in an area, whether through investment in local business growth, more good jobs or profits being reinvested locally, new opportunities are created and more wealth is retained.
Several key questions came up as the legislative proposals were being developed, and I will touch on three of those.
The first is a question that I have asked myself—do we need legislation? There are already good examples of local authorities and other organisations across the country delivering impressive results through their implementation of community wealth building, and the financial memorandum was informed by investment information from local authorities, whose staff—along with public servants in the national health service and other areas—have, to a large extent, driven community wealth building. Focused, proportionate and enabling legislation has the potential to amplify the impact and contribute to the operation of Scotland’s economy.
The second question is about the purpose of the bill. Collaboration and the consistent application of community wealth building can help to maximise the combined impact of public spending, ensuring that all local and wider regional economies benefit. That is why the bill focuses on the creation of a new and consistent platform to underpin a formal public sector-led partnership approach to local economic development. The bill also provides for the development of guidance that will be co-produced with key partners and informed by current good practice.
The final question is about getting the balance right between local flexibility and national consistency. Local partners and communities are best placed to understand the challenges and opportunities in their areas, which is why the bill gives local authorities and other public bodies the flexibility to develop and implement meaningful actions to meet local needs. Care has been taken to ensure that the advancement of community wealth building in the public policy landscape is light touch and that it complements existing partnerships and policy in linked areas.
The bill is very much about looking forward and laying foundations for an economic development format that sees every public pound as having economic agency. The public sector needs to lead the agenda while working in partnership with businesses, the third sector and communities. Securing in statute our commitment to community wealth building has the potential to support local economic development and ensure that it is focused on real places and delivery for people.
I welcome the committee’s scrutiny of the bill and look forward to receiving its recommendations in due course.
Thank you, minister. You have already touched on an important point by asking whether we need the bill. No member of this committee is against community wealth building—many are passionate about it. However, is the bill ambitious enough? What will it deliver that could not be delivered via, for example, an agreement with the Convention of Scottish Local Authorities or ministerial direction to other public bodies? Why do we need legislation when those vehicles could have delivered clear direction to public bodies?
There are a number of answers to that question. It has been helpful to listen to the witnesses who have appeared before the committee, because there is clearly a lot of support for the work that is being taken forward. That is important. A lot of people are looking for the bill to signal the Government’s direction and intent and to lay out how our partners across the landscape of local authorities and other public bodies can best specify their roles.
Do we need a law to do that? Can you not just have an agreement with COSLA to set that direction for public bodies? Public bodies, such as Scottish Enterprise, rely on ministerial direction letters, so could that not all have been covered by that process?
There is scope to do that and it should absolutely be considered. I will be spending time in the next few weeks engaging with more partners to understand their views. The bill gives a platform and impetus to community wealth building, and it corrals the energy that already exists around it.
From a technical point of view, you are probably right, but I would need to check that ministerial direction would cover everything. The requirement on ministers to take that approach is not there; we would need to put that requirement on ourselves. I suppose that the bill future proofs that by specifying exactly what is in statute and, therefore, putting a lot more weight behind it. However, I take your point on board.
If we are to have a bill, why does it ignore the big-ticket policy areas that really matter, which we have heard about in evidence? Why are changes in the policy areas of, for example, procurement thresholds, small and medium-sized enterprise access to procurement, and improved community asset transfer policies not in the bill? Have you not missed an opportunity to tackle those issues and really move the dial on community wealth building?
A lot of work was done on that in the Procurement Reform (Scotland) Act 2014, which focused on the significance of SMEs. Scotland’s performance in that area is far in excess of what we see across the rest of the United Kingdom or, indeed, in most international examples. That legislation has delivered.
We can change thresholds without legislation, depending on which thresholds we are talking about. Clearly, those that are set internationally are different, but we can change those that we have set domestically without legislation. Similarly, the legislation that is in place on community asset transfer is undergoing review so that we can understand its impact and build on it.
I take the point, and I will be looking to the committee and others to see whether there are any glaring omissions of specific things that might be included in the bill in order to give more impetus to the work that we want to take forward.
Good morning. We have taken a lot of evidence on the guidance that the Scottish Government will issue. The legislation makes it clear that public bodies have to have due regard to the guidance when they are drawing up their plans. The Delegated Powers and Law Reform Committee has just reported on the bill. I do not know whether you have seen the report, but it recommends that, as the bill’s lead committee, we consider whether the proposed content of the guidance could be included in the bill to provide more clarity to those who will be subject to duties under it. What stage is the guidance at? What thought has been given to its content? Is there any prospect of the guidance being available before the bill completes its passage through the Parliament?
As you would expect, I will defer to officials on that, because I have not yet seen the report. I intend to look at that issue over the coming weeks to understand the status of the guidance.
In real time, the guidance is evolving every day through the practitioners network. Building up a collection of real practice so that there are peer learning opportunities is implicit in its work. The guidance is growing through that work, which is based on real experience.
