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Chamber and committees

Net Zero, Energy and Transport Committee [Draft]

Meeting date: Tuesday, September 27, 2022

Agenda: Decision on Taking Business in Private, Role of Local Government in Delivering Net Zero, Programme for Government


Contents


Role of Local Government in Delivering Net Zero

The Convener

Agenda item 2 is the last evidence session in our inquiry into the role of local government and its cross-sectoral partners in financing and delivering a net zero Scotland. I refer members to the clerks’ and Scottish Parliament information centre papers for this item.

The committee launched the inquiry in December to look at the progress at local level in reaching net zero targets. In spring we began to look in depth at key themes and last week we heard from local government experts and leaders. Today, we will conclude with evidence from the Scottish Government.

I welcome Michael Matheson, the Cabinet Secretary for Net Zero, Energy and Transport, and Ben Macpherson, the Minister for Social Security and Local Government. I believe that you also have with you, from the Scottish Government, Gareth Fenney, head of heat networks and investment—I hope that I pronounced that right; if I did not, I apologise—Philip Raines, deputy director, domestic climate change, and Ian Storrie, head of local government finance.

We had allocated about 75 minutes for this item, but due to circumstances beyond our control we might have to reduce that slightly. Cabinet secretary, we have allowed you a brief opening statement. You will know from previous committees that you and I have attended that I like to keep that down to about two minutes maximum, so you have your two minutes, cabinet secretary.

The Cabinet Secretary for Net Zero, Energy and Transport (Michael Matheson)

Good morning and thank you for your invitation to the committee today.

This inquiry has been invaluable in exploring the complex nature of the decarbonisation challenge across all 32 of Scotland’s local authorities, and I am very grateful for the evidence that has been provided to the committee from a range of stakeholders over the course of recent months. This is also the second day of Scotland’s climate week 2022, which is an annual initiative to celebrate Scotland’s action and the progress that we are making in the climate emergency. I want to start by acknowledging the vital role of local government in the transition to net zero and the significant progress that councils have already made in moving towards achieving net zero.

I am encouraged to see that end-user emissions fell significantly across all Scottish local authorities between 2005 and 2020, with an overall drop of some 10.6 per cent between 2019 and 2020. Two Scottish local authorities exhibited the largest reductions in emissions among all United Kingdom local authorities between those years. West Dunbartonshire Council showed a 28 per cent reduction and Highland Council a reduction of some 24 per cent.

While good progress has been made to date, I recognise that there is still a very long way to go. Throughout the inquiry, you have heard about the interlinked role that local government has with cross-sectoral partners and the Scottish Government in driving forward our journey to becoming a net zero nation. All the challenges that have been highlighted during the inquiry are made all the more acute during the present cost crisis. Our priorities remain, however, and you can be assured that the Scottish Government is absolutely committed to being a steadfast partner with local government in tackling the global climate emergency.

In recognising the capacity challenges of getting projects off the ground, the Scottish Government is working with the Convention of Scottish Local Authorities to explore additional support to help local authorities develop their pipeline of low carbon projects. Later this year we will set out our energy strategy and just transition plan, which will provide a road map for the energy sector’s role in achieving our emissions reduction targets and securing a net zero energy system for Scotland. We have also allocated £194 million this year to help to reduce energy bills and climate emissions through our warmer homes Scotland area-based schemes and Home Energy Scotland.

Those are just a few of the key examples of how we are working with local government to address the crucial issues raised throughout the inquiry. However, as you know, we must work together to do more to meet our climate targets and avert further irreversible damage. I am happy to respond to any questions that the committee may have.

Thank you, cabinet secretary. We will dive straight into questions because there are quite a lot of them. The first is from Monica Lennon.

Monica Lennon (Central Scotland) (Lab)

Good morning, panel. How will public sector pay increases, the recently announced spending cuts and inflationary pressures impact on the ability of local authorities to deliver on the important net zero ambitions?

09:45  

Michael Matheson

I will deal with some of the inflationary pressures and Ben Macpherson can pick up on the wider public sector finance situation and funding for pay increases.

There is no doubt that the increasing inflationary pressures that are being experienced by local authorities will have an impact. It is difficult to quantify exactly to what extent those pressures will have an impact, but the cost base for carrying out capital works has increased because of both material and labour cost increases. That will clearly put pressures on local authority budgets, as it will for the Scottish Government and other parts of the public sector. There is no doubt in my mind that inflationary pressures will have an impact, but it is difficult at this stage to quantify that impact.

It is also worth keeping it in mind that some of the pay challenges that local government has faced have resulted in additional funding being provided to local government to try to help to meet and offset some of the additional costs associated with the pay awards. That was as part of our on-going engagement with COSLA to try to help to resolve the pay disputes that were taking place. Ben Macpherson may want to say a bit more about local government financing.

The Minister for Social Security and Local Government (Ben Macpherson)

To build on what the cabinet secretary has said, I will add that within the pay negotiations and the fiscal framework discussions and considerations around the new deal, discussions are on-going, between officials and at elected level, on ring fencing and the future settlement for local government in the next financial year. I am sure that the committee may have questions about the fiscal framework and the new deal, but all that has been considered within the pay negotiations in recent months.

Monica Lennon

That is helpful, thank you both. Minister, where have we got to with the Scottish Government looking at the council tax system? Is there a further review, in light of the spending pressures that we have just heard about?