We have not yet seen the DPLR Committee’s report. I was aware of some correspondence that hinted that it would soon be published, and a reply was issued. I used to work with the official who gave evidence to that committee, so I know that they indicated that the bill should include at least the structure of the guidance, if not the entire collection of material. A significant amount of information exists on the five pillars and all the other policy areas applying to community wealth building, so we would need to work through whether it would be desirable or appropriate to try to capture all that practice in primary legislation.
We are aware of the DPLR Committee’s view, if not the content of its final report, because of the correspondence that I mentioned. The bill team will look at that in detail.
When is the guidance is likely to appear, even in draft form?
The Government would have to have fully finished the guidance and developed it with partners 18 months after the legislation’s commencement. At the moment, there is dialogue to build up the collection of information that will become the guidance, and there will need to be discussions with the practitioners network to capture a structure for it. I think that everyone in the network would be open to discussions, and we would be open to helping to put together the corners of it, if that would be helpful, but putting an exact timescale on that work would be difficult, having just been asked that question today.
The motivation of everyone who supports community wealth building, and much of what has come through in written submissions, suggests that they would be keen to work with Government officials to frame the guidance so that it would be informative.
I am certainly very keen to bring forward what we can as early as we can. It would be helpful for everyone if the committee could let us reflect on a structure for the guidance.
The bill would require public bodies to have due regard to the guidance. How will you ensure that that happens? What does “due regard” mean?
I shall ask the lawyer for the technical definition of “due regard”—you are a lawyer. [Laughter.]
Exactly. That is why I am asking the question.
To my mind, it means that public bodies would have to take the guidance into account and ensure that they have addressed the issues that it contained. The point of having guidance is that it would force public bodies to go through the process of thinking about the issues, such as what they are doing, how they can contribute to the agenda, where their spend goes, and how they can maximise that spend in the right places.
In general, legal authorities provide that having “due regard” to a particular matter requires the duty holder to give regard that is appropriate in all the circumstances. The duty must be given appropriate weight, while taking into account other considerations, such as other duties in legislation or other policies. In considering whether a duty to have due regard to a particular matter has been complied with, the courts will scrutinise a decision maker’s thought process vigorously. They have described the duty to have due regard as a test of the substance of the matter; it is not a mere box-ticking exercise.
09:15
That is helpful. I have one more question on that issue. There is a duty on public bodies to have “due regard” to the guidance, but there is no such duty on Scottish ministers. Why not?
That is a good question. [Laughter.] I had not spotted that. Do officials want to comment on that?
Scottish ministers would be the producers of the guidance, and a report would need to be lodged on the actions that had been taken in the furtherance of what had been set out in the ministerial statement. On that question, other provisions in the bill were felt to be in advance of “due regard” and to provide stronger commitments and stronger expectations in relation to the work to be done. However, that point can certainly be considered in the round, with all the other evidence that is provided and the other points that committee members make.
I have one question on a different topic. The financial memorandum estimates the cost to public bodies and local authorities of designing and publishing the action plan, which is what the bill requires, but there is no estimate of the cost of delivering, implementing, monitoring or evaluating those measures. Is the financial memorandum too tightly drawn? Is it not the case that the costs of delivery will be more substantial than the very narrow costs of preparing the plans?
I take that point. The financial memorandum covers the aspects of the bill that will be required by law. In relation to taking forward that agenda, if you look at how public bodies spend their money and at their focus on delivering best value, you will see benefits in the round. That applies to the whole system. The whole point of the bill is that there will be economic benefits, economic development and economic activity as a consequence of public bodies taking those actions, so there will be more value in the system in its entirety.
Clearly, the changes that public bodies would have to make would depend on what was in the action plans. If they just decided to redirect, from one place to another, the procurement spend that they would have spent anyway, the effect might be minimal.
I take on board the point about monitoring and evaluation, and we should perhaps reflect on that in relation to the FM. I do not know whether Stephen White wants to comment on that.
I am looking at the table that shows the local authority figures. It is probably worth noting that those figures were collected from real information following dialogue with local authorities. The total figure of £4.4 million relates to staff costs. Activity that was already happening on the ground would involve administering community wealth building and elements of monitoring and evaluation, but nobody is claiming in any way that those figures are representative of the real experience in every local authority. As time goes on, each authority will need to work out its outgoings based on its local circumstances, and we will talk to authorities about that.
It seems to me that, if we ask local authorities to revisit procurement rules, for example, additional staff time will be required for that. That needs to be factored in along with the cost of drawing up the plans, which is all that the financial memorandum covers. It would be very helpful to the committee if you could have another look at that.
I would like to ask about how we will measure the success of the bill. Section 2 says that one of the intentions behind it is to reduce inequality. I have no issue with that, but the second stated intention is to increase “economic growth”. Just about every witness who has given evidence to the committee has suggested that gross domestic product is not a good measure of the things that we are trying to achieve through the bill, such as increasing opportunity, improving crisis management and increasing connections. How would the minister measure “economic growth”? What does he mean in having it as one of the stated intentions behind the bill?