Do you mean a review of the council tax specifically or local government funding in the round?

Council tax.

Ben Macpherson

As far as I recall—I will bring in Ian Storrie in a moment—the last formal engagement between parties on the future of the council tax took place when I was public finance minister back in the spring of 2020. Those discussions, with the agreement of all the parties that were involved—the Conservative Party excluded itself from those discussions—were then postponed. Following the election, the Bute house agreement included a commitment to considerations around public engagement on the future of the council tax and a citizens assembly, but that would be a question for the Minister for Public Finance, Planning and Community Wealth to answer in any further detail.

Thank you. Is Mr Storrie able to add to that regarding any current activity in that area?

Ian Storrie (Scottish Government)

I cannot add much on the future of council tax but, as the minister has alluded to, the concept of council tax and what that means for local government is obviously a key part of the fiscal framework discussions, which are looking at all sources of council funding, both current and potential. In terms of the political decisions, as the minister says, the Minister for Public Finance, Planning and Community Wealth may be better able to handle that question.

Thank you. My other questions are on a different topic, so I am happy to stop there, convener.

Yes, I will stop you there. I am not sure that you will get much on that question at the moment. Liam Kerr is next, and then the deputy convener, Fiona Hyslop.

Liam Kerr (North East Scotland) (Con)

Good morning, panel. The cabinet secretary talked about resources to councils and Ben Macpherson talked about ring fencing. We heard from COSLA last week that 70 per cent, I think, of funding that goes to local authorities is ring fenced. It suggested to the committee that

“fewer, but larger and more flexible funding streams”

would better facilitate the just transition to net zero. On that specific point, first, is there a way in which the Scottish Government can provide more flexibility within the current funding arrangements? Secondly, is it your view that fewer but more flexible and larger funding streams would be a better mechanism? In any event, do you foresee any risks of fewer but more flexible arrangements?

Ben Macpherson

Thank you for the question. I will preface my answer by saying that I think that the committee’s work on this inquiry is really helpful as part of the wider challenge for us all to make progress on net zero and to work collaboratively with local government, as different spheres of government, all engaged in an important process of work to make a difference for the communities we serve.

On a point of detail, the Scottish Government disputes the 70 per cent figure. We argue that local authorities have discretion to allocate 93 per cent, or £11.8 billion of the current financial year settlement, of the funding that we provide. Plus they have discretion, of course, over all locally raised income.

However, the point on ring fencing and how we work together on shared progress and accountability for national outcomes that both local government and central Government, as different spheres of government, want to see progress on is all part of the discussions on the fiscal framework, which are continuing at pace. The discussions within that, at elected level and official level, are about how, in the next financial year, we get to a position where local government and central Government, having gone through a process of considering the current ring fencing, are working in an understanding of what the best scenario is for the financial year ahead and those thereafter.

The evidence that the committee has collected about the size of different funding allocations is helpful and will be part of the on-going consideration of the fiscal framework between finance ministers and the finance spokesperson for COSLA.

I have no further questions at this stage.

Fiona Hyslop (Linlithgow) (SNP)

Good morning. Recognising that delivering net zero is a massive task and recognising the independence of local authorities, we have heard from councils that they need not just fiscal resource, but experience and skills. Cabinet secretary, might you be open to the call for some centralised pool of expertise and training resource, but also skills to go into local authorities to help them? People might be seconded to local authorities when they have major projects, whether in investment, infrastructure, or other areas. I know that we have the Sustainable Scotland Network and that collaboration and advice are important, but experience is really needed. The private sector could maybe snap up those people in councils who are very good at this. Is there a way of helping to share that experience? Not everywhere can be like Dundee or Glasgow or Edinburgh, where we have heard that there is a great deal of experience and a real drive. Not all local authorities have access to that.

Michael Matheson

This is an important issue. Obviously, finance is important, but having the right skills and the right people is also extremely important in being able to deliver on your net zero objectives at a local authority level. We have tried to address the issue through a variety of means and the Sustainable Scotland Network is one practical route by which we try to help to achieve that. It is about pooling and joining together expertise and experience within the public sector so that we can cascade it out to the whole of the sector and those who participate in it.

There are also some funding streams available to local authorities that can help them to do some of the pre-capital stages of plans that they are looking at. They can get funding to help to resource additional capacity to carry out some of the modelling, design and planning around net zero to support them in achieving that as well.

There is a bigger issue that we probably have to do more on. It is not necessarily about additional staff, but the skills base of the current staff, who must be upskilled. You will be well aware of the “Climate Emergency Skills Action Plan 2020-2025”, which is all about helping to develop the skills that are needed to tackle the climate emergency. Most of that plan is targeted at those who are already within the private sector to some extent, and I think that there is a need for us to look at whether there is more to do in helping to support those in our public sector.

I cannot say to you that we have a specific way in which we will do that, but I think that it is one of the issues that is becoming an increasingly important aspect. We need to work with COSLA to look at how we can address what it views as potentially a skills gap in its own staff, to help to upskill them in developing plans and proposals around net zero. I am certainly happy to take that away and look at how we can help to develop that further.

Fiona Hyslop

Everybody says that public funding is not sufficient to do what we need to do, so the financial expertise to leverage in private funding will be essential. Those skills are very few and far between and the need is particularly in that area.

Michael Matheson

Yes, there are a couple of ways in which we have tried to address some of that. Over the course of the last two years, we have been developing ways of using the Scottish Futures Trust’s expertise and skills in helping to pull together projects and engaging with the private sector. We have taken some of that forward for aspects such as electric vehicle charging points and fleet replacement for local government, trying to help to pull some of that together. The Scottish Futures Trust has also been looking at where there is further work that it can take forward with COSLA to help to drive up some of the expertise that it can bring to local government and to support it in meeting some of those challenges.

We can better utilise some of the resources that we have already to help to support our colleagues in local government, but I think that there is a genuine issue there about what we can do to help to upskill some of our public sector workers.

Fiona Hyslop

I will move on to the Minister for Social Security and Local Government. How convinced are you that net zero will be at the heart of the new deal that is being prepared between the Scottish Government and local government, as it needs to be to ensure that we can deliver on it? In particular, how will local authorities manage a place-based approach to net zero? We have just heard comments from the cabinet secretary about fleet replacement and EV charging. Some of that is for the private sector and for car owners. A lot of what we will expect councils to do is to help lead action that is about privately owned housing. How are you factoring in what local authorities will have to do to lead a place-based—not just a public sector and local authority responsibility led—approach to net zero? How is that being built into the new deal discussions and negotiations and how can local authorities be resourced to do things that are outside their direct responsibility for public sector housing or schools and so on?

Ben Macpherson

I will come to the new deal in a second, but I want to emphasise an important point that the deputy convener made at the start of her questioning to the cabinet secretary: local authorities are independent corporate bodies with their own powers and responsibilities. Councillor Gail Macgregor emphasised that point in her evidence last week. Local authorities need to be able to develop initiatives that work for their local areas.

The new deal is about how central Government and local government—recognising that both aspects of Government are important spheres of not just delivery but development of policy—get to a place where, from the next financial year onwards, we are working jointly on our shared priorities and the national outcomes that we both want to deliver. Of course, net zero is a cross-cutting policy area within that that is of the highest pertinence, just like local government is a cross-cutting consideration across the different spheres of portfolio responsibility within the Scottish Government.

The development of the new deal is going well. Through the summer, Government officials met COSLA officials over 10 times as part of their intensive collaboration on the fiscal framework. As the new deal develops, as you will know, it is the fiscal framework for local government that is intended to establish agreed ways of working on the fiscal relationship, greater transparency and, importantly, accountability. Alongside that is the partnership agreement, which provides the framework for specific policy agreements based on shared value-based overarching agreement on outcomes and accountability. It is in that partnership agreement space where considerations of how we work together on the net zero agenda are being developed. Then the resourcing is part of that within the fiscal framework.

10:00  

This is about working with COSLA to make sure that, from the next financial year onwards, we have an agreed new deal settlement where we are focusing and where we collaborate on what we can do together, rather than the sometimes more polarised position that has been articulated in the public domain in years past. My experience, not just in this role but in others in government, is that when central Government and local government work together, what can be achieved is significant and makes such a constructive difference. As a Parliament and as a democracy, the more that we emphasise the good work that is going on between local and central Government, the more progress we can make together. This committee’s work on net zero has certainly shone a light on what has been done well and what more can be done together, and I look forward to working with local government colleagues in the presidential team to progress that. I am sure that colleagues across the different portfolio areas look forward to working with their COSLA spokespeople on the shared agenda.

The Convener

This subject is really interesting and I think comes to the crux of the matter, so I will come back to you, deputy convener, and then go to Natalie Don and then to Mark Ruskell. I might have a question to try to tie it all up at the end.

Fiona Hyslop

Cabinet secretary, are you convinced that the partnership agreement and the new deal will be strong enough to deliver on net zero? You have the overall responsibility across Government.

Michael Matheson

There are a number of things that sit alongside the new deal and those are the statutory requirements that local authorities have. They have gone from having had to “have regard to” tackling climate change to setting out plans on how they intend to achieve net zero and tackle climate change and now also setting out targets for when they expect to decarbonise particular local government responsibilities. There is a regulatory framework that clearly requires local authorities to set out the actions that they are taking and the date when they expect to achieve net zero in different areas of their responsibility. That combination of partnership through the new deal and the regulatory framework gives me confidence that it will ensure that net zero is a central part of the thinking.

In fairness—you may have heard this in your evidence—it is very clear to me from my discussions with colleagues in local government that net zero is a high priority for them. The way in which they go about it is different in different local authorities, for good reason very often, but I am confident that the regulatory framework can help to drive it forward.

Natalie Don (Renfrewshire North and West) (SNP)

Good morning. I am interested in the role of communities in this. What can the Scottish Government do to ensure that communities become key partners in achieving net zero? Is there a need for a fundamental change in culture and practice throughout local and central Government to include community groups? We have heard so far that inclusion has been quite sporadic in different local authorities. If so, what can be done to support it, whether that is training or guidance or more flexible funding options?

Michael Matheson

I will have a go at that. About 60 per cent of the actions that have to be taken to achieve net zero involve some form of behaviour change. If you are looking to achieve that scale and level of behaviour change, you have to take communities with you. You have to do it in partnership. There will be some local authorities that are better at that than others. I see that; I also witness that at a local level. A big part of it is very often down to the skills and the ability of officers in a local authority to develop those partnerships. I think that collaboration with local communities is extremely important.