The national performance framework includes a range of economic measures. You can look at what we are doing in relation to job creation and the value of those jobs. We already have procurement measures in place in existing legislation, and we measure and report on that annually. You can also measure business creation through the number of business start-ups in a community. A range of economic measures are already in place. GDP growth is one of those, but it is by no means the only measure. At a macro level, it will be very hard to know how much of an impact the bill has had, compared with the range of economic and other measures that are in place. At a local level, local authorities—they already do this—will look at what is important in their local economy. That may differ from economy to economy, depending on their priorities.
Would it not, therefore, be more accurate to change the reference that the bill makes to “economic growth”, which implies change to GDP, to other language, such as “economic success” or “economic prosperity”? One of our witnesses suggested that the bill could refer to increasing
“social, cultural and ecological wealth”.—[Official Report, Economy and Fair Work Committee, 18 June 2025; c 33.]
Would the minister be open to revisiting the language to make it reflect more accurately the intention that he has just set out?
We can certainly look at that. I get the point that you are making. I suppose that we want to keep the provision as succinct as possible. It does not refer to GDP; it refers to “economic growth”, which is a catch-all term that covers a range of measures of economic activity and economic success. It is important to recognise that. How that is interpreted will depend on who you talk to. However, we can reflect on that.
That is my issue, because different people think about economic growth in different ways. In the current cultural zeitgeist, it means increasing GDP, which I think we all agree is not the sole thing that we are after here.
With regard to measures of success, ideas that have emerged from our evidence sessions are that there should be some sort of community audit and that, as community wealth building projects progress, the community should be able to evaluate how the process has been working for them. There are no such measures in the bill. The bill simply sets out the intentions without setting out ways to track or measure how successful such projects have been. Would the minister support amendments to the bill in that regard? Has any thought been given to how success might be tracked?
That is a good point. I will ask officials to talk about the detail of that. The first question is how we define “community”. We could do so by referring to local authorities, but they are part of the process and are at the core of community wealth building. If by “community” we mean more local communities, such as neighbourhoods, there are no mechanisms in place to enable evaluation to take place at that level to the extent that we might want. That is part of the broader agenda of the democracy matters work that I am taking forward separately. There is a lot of crossover with the work on community wealth building.
We are happy to consider how we measure how successful community wealth building projects have been for communities. I will let officials talk about the specifics. We would need to do quite a bit of thinking about what mechanism we could use to enable communities to hold people to account.
That suggestion came through in one of the evidence sessions. I have worked on the development of the bill since the beginning, and one thread that has run through its development ethos has been the idea of simplifying and working with what is already there, by which I mean the elements of the Community Empowerment (Scotland) Act 2015 that oblige public sector bodies to do certain things. That would involve working with the public sector landscape as is.
The guidance could stipulate what good practice would be and could set out how such work might be done if certain areas wanted to undertake a community audit. Of course, there could be a provision in the bill that would make that a compulsory approach, but it would be interesting to have a discussion with people in the stakeholder community about the parameters for such an exercise, because there would be different ways of doing it. That is an interesting issue that we picked up from the evidence, and we will pursue it.
I hope that I speak for the committee when I say that we have a general concern that the process must not be a tick-box exercise or a talking shop. We want it to have impact. In order to judge what impact it has had, people will have to be able to measure or audit it in some way. That is a theme that we will come back to.
My final line of questioning is about the organisations that are on the list of relevant public bodies in section 5 and the list of specified public bodies in the schedule. What criteria were used to put those organisations on the lists? Some witnesses—including representatives of organisations that are missing from the lists—asked why there were two lists and suggested that there could be just one. Another question was whether organisations with a significant amount of land assets, for example, should be considered in a different way from those that have purchasing power. I would like to understand why those lists are the way they are and to hear an explanation of who is on them.
It is a valid point to consider. There are two lists because the first group would work with the local authority to put the plan together. That group is seen as being at the core of economic activity and would have significant input into what the plans look like. The second group—the longer list—includes the bodies that must have regard to the guidance when they put their plans together. You could say that all public bodies should take it into account when they do so, but maybe that is too wide, although there is a significant number on that list already. You would need to look at the ones that are not included and consider whether there is a case for including them in the “due regard” requirement.
Regarding the public bodies that should be working with local authorities to put the plan together, if a case can be made for them to be involved proactively at that stage—which goes beyond the “due regard” requirement—I think that that could also be considered.
We want to keep everything as simple as possible, which goes back to the principles around the public service reform strategy. We do not want to give people extra work to do if they do not have to do it, and we do not want to create complexity across the system for the sake of it. It is about getting that balance right.
I would need to check the scope in relation to the bodies that we could add to or take off that list, and how we would execute that, but I will let Stephen talk about that.
I am interested in the criteria that were used to choose those bodies, particularly for the shorter list.