How a local authority chooses to go about doing that is dependent on its circumstances. The way in which you might want to do it in a very urban area might be different from the way in which you want to do it in a particularly rural local authority area. They should be looking to try to help to engage with local communities around their climate change plans, the targets that they are setting and the process for implementation of policy. It should all be part of the engagement programme with local communities to make sure that they are facilitating the opportunity for local communities to feed into that through area committees, community councils or other engagement mechanisms that they have. Local authorities can use all those different structures, but engagement has to be meaningful and it has to allow communities to feel that they are part of the journey and that they are affecting the plans and the way in which they are being taken forward locally.

Natalie Don

Absolutely. Might new forms of democracy, such as climate citizens assemblies or local net zero forums, help to ensure community involvement? If so, how should those be initiated and supported? How do we ensure that if we take those steps everybody in the community is included and that it is not just the people who are usually involved in such things? As you say, we need to include everyone.

Michael Matheson

There is no set formula to say, “This is how you should do it and you should have a net zero forum or you have to have a local citizens assembly”. They all have a role to play. It is for individual local authorities to deploy those options in a way that they think will best reflect their local community. The challenge is how you reach out to engage people who might not necessarily engage in the normal processes that local authorities have, through community councils, area forums and so on. I can think of it based only on my constituency. There is a challenge in trying to get people to engage in some of the wider consultation exercises that the local authority undertakes.

The key thing that I often hear from constituents is that they feel at times that some of the engagement is tokenistic, that they are going through a process and there is a preconceived view on what the outcome will be and it does not matter what the community has to say about it or what their feedback is on what will happen. I do not think that is necessarily always the case, but there are times when communities feel that that is the case. That can make folk feel quite disengaged and disempowered and as though it is not a worthwhile exercise.

The key thing for local authorities is that, whatever engagement structure they put in place, there is clear cause and effect and they can demonstrate that to communities. If they say, “This is the issue that we are trying to address. These are options that we are considering. We are looking for your views and your feedback on those,” then they should be able to demonstrate how that feedback and engagement has had an impact on the decision that has been arrived at. That engagement in communicating with local communities is important to make people feel as though they have had a valuable input to the process and that it has had an impact on the outcome. That is about demonstrating how the process affected the final decision that has been made. It is a challenge that lots of local authorities face in trying to engage people and wider stakeholders in the process.

I have one quick follow-up question.

You may have one quick follow-up. A quick follow-up with a quick answer is always appreciated, cabinet secretary, so that I can get on to other members’ questions.

Natalie Don

We are talking about encapsulating the wider public. Could local and national Government better align their work to inform the public about climate change mitigation and adaptation, and to encourage people to change their behaviour and get involved in the things that we are talking about?

Michael Matheson

I find that the challenge at times is that there can be an expectation that tackling climate change is someone else’s responsibility and that “someone else will do it for me”. I have always emphasised that we all have to take individual responsibility and collectively we will achieve these targets. It is about making sure that we utilise the input that we get from things like the citizens assemblies and the process that we go through there. That input should help to formulate our thinking and our planning and policies so that people can see that there is clear cause and effect from engaging in the process. If we are to achieve the big behaviour change that is necessary, people need to feel as though they are part of that and that they have a responsibility, so individual responsibility and the role that individuals play is important in achieving net zero.

Mark Ruskell (Mid Scotland and Fife) (Green)

Cabinet secretary, I want to go back to what you said about the regulatory framework for local authorities on climate. It links in with what you were saying, minister, about developing the new deal for local authorities. Do local authorities need more duties within that framework? My impression is that some local authorities are very much focused on their own corporate emissions and doing what they can to reduce emissions within that scope but thinking less about the emissions from the wider area and about place making. Do more duties need to be placed on local authorities?

Michael Matheson

I can imagine the reaction that placing more duties on local authorities would receive. However, I think that it is a fair point. A lot of what local authorities are focused on is their direct corporate responsibility in looking to decarbonise and change their processes to make them less carbon intensive, whatever that may be. Is there a need for us to get them to think a bit wider than that? There are some local authorities that are better at it than others. If you look at some of the things that some local authorities are doing around transport issues, for example in active travel, EV charging infrastructure and the 20-minute neighbourhoods—all those things have a positive effect in the community. They are not direct corporate matters, but they have wider community and environmental benefits.

There is a fair amount being taken forward by local authorities that goes beyond just their direct corporate buildings and vehicles, but I think that there is a fair challenge there in questioning whether there is more that we could get local authorities to do. I am a bit hesitant to put more statutory targets around them at this stage, given the new statutory targets that come in in two months’ time on their own reductions targets.

Mark Ruskell

I suppose that there is a hint of that in the programme for government, where you talk about potential new duties on public bodies to take account of well-being and sustainable development. That feels like more futures thinking, which obviously encapsulates some of the climate change issues. Minister, do you have anything to add to that?

Ben Macpherson

I do not have a huge amount to add to what the cabinet secretary said, except to say that, of course, local authorities and the Scottish Government work collaboratively around the national performance framework, which has place making and well-being encapsulated in the outcomes that we are seeking to achieve together. That is a key part of how we work collaboratively across Government with local authorities.