In the overall spirit of being informed and taking a light touch in bringing that core group together, it was about which bodies had the most economic agency and economic influence. In addition, the longer “due regard” group list was informed by how many other duties the bodies in that group have.
If you look at community planning partnerships, some bodies in that group, such as the Scottish Fire and Rescue Service and the police, are not in the core group. The idea, which is open for discussion, was to separate those with the most economic influence and the ability to make an impact. Everyone can make an economic impact, because—as the minister said in his opening remarks—every pound has economic agency, but we took a lighter-touch approach to what those bodies would be obliged to do. That call was made for discussion.
Brilliant. Thank you very much.
On that point, what consideration was given to creating a formal role for those anchor organisations when it comes to co-designing the action plan itself? You have highlighted the importance of those organisations, but should they not be co-designing the action plan with local authorities?
The first group would do that. The relevant bodies would work with the local authority to produce the plan—that would be colleges, health boards, Scottish Enterprise, enterprise agencies, Skills Development Scotland and the regional transport partnerships. That is the core group that would work with the local authority to produce the plan, and then the bodies in the wider group are the ones that must take it into account when they produce their corporate plans.
I was thinking more about formalising that role as a co-designer in the bill, as opposed to those bodies inputting into the plan. That point came through in some of the evidence.
Good morning. I will continue the convener’s line of questioning on how community groups can have a formal role in this. First, I acknowledge the fantastic work that is already going on in North Ayrshire, East Ayrshire and other places, which a number of the committee members have seen. Some really good stuff is going on. However, it is not the bill that will make the community wealth building approach succeed; that will be driven by the dynamic between community groups and officials in an authority—we have seen evidence of that already. Will the bill amplify that dynamic across Scotland? It is not happening across Scotland yet—we know that—but we hope that that is what the bill will achieve.
Do you recognise that what makes things tick is the good work that goes on locally with the organisations that the convener talked about, driven by really good, committed officials?
You are absolutely right. It is down to individuals in local authorities, community groups and organisations across Scotland, including development trusts and other bodies that are doing great work and have a real focus on this. Some of the committee’s witnesses have done a lot of the thinking behind the theory and have learned from international examples. Those individuals are the folks who drive this.
I suppose that we are saying that we have that approach in part, as you rightly identify, but we do not have it to the extent that we could or should have across the whole country. It is about whether the bill gives the impetus to make the issue one that people need to take more seriously, which will then force them to learn from others about best practice.
09:30
The local people who we spoke to were at pains to emphasise that they value having a participative role at the outset, rather than having officials coming along and telling them, “This is what we’re going to do to you.” People very much want to have the sense that they are in a partnership, and to feel as though they are driving the process. I think that people were saying that that is the key to success.
That leads me to the convener’s question about formalising that role in the bill. It is one of the shortest bills that I have read. It has only 12 pages, and it is really nice, but although it talks about giving “due regard”, there is no formal connection to require engagement with the public in shaping the plans to begin with. I wonder whether a balancing act is needed to ensure that the public have a role in defining what the plans look like.
We need to unpick that a wee bit. The language that is used is that each local authority and “relevant public bodies” must prepare a community wealth building action plan. The list of relevant public bodies involves big bodies, such as colleges, health boards and economic development agencies. Then there is the list of bodies that must give “due regard”, which is another list of constituted public bodies. However, as you rightly identify, it is not about formalising community engagement in the process. Lorna Slater also made a point about community engagement.
There is a question about how that could be formalised, and I would be interested to take views on it. I will ask officials to comment on whether it has been considered. We must recognise that the level of development of community organisations across the country is variable, whether those are community groups, community councils or whatever, so the process by which we engage them will obviously have to be flexible to take account of that. However, I absolutely take on board your point. If we are going to have something that will work in a local authority area, engagement with those whom we are seeking to support is hugely important. Local authorities could and should take that forward as well, but the picture there will, of course, be variable, too.
Have we done any thinking on that, Stephen?
Laura Moffat might want to discuss that.
Sure.
There will be a duty on local authorities to lead a consultation prior to publishing the action plan. Implicit in that is that they would engage with communities in doing so. We will think about that in more detail as we develop the guidance and good practice.
As the minister said, actually putting that in the bill is something that we can explore further. During the development of the bill, we considered the issue of proportionality. As the minister highlighted, the landscape and the organisations vary across the country. If we put a legal duty on some bodies to engage with the community wealth building partnerships, would that be proportionate for them? There is a balance. We hope that, through the guidance—this will be statutorily required—local authorities will ensure that they engage with the right people as they consult on the action plan.
What has happened in Ayrshire in the pioneer councils will inform the guidance on that element. There is also other statutory commentary in legislation on community empowerment and engagement. The democratically elected councils have pushed this approach, but we can examine further whether that requires to be instructed or whether we just need to capture in a consistent way across Scotland what has happened and the feedback from communities on what they have benefited from and enjoyed.
Is there a place for local place planning, which we discussed yesterday at the Local Government, Housing and Planning Committee in reviewing the national planning framework process and the development of local development plans. As you know, local communities will come up with and devise local place plans. Is there a connection between that process and the process in the bill?
That is an interesting question. As I mentioned in my opening remarks, there are huge linkages with the wider public service reform agenda, the work on community empowerment, the democracy matters work, the work that we are doing on single authority models and the work to strengthen community planning partnerships. There are a lot of linkages.
The place plans sit within a very formal structure for how local development plans are put together. Communities do not think in silos; for example, they will want to do something because it has a place, economic, social or other benefit. They might want more houses—or they might not; they might want more economic activity and economic development. It is all joined up. One thing that I am keen to explore further over the coming weeks is the relationship between this work and the work that we are doing on community planning partnerships, including how integrated this work should be with the work of those partnerships, for which there is an existing structure.
Good morning. I will ask question about finance. Finance is key to all of this in two respects: additional spend through procurement with SMEs; and access to finance for community groups and social enterprises.
There is a huge range in spend on procurement with SMEs. For NHS Greater Glasgow and Clyde, that accounted for 12.5 per cent of its spend—which I understand is partly due to the drugs bill that it has to pay for—whereas for North Ayrshire Council, the figure was 26 per cent. Should targets be set for SME spend and for local SME spend—that is, spending with companies that are operating within the council or health board area?
If you look at the annual procurement report, you will see that 47 per cent of the total public sector spend—£16.5 billion—goes to SMEs. I made the point earlier that that is a significant number, although that does not mean that work is not happening to increase it further. Interestingly, the proportion of public spend that goes to SMEs is higher than the proportion of the economy that is represented by SMEs, so SMEs get a bigger proportion of spend from the public sector than they do from the private sector. That is an interesting thought to reflect on.
In local areas, the issue becomes one of definition. In Clackmannanshire, the scope for spending with local bodies within the council area is different from that in Glasgow, where there are a lot more businesses and, therefore, a lot more scope to spend with local bodies. The setting of targets at that level becomes an issue. Last week, the committee talked to the Federation of Small Businesses, which tends to focus on microbusinesses. Those are very different from what we would call medium-sized businesses, but both are in that SME range—a huge range of different businesses is caught by the SME categorisation. In setting targets, we would need to be very careful about what exactly we would measure and how we would compare like for like. As you said, the spend of a health board is very different from that of a council in terms of the scope that each has for spending locally. The best way to set such targets would probably involve considering that as part of a plan, in order to allow for local variations.
I accept that the situation is very complicated, but if you do not set targets, what will stop organisations just paying lip service to the issue? At the moment, only eight out of 32 local authorities do community wealth building seriously, so what is there to stop an organisation just undertaking a tick-box exercise?
That is always a danger, and we need work to make sure that it does not happen. Designing the legislation correctly is important in that regard. That goes back to the point that Lorna Slater made about how to measure and evaluate. We are certainly open to considering how that could be done in a way that would work. It is also not just about the local authority and the relevant partners but about all the other public bodies on the longer list and the money that they spend in the local community.
Stephen, do you have any thoughts to add on how we developed our thinking around that?
We are familiar with the issue, as it came through strongly in a lot of the evidence in the submissions. As people who work on community wealth building, we rely on advice from our own colleagues in procurement. There has probably been a long history of discussions about targets. As the minister indicates, local partners could set out targets in their plan if they want to do so, but obliging them to use centralised targets would be different. The issue has been a thread through the community wealth building discussion since it began.
When we were out on our visits, we met a lot of community groups that had taken over derelict land or repurposed buildings but had difficulty accessing funds. What steps will the Government take to deal with that issue, either through the action plans or in the guidance?
The things that you are talking about very much relate to the five pillars of community wealth building, which include finance, workforce, procurement and assets and land. That goes back to the fact that what we are doing is giving impetus to all the other work that is happening in relation to those pillars. There is already funding in place around projects that involve vacant and derelict land, and, of course, the community asset transfer legislation supports that, too. There are already mechanisms that help in that regard, and the bill will not address that per se, but there could be consideration of how other bits of the system could support that. Procurement and the funding for asset transfer are another part of that. Clearly, how much money can be put into that in any given year is budget dependent, but there are funds for that, and I would expect that to continue.
Stephen White might be able to talk about the detail of the vacant and derelict land fund and so on.
I am not able to recount exact numbers, but if the committee would find information about the broad contributory areas useful, we can write to the convener with some indication of what would be in scope in terms of relevant amounts of money.
The legislation seeks to establish, in a binding way, a consistent place in which discussions can be had. The plan that could be the place and the economic context for all those calls for resource and discussions about the change that is required, including future legislative change. At the moment, that does not exist, and those discussions must take place in different forums, so there is an opportunity to join things up.
We have heard evidence that credit unions are keen to get involved, but that there is a legislative block to their doing so. However, we then heard contradictory evidence about that.