To pick up on the previous conversation related to this, building on the Community Empowerment (Scotland) Act 2015, in the previous parliamentary session there was a very good piece of work undertaken in the local governance review. Part of the work in the new deal will be to think and to act collaboratively between local government and central Government on how we progress the local governance review. That will involve considerations around engagement with communities and progress on the wellbeing agenda.

The Convener

Minister, I was struck that we heard evidence from the local authorities that about 70 per cent of their funds were ring fenced and you said that 7 per cent of their funds were ring fenced. That seems diametrically opposed on the way forward. On the principle that there will be some national targets and that achieving those targets will be difficult because there is not a mass of money to throw at them—money is tight in all sectors—do you foresee ring fencing becoming a key part of your armoury to ensure that national targets are achieved at local government level?

Ben Macpherson

I think that that is a question for all of Government. I will bring in Ian Storrie on the point of ring fencing and the percentages to provide a bit more detail on that. The funding that is allocated and the considerations around ring fencing are all based on decisions, many of which this Parliament takes, on shared outcomes that we agree as a democracy that we want to see. The different spheres of government then work collaboratively to deliver those outcomes.

Local authorities have argued and engaged constructively in a process of how we get to a position where local authorities have the flexibility that they feel would be beneficial for them to meet those shared national outcomes and aspirations and targets that we want to see realised. How we consider the balance into the next financial year and going forward is at the heart of the discussions on the fiscal framework and the considerations around the new deal more widely.

10:15  

There has been good constructive discussion on ring fencing—I will allude to that in a moment—but where the funding that is allocated to local government is ring fenced, so to speak, is around how we meet aspirations and policy targets and commitments that both spheres of government want to achieve. The discussions on the fiscal framework and the new deal are around where there is contention between local and central Government on what the optimal position would be. That is why we are engaged in this very constructive process of how we move forward. Ian Storrie may want to add something.

The Convener

I am sorry, but we are short of time so I am very happy for Ian Storrie, via your office, to send the committee your breakdown of what you consider to be ring-fenced funds. I am not sure, however, that I have had a specific answer from you. Will ring fencing will be important for the Government to be able to achieve the national targets that are being set, minister?

On climate change or more generally?

On climate change.

Ben Macpherson

The cabinet secretary may want to add something afterwards. Local government and central Government work collaboratively on the delivery of the targets that the Parliament sets. In fact, local government told the committee last week that it wants, quite understandably, to be in a co-design relationship for how policy is developed and it obviously contributed to this Parliament’s target setting on climate change. In terms of how those targets are delivered, if you are just thinking about resourcing, and I think that you are, resourcing must be properly structured to deliver the targets. As part of the considerations around the fiscal framework and the new deal, as I have said and as the cabinet secretary has alluded to as well, considering how we give local authorities the flexibility that they need to do what is right in their communities is part of how we are developing the new deal. Of course, I cannot say more on the new deal because it is still in development, but it will be there for you to see as we go into the next financial year.

I will leave that there because there are lots of questions, but ring fencing or not ring fencing funds is obviously a knotty problem. The deputy convener has some questions.

Fiona Hyslop

What can and what is the Scottish Government doing to de-risk investments in net zero infrastructure? What barriers are preventing more successful partnerships between councils and private investors? How do you make sure that there are investable opportunities? The criticism that we have is that the propositions are not big enough, so who helps to resolve that situation?

Heat and transport are the big issues that we have to address, but not all heat is in council housing. There is also social housing and private sector housing. How will that be financed and how do we make sure that we have propositions of new finance models to make net zero happen? Is there any role whatsoever for local government in that? Is that what we can expect? Or, in a place-based approach, who will do it? There are big questions around that wider investability and how we leverage in the money. What role do local authorities have and what are you doing to support them? Do they have any responsibility whatsoever for private sector housing in a place-based approach to tackle net zero?

Michael Matheson

There are a number of big issues in there. There is absolutely no doubt that the public sector will not be able to pick up all the costs associated with decarbonisation across a whole range of areas within local government, and private sector investment will be critical to help to support that.

It is also fair to say that there is a significant amount of private sector investment available for the right types of propositions. We developed the global capital investment plan, which was published back in March last year. It aims to align the investment opportunities in Scotland with what the private sector is looking to make investments in. The outcome of that is the green investment portfolio, which brings together about £3 billion of potential projects into which private sector investment could be made. Some of those projects are across different local authorities and different parts of the public sector. That is seeking to achieve—this is one of the things that you get from private sector investors—investment propositions of a scale that they believe merits their investment and that they ultimately will get some form of return on in the medium to longer term. Outwith maybe four or five big local authorities—perhaps even them—local authorities might struggle to get propositions together. The idea behind the green investment portfolio is to help to bring together some of the proposals that local authorities have and to try to align them with what private sector investors are looking at.

That could be looking at a whole range of propositions. It could be things such as investment in the provision of district heating, which would be for not just social housing, but private and potentially commercial premises as well. It could be something like what we announced around EV charging and the partnership with the private sector over the course of the next couple of years, doubling the level of investment from the private sector. Again, that was about trying to scale that up across local authorities to align with what private sector investors are looking for.

We have created a mechanism that allows local authorities and other public sector organisations to come together to create propositions, and there is some funding available from the Scottish Government that can help to do some of the pre-capital investment work in developing such propositions in a form that could make them attractive to private investors. We have a mechanism for doing some of this. The key thing is starting to make some of that become a reality and to see some of that investment start to flow into local authorities.

Fiona Hyslop

I previously launched the green investment portfolio and it was primarily private sector propositions at that point. It would be helpful to the committee if you have any examples of public sector, council-led propositions that are part of that portfolio now.

We have concerns, however, as councils are telling us that they would carry the risk for such joint propositions and they are of some scale, as a result of propositions being brought together. Also, most of them are probably city based, so what are we doing to help the smaller local authorities access this portfolio of investments that we know is available? How do we help smaller local authorities and what can we do to help to de-risk the activity for local authorities embarking on putting forward an investable proposition?

Michael Matheson

One of the aspects of this is to try to pool proposals that some small local authorities may have that would not be attractive to private sector investors on their own, where several local authorities might be looking at doing something. Take, for example, somewhere like Forth Valley, with Falkirk Council probably trying to do something on its own but possibly working in partnership with Stirling and Clackmannanshire Councils and maybe West Lothian Council as well. Bringing together collective proposals is one of the mechanisms to try to help it work better for smaller local authorities.

Even for some of our big local authorities, operating on their own for the scale of investment that they are looking for is probably not viable. Some will probably have to think about working in partnership with other big local authorities to get the scale that some private sector investors are looking for.

I will need to take de-risking away. Finance colleagues lead on this matter. I am more than happy to take that away to look at what we are doing to try to help to de-risk some of the challenges. I know about some of the work that the Scottish Futures Trust is doing to try to de-risk EV charging for local authorities and the private sector investment in that, but I am more than happy to take away the issue about reducing the risk. On your other question about local authority propositions that are in the GIP, I am more than happy to take that away and come back with some details on what propositions are there.

We are coming to the end of our inquiry, so it would be helpful if you could do that quite quickly.

Sure. I am happy to do that.

You saved me chasing the cabinet secretary. Thank you, deputy convener. Jackie Dunbar has been sitting very quietly. It is your turn now.

Jackie Dunbar (Aberdeen Donside) (SNP)

I am always quiet, convener. Good morning. My questions are about waste and the circular economy. I will get straight into them because I know that we are short of time. Written evidence has highlighted the importance of innovation, skills and procurement to support a transition to the circular economy. What support can the Scottish Government provide to local authorities to use circular economy approaches to procurement?

Michael Matheson

Part of that goes back to a question I was answering earlier about helping to develop the capacity of local authority employees and council officers to take forward net zero proposals.

An organisation that works closely with local authorities on the circular economy is Zero Waste Scotland, which can provide additional support and advice to local authorities. I am not entirely sure whether it can provide training, but it can certainly provide assistance and expertise to local authorities on aspects of the circular economy.

We are also looking, through national planning framework 4, to make some changes to the way building use is considered as part of the planning process to help to encourage and develop the circular economy. The principal way to try to help local authorities, however, is through the skills that local authority or council officers need and making sure that we utilise the expertise that we have in Zero Waste Scotland, which already works closely with local authorities on aspects of the circular economy.

Jackie Dunbar

Evidence also emphasised the importance of reusing and repurposing existing buildings—you just touched on this—over demolition and construction to reduce waste and embodied carbon. How can the Scottish Government strengthen decision-making and planning legislation to encourage that, so that local authorities are not just demolishing buildings all the time?

Michael Matheson

We are trying to take that forward through NPF4, which is due to be published in the next couple of months. Demolition should not be the default. It should be the last option to pursue. Whether a facility can be repurposed or redeveloped should be looked at first. Part of how we address that is through the guidance that we offer to local authorities through NPF4 so that they can make sure that that is embedded in their policy thinking and development as they go forward. NPF4 will be laid before the Parliament for the Parliament to make its views known on that as well, of course.

I am happy with that. Monica Lennon, you have a couple of follow-ups on that.

Monica Lennon

Yes, convener, I have some brief follow-ups, although I could talk about planning all day, because I believe that it has a big role to play in enabling sustainable development.

Cabinet secretary, you mentioned NPF4, so I will come back to that briefly, but are you able to say how the work that has been done around the circular economy agenda aligns with the Government’s aspirations on community wealth building?

Could you explain what you mean by that and how that links together?

Monica Lennon

There are issues around procurement, I suppose, but is it your strategic approach to make sure that there is some alignment between those well-intentioned strategies? The work on circular economy makes us think about buildings and land, but in terms of community wealth building, we want our local communities to get the most benefit from those assets and from any investment. Is any work going on between departments and ministers to make sure that there is some alignment among the different workstreams?

Michael Matheson

Are you referring to the idea of community asset transfer from local authorities to communities and how that fits into the circular economy process and how we make sure that investments made in asset transfers are consistent with the circular economy approach?

Monica Lennon

Yes, that could be part of it, but I am also thinking more widely. How often is the Minister for Public Finance, Planning and Community Wealth, Tom Arthur, around the table when you take the temperature to see how well these things are going? If that is a question for Mr Arthur, I can pivot to NPF4.