I was thinking about Glasgow Credit Union, which has assets of £192 million, £20 million of which is in cash—I realise that it has to have substantial cash holdings, so that it can pay out to savers. However, such organisations seem to be risk averse. I have seen information that says that credit unions can have corporate members that they can lend to, but Glasgow Credit Union has only one. There are more than 100 credit unions, and it would seem to me that they are a natural fit with the Government’s community wealth building goals. Is the Government doing anything in that regard?
Are you asking whether the Government is doing anything to enable credit unions to lend to organisations in the community?
Yes.
I know that some issues relating to that are reserved and some are devolved. We are happy to unpick that. Stephen White might be able to comment on that.
It is an interesting point. I am not an expert on this but, earlier in the development of the bill and the general policy, I met a few chief executives from big Scottish credit unions. The point that they made was that they are curtailed in their lending and that the change that would be required is in the reserved area. It is one of a long list of issues from the original consultation on the bill that would require engagement with the UK Government. The issue could be fully considered through that process of dialogue.
We received some information that said that credit unions are allowed to lend to an organisation as long as it is a member of the credit union and operates in the same area, although there is also a small percentage figure that is the limit that they could lend to that organisation. However, although it seems that there is nothing to prevent any credit union from making such a loan, there is a reluctance to do so, despite the fact that credit unions can take out loan insurance and make secured loans. I do not think that there is anything in the reserved space that is preventing that lending from happening; I think that it is more to do with the fact that credit unions are risk averse. Is there anything that the Government can do to support them to reconsider their position?
09:45
I suppose that that comes back to where we started the conversation about the purpose of the legislation. If the legislation flushes out such conversations in local authorities as they sit around the table with the relevant partners and put the plan together, it is clear that, depending on which part of the country they are in, there will be different solutions, given that credit unions and other organisations have different profiles. If the legislation flushes out those issues and the guidance says that credit unions should be considered, that points to the value of the legislation in enabling people to have such conversations.
Good morning. On that point, one reason for the bill is perhaps that there is a patchwork approach to community wealth building across the country. However, I am sure that you recognise that, even with the legislation, different areas will face different challenges. Where do you see those challenges existing geographically—for example, in relation to rural and island communities and economies of scale—even when the bill has been passed, if it is passed?
The purpose of the way in which the bill has been designed, in enabling or requiring local authorities and local partners to sit down and pull together the local action plan, is to give a framework but also to allow scope for locality-specific issues to be pulled together. You will know much more about island groups than I do, but I am sure that, if you sat down with people from Orkney, Shetland and the Western Isles, they would have a lot of similar challenges but also a lot of different challenges. Having things at that local level is really important to flushing that out. From our perspective, it is about making sure that the legislation enables that and the guidance lists the things that should be considered, and how they should be considered, in order to enable that to happen.
If the bill is amended and passed, is the aim that there will be different levels of engagement rather than a level response but that the overall level of engagement across Scotland will increase?
Yes. Everything should lift, because everyone will see what the requirements are and what best practice is, and people will go through the process of pulling their action plans together and consulting locally and more widely. Of course, it is not the case that everybody will be at the same level, and there will still be things that we need to make progress on, but we will be further down the road and moving in the right direction.
We talk a lot about councils getting involved, but one area of interest is where the Government can be involved. A lot of the time, Government contracts are delivered centrally—for example, for insulation programmes. Will there be a move, or is there an opportunity, for the Government to decentralise some of those contracts? They are often given to large companies in the central belt and are then delivered in rural areas by secondary contractors. Is there an opportunity to have more flexibility in how those contracts are delivered in order to allow more local engagement and delivery?
Through procurement activity, there is a lot of focus on breaking up those big contracts into lots through the work of the supplier development programme. Recently, I was at a very well-attended conference at which there was an emphasis on and momentum behind getting local suppliers engaged in that process. I have also been at round tables with groups of SMEs from around the country to hear at first hand about the challenges that they have in accessing public sector procurement. A lot is already happening in that space.
It then comes down to what is being built. A local authority or health board in a rural area will have its own focus. A large-scale construction project will allow engagement with only a limited number of people, but work is already in place to support how that cascades down through the tiers when it comes to the fair work and local content agenda, and so on. There is a lot in that—and the bill will give it more emphasis—that will help to move things along.
Good morning. Minister, do you agree that the most important thing about the bill is communities?
Yes. There are a lot of important things, but that is very important.
Thank you—
Where is this going? [Laughter.]
Is it fair to say that communities often get turned off from getting involved in good work, because they feel excluded?
Yes. It goes back to my earlier point about how we define communities.
There are many definitions of communities. Whether it be a small village or hamlet or a wee neighbourhood in a big city, the people there see themselves as a community, and they have a vital role to play in community wealth building. I am sure that you agree that we have a duty to ensure that those folks are empowered as much as possible.
In relation to making the best communities and ensuring that there is positivity from communities, is it right that, when we make changes, we must listen to communities and get our communication right?