10:30  

Michael Matheson

I can take it away because it is set much more on the planning side as well. In NPF4 you will see a much clearer focus on helping to support leading on net zero objectives and the guidance that will be issued to local authorities for that. You have to be careful that asset transfer in local authorities is not simply a local authority getting rid of a problem facility on to the local community. I am clear that the local experience should be that local authorities transferring assets do so in good order and do not leave communities with difficulties in upgrading them to improve insulating, heating and so on. We have to think about how that would all fit in to make sure that we are making these buildings sustainable going forward.

On your wider point, I am more than happy for us to take that away to see whether we can get more details for you from a planning point of view, if that would be helpful.

Monica Lennon

Yes, it would be helpful to get some written follow-up because we have heard a lot in this inquiry about procurement and that it will present challenges for approaches to the circular economy. Yes, we could follow that up.

On NPF4, Jackie Dunbar talked about buildings. The strategy outlined in NPF4 talks about a combination of incentives, investment and policy support to encourage development of brownfield land, thinking more widely than just buildings. Are you able to give us an update on what specific incentives are planned to encourage more brownfield development?

Michael Matheson

I will have to get that information from the planning minister or from those who are dealing with planning directly. The use of brownfield sites and how that is planned within NPF4 does not sit in my policy remit. It is not within my portfolio. I do not want to start saying what the Government’s position is on a policy area that another minister is dealing with, if you do not mind.

The Convener

In fairness, Monica Lennon and I could talk about planning all day, but there are quite niche areas within it. It would be useful to get some feedback on planning and how the welfare of communities is considered as part of net zero and how we reuse buildings rather than just remove them. I think that that is what Monica is driving at. It would be helpful to have some feedback. I am sure, cabinet secretary, that you can get us that.

Although I could, as I say, talk about planning all day, I will move on to Mark Ruskell.

Mark Ruskell

I will come back to transport again. With the national transport strategy’s strategic transport projects review 2, there has been a shift over time towards working with the transport hierarchy, prioritising active travel and public transport. Is that reflected within local authority investment plans, city deals and local transport strategies or is there a gap? Are we all moving forward together or are some local authorities still hanging on to high-carbon projects when the world has moved on?

Michael Matheson

You see it happening in some local authorities. With the scale and level of investment that has now gone into aspects of active travel, you can see the considerable levels of ambition that some local authorities have on helping to get the right active travel infrastructure in place. It partly reflects the significant increase in funding that we are making available to active travel and the priorities that we have set out in the NTS and the investment hierarchy and the transport hierarchy.

You can see it by some of the ways in which local authorities are looking at the future delivery of transport provision within their areas and at different models and different approaches to take it forward. We see some real ambition being set out by local authorities.

Is there more that I would like to see happening in some local authorities? Absolutely. A lot of it is sometimes dependent upon individual officers and their desire to pursue particular policy areas. However, we are starting to see aspects of the NTS hierarchy becoming real policy on the ground, particularly in areas such as active travel and looking at wider transport provision within local authorities. I expect that to continue to develop, given the level of funding that we are putting into it in the coming years.

Are there issues around transport governance—who is making decisions and who is implementing projects—that need further consideration?

Michael Matheson

We have the regional partnerships for transport planning, and taking that forward is then down to individual local authorities. Some local authorities are more proactive and better than others at pursuing transport planning. Is there more? We gave a commitment to review in this parliamentary session the structure for transport planning and to look at whether it is the optimal model to take forward. We want to do that co-productively with local authorities to make sure that the structure that we put in place reflects what they believe is the best approach, alongside what we are trying to achieve with transport planning. I would say that the model that we have now is maybe the optimal model, but there is scope for us to look at how we can improve it. Some local authorities are making good progress.

Mark Ruskell

Thanks. I will move on briefly to look at nature-based solutions. Jackie Dunbar might be interested in this area as well. The climate and nature emergencies run alongside each other, but solutions to climate change can come from investment in natural capital within council areas.

Are there ways in which the Scottish Government could enhance support to local authorities to do more of that work, to consider adaptation, to consider investment or to bring forward investable models so that private capital can come in as well? It feels as though we often talk about climate over here and nature over there, but some of the solutions, the tools, the planning and the investment that are required feel as though they are in a similar space. What can we learn from the work on climate when implementing nature-based solutions and improving natural capital?

Michael Matheson

Nature-based solutions are important and sit alongside aspects such as tackling the biodiversity crisis that we face. Some local authorities will be better provided for in terms of natural assets than others, purely due to geography. How can we make better use of those assets? How do we make them investable propositions? We are already doing work around peatland restoration, additional woodlands and so on. Is there a way in which we can work with local authorities to make better use of existing spaces that are not necessarily playing a role within nature-based solutions? Yes. Some of that is already happening. In my constituency, I can think of work that is being taken forward in the Hallglen area redeveloping an old colliery bing that has now been turned into a nature park to help to support biodiversity and has brought together a whole range of different stakeholders. Some of that work is already happening. Could we do more of it? Yes, I would like to see more of that happening. A big part of that is also local neighbourhoods and communities: how do we make better use of our community assets within a neighbourhood to support nature-based solutions? There is certainly more that we could do in that area.

On an investable proposition, we are taking forward work and looking at how we can make sure that we have what would be viewed as a clear set of principles around any private sector investment in nature-based solutions as an option that some local authorities and others might want to access. We need to do it in a way that is consistent with it being of a high standard and having a clear set of principles before we start opening it up widely to private sector investment.