Absolutely.
In that case, I ask you to look at the Official Report of today’s meeting. There are folks in my constituency who have quite an interest in the bill, and some of them do not think that it goes far enough. I might think that, too. One thing that is frustrating is the level of managementspeak that there has been today. Quite frankly, that turns communities off and prevents them from getting involved. How will you ensure that we get rid of that language and have plain and simple speaking, not gobbledygook that turns folk off?
That is a broader question. I have a lot of sympathy with the point that you make. I have spent many happy hours rewriting official or Government documents to remove much of that language. For example, there should be a limit on the number of verbs that you can have in a sentence, and we should probably ban certain phrases—“in due course” is one that springs to mind. That would be a separate exercise that would have much broader applicability than simply what we are talking about today, but I have a lot of sympathy with that point.
There is a wee bit of jocularity around this, but it is quite simple: listening to what we have heard this morning is a turn-off for my constituents. I know that, because I have already had a message about it. We cannot afford to have folk turned off when it comes to community empowerment and community wealth building. In all seriousness, I ask that we all look at the language that we use and that we listen to people on these very serious issues.
You are absolutely right. I do not disagree with any of that. Certain things need to be spoken about in legal language when we are talking about legislation, and other things need to be talked about in quite technical language for good reasons, but we should always focus on the impact on people. To be fair, some of that is about the language that is used and some of it is just about explaining how things work and what things mean. We use a lot of terminology as shortcuts. We might know what the terms mean, but you are right that they might not necessarily make sense to community groups.
When the rubber hits the road, community groups should have access to procurement opportunities and have better support from local authorities and others that can help them to deliver what they are trying to deliver for their communities.
I appreciate that. Thank you.
I will bring in Daniel Johnson. No pressure, Daniel, but we are looking for some plain speaking.
I am known for nothing else but plain speaking. You should not smile so broadly, minister.
The subtext to this is that there is a risk that, in essence, nothing will really change as a result of the bill—the Government will issue another set of guidance, there will be a round of consultations by local authorities and they will produce a report. There have been four suggestions—that is the number that comes to mind—for changes that could be made at stage 2, and I ask you to consider them.
First, in relation to what Lorna Slater and Gordon MacDonald said, could a consistent set of metrics be provided—not necessarily in the bill but in a subsection of the guidance—and could local authorities be required to set their own targets? You made the good point that one set of targets cannot apply to every area. However, if each local authority used a consistent set of metrics but was required to set its own targets, would that improve the bill and move things forward? What is your response to that idea?
Absolutely. I think that some of that could be in the bill and some of it could be in guidance, depending on how we want to articulate it.
The second suggestion is the one that you alluded to. What we need, in part, is a change in the procurement approach. Is there a possibility that, rather than only changing the narration of what is going on in procurement—which is what the report would do—there could be a change in the structure of the procurement that is undertaken by local authorities and other public bodies? The structure could require them to do some initial work to explain their procurement requirements, either for particular procurement exercises or more generally, and it could require them, in their work on how bids are assessed, to think in particular about social value, as that is a permitted reason for granting and awarding contracts, over and above simple financial value.
I would need to be careful not to cut across existing procurement legislation in that space. Having two sets of procurement law could be complicated and create confusion.
It is important to understand how much the bill can do for communities and localities, but we have made huge progress in that area during the past 10 years, and the stats show that. There is a way to go, of course—there always is—but it is not true to say that we are starting from ground zero. We want to ensure that anything that we create builds on the work that is already happening on procurement activity and existing legislation.
I am therefore not sure that we would want to do that in the bill. I am not saying that we will not do it, but we are very conscious that we already have legislation on the matter. That legislation might need to be changed—we have talked about thresholds that could be changed without legislation and so on—and I am happy to consider that, but I need to be careful to find the right vehicle for it.
I guess that I am saying that we should update existing guidance or legislation. I am not saying that it should be replaced; I am saying only that it should be updated.
I also wonder whether the bill could update the Community Empowerment (Scotland) Act 2015, as has already been alluded to. When we talk to community organisations, we sense that there is a feeling that, despite the mechanism in that act, public authorities do not necessarily help them to make their bids, let alone local authorities and other public bodies such as health boards baking into their service design the possibility of the 2015 act—for example, its community asset transfer powers—being used in relation to running parts of their public service delivery.
Could there be an update to the 2015 act to create obligations to facilitate and enable such bids and to consider the provisions of the act and community wealth building as part of public service design and implementation?
I am very happy to consider that. Again, however, it is important to put the matter in context. The public service reform strategy that we brought out last week has workstreams on how we make community planning partnerships more effective. Will legislation come out of that work? I think that it is likely that there will be a lot of public service reform during the next parliamentary session, which will cover a range of things in that space and consider how to get more empowerment in local service design and everything else that goes with that. We are very much considering that.