Jackie Dunbar

Some councils consider that planning tools to protect natural infrastructure are insufficient and that there is a lack of resources to enforce existing rules. How will the Scottish Government ensure that local authorities have the planning tools and enforcement resources to protect existing natural infrastructure, such as trees?

Michael Matheson

The review of NPF4 has taken place and an updated NPF4 will be published in the next couple of months. I hope that that will deliver the tools that they believe are necessary to help to support them in delivering nature-based solutions and protecting the nature-based provisions they have in their local area. If local authorities feel that there are particular gaps in the existing planning regulations, I have no doubt that we would be more than willing to look at that, but I certainly want to make sure that local authorities have the necessary powers required to protect nature-based environments in their own local authority areas and also to act to develop areas in their own local authority areas. If there is a particular area that you feel is a gap, I am more than happy for us to take that away and for the planning minister to look at it as part of the NPF4 process. I hope that that is an issue that was flagged up during the review of NPF4—I have no doubt that it was.

Fiona Hyslop

Minister, I previously asked about net zero being part of the new deal and agreements with local authorities. Are you convinced that nature-based solutions and the climate emergency are given equivalence to the biodiversity in nature crisis that we face? Will that be in your new deal negotiations, on an equal footing with net zero?

Ben Macpherson

The Scottish Government has always seen the two crises as of equal importance. Along with other considerations in the new deal discussions, it is absolutely, along with the net zero agenda, an important part of the wider Government agenda. Of course, that includes our engagement with local government around the new deal.

Is that a yes or a no?

Ben Macpherson

Yes, as far as I am aware. I can confirm with the committee, but it is a Government priority and every Government priority is under consideration with the new deal, because local government is a key partner in not just delivery, but in development of how we move forward and deliver on both the priorities for the Scottish people and also what this Parliament sets as the agenda.

In fairness, minister, I interpreted that as a yes. It is a clear yes as stated and as interpreted.

Liam Kerr

We have not looked at heat in buildings at all this morning, although the committee has rehearsed it a lot. One question arises from that. Currently, owner occupiers and those not in fuel poverty are expected to be proactive in seeking decarbonisation information, advice and support, which, given the current cost of living challenges, might not be at the forefront of their minds. What can the Scottish Government do to ensure that consistent energy efficiency guidance and advice is given to all, whether by the Scottish Government or at the local authority level?

Michael Matheson

You raise an important issue, which is the need to make sure that we do more to help to educate people and ensure that the information is available. As you are aware, a variety of schemes presently operate. Home Energy Scotland is the main point of contact for impartial advice and information as it stands now. There is a single point of contact to get the information and advice that individual households may be looking for.

Of course, we are also taking forward the development of our national public energy agency, which will have a clear role in helping to support decarbonisation and energy efficiency work, in making sure that there is a much more consistent approach across the country, and in bringing together a range of stakeholders engaged in this process.

Home Energy Scotland is the main point of contact for independent advice, but I expect that, as we take forward the development of our public energy agency, it will have a clear role in helping to support households and giving advice and information, as well as helping to co-ordinate the development of heat decarbonisation across local authorities, public sector organisations and the private housing sector.

Monica Lennon

This might have been published elsewhere, but is there a date yet for the virtual public energy agency coming into force and what will it mean in practice? Will it be a website? Can you expand on what you mean by “virtual agency”?

Michael Matheson

I gave a commitment to the committee earlier in the year to give you an update, which I am about to provide this week. I hope that it will give you much more detail on how the organisation will be taken forward and how it will operate. I hope that the committee will find it useful, given that I gave a commitment to provide that further detail. That information will be with you shortly.

10:45  

The Convener

Monica, you are on the ball. You were expecting the information and reminded the cabinet secretary. Unless members have any other questions, I would like to ask about the issue that Liam Kerr raised. Before I do, I remind the committee that I own properties that are available for rental and that I am a chartered surveyor by training.

In this country, we use energy performance certificates. Are you happy, cabinet secretary, that EPCs are worth while, do what they are said to do and are useful to home owners in working out whether their houses are energy efficient?

Michael Matheson

I cannot profess to be an expert on EPCs from a technical point of view. I know that we require them for a range of matters. For example, for social housing landlords, letting properties and at the time of sale of properties, EPCs must be completed. I am afraid that I will have to take some technical advice on whether they are the most effective technical way to provide that assessment to an individual household. I am not particularly versed in that.

The Convener

I am keen on every house being as energy efficient as possible. I know from doing EPCs that, sometimes, changing to LED light bulbs gets you more points than putting in double-glazed windows. To me, that questions the point of EPCs. As part of moving to net zero, which is important, would the Government consider reviewing how we do energy efficiency in homes and how we achieve it? Gas prices are going up. Is the EPC system relevant?

Michael Matheson

That is covered by building regulations, but I am more than happy to take it away and we can come back to you with some further detail, including on the technical points that you have raised on how the points system operates.

The Convener

Thank you. As members have no other questions, thank you very much, cabinet secretary. We will have a brief pause to allow a changeover of witnesses. Thank you to those who are leaving, and thank you to those who are staying.

10:47 Meeting suspended.  

10:54 On resuming—