I suppose that it comes down to what the most effective vehicle is. If there are specific things that we can do in the bill during the next few months, given its timescale, we are very happy to consider that, but I would say that the bill is not the end of the story. There is a lot more to be done. There is also the democracy matters work, on which we have indicated that we will create legislation on the single authority model, the strengthening of CPPs and so on during the next session of Parliament.
This will not work unless there is capacity and capability to heed the calls. It is about ensuring that people who know how to do that stuff have the confidence to do it. That is not going to happen unless there is support. Is there a possibility of considering broad duties to support capacity building or the Government looking at how it could use its agencies to help local communities to develop the skills, know-how and wherewithal to approach community wealth building? Unless people are starting businesses and creating community organisations and initiatives, community wealth building will just not happen. No amount of consultation or reports in the world will change that.
10:00
That is absolutely true. It is important to recognise that we are not starting from ground zero. There are a whole series of workstreams in the national strategy for economic transformation that seek to address the point about entrepreneurs starting businesses. There are a lot of great examples of community development trusts, including in my constituency, and a lot of work is being done at a Scotland-wide level through organisations to pull that knowledge together, share best practice and give the momentum and impetus to take that forward. There is a lot happening, but I recognise the points about capacity and our role in helping to support that where we can.
Capacity can be a challenge. Going back to the point that Willie Coffey made, I note that there will be good capacity by definition in areas where good progress is being made, but not in areas where it is not. How that is balanced is important. We are keen to work with partners in the broad sense to take that forward. However, I note again that the bill is not the only opportunity that we will have to address these issues.
I guess the key question is: are you open to exploring some of those possibilities through stage 2?
Yes.
Fantastic—I will leave it there.
I have a quick question about the metrics and so forth that Daniel Johnson spoke about. One of our witnesses was clear that it is hard to assess not only the data that already exists on community wealth building but also how progress might be measured, because there is no data collection. Are ministers and officials open to putting data collection requirements into the guidance or the bill? Whatever we end up deciding to measure, there will need to be obligations to collect data on those metrics so that we can track progress.
It depends on what you want to look at. In the procurement space, we have tonnes of data. Every public body produces a report each year and there is a consolidated report that pulls all of that together for the 100-and-whatever-it-is public bodies on what they have spent, where they spent it and who they spent it with.
On the metrics discussion, if there are other areas in which we are clear on what we should be measuring and we want to have a reporting mechanism for that, we should consider the most effective way to do that. However, we must always remember that we do not want to put too much of a burden on public bodies or communities by requiring them to spend all their time collecting data and reporting on things. It is a balance.
I understand that. However, witnesses have brought up questions such as how many businesses are co-operatives or social enterprises and how many people they employ, and we do not know that. I am not aware that we have data on it, and the evidence that we have taken suggests that it is not widely understood. Employee-owned businesses are a key pillar for community wealth building. However, that is just an example. I take the point that procurement is one of the easier pillars to implement and measure, and that some of the other five pillars are more difficult to measure, but we will want to make progress with those pillars as well.
I would be happy to look at that. With this stuff, if you go and look, you will often find the data. People may not have necessarily talked to the right people or asked the right questions, but we can certainly look at some of those points. I might be wrong, but I would be surprised if there is not data on some of the things that you have talked about. However, we can check on some of that.
Thank you.
Minister, I have a question that you may be able to answer with your wider public sector reform hat on. The bill aims to empower local authorities to transform local economies through community wealth building. However, councils in Scotland still lack a general power of competence, which is something that councils in England were given by section 1 of the Localism Act 2011, which effectively gave them the ability to do anything unless it is prohibited by law. That seems to have helped cities such as Preston to pursue some innovative work on community wealth building.
Is there a concern that, without that general power of competence, councils might be hesitant to pursue some innovative approaches for fear of overstepping their legal responsibilities?
There are a few things to unpick in that question. It comes back to the point about when I ask people what they mean by “community”. That is an important question, because a lot of people have visualised the conversation happening at a very local level. However, community planning partnerships technically exist at a local authority level, which can—certainly in the bigger local authorities—be a long way from where communities are. Understanding and reflecting on that context is important.
I do not know whether there is anything in the bill that seeks to allow councils to do things relating to the community wealth building agenda that would be problematic and require a general power of competence to be taken forward. It would be interesting to see examples of areas in which councils would like to do things under the community wealth building agenda but think that they are unable to do them within their powers.
The general power of competence is another issue. I would need to look into that. My officials might have more information, but it is obviously not their area. My understanding is that there is an issue with the devolution settlement regarding our ability to give local authorities that power, but I can go and verify that. I do not want to speak incorrectly. There is also a flipside to that power. We have seen examples of local authorities down south getting into things that they probably should not have done and ending up with financial challenges as a consequence of that.
Okay. We may come back to that issue.
As members have no further questions, that brings us to the end of the evidence session. I thank the minister and all the officials for joining us. I will suspend the meeting briefly to allow a change of witnesses.
10:06 Meeting suspended.Next
Alexander Dennis