Chamber and committees

Let us consider the budget assessment of capital spend, for example. I think that around 92 per cent of the capital spend in the budget is viewed as being low impact or neutral in respect of carbon. That is an overall, positive reduction in carbon impact. That comes through in the carbon assessment process for the budget.

For individual projects, let us take peatland restoration as an example. Our commitment to delivering on the 250,000 hectares is part of our sectoral envelope for meeting our 2030 target, and it is part of our climate change plan. In developing the climate change plan, various envelopes went through an assessment, and part of that involved assessing the impact that individual policies would have in order to see whether they would align with getting to our target of 75 per cent by 2030. The 250,000 hectares figure was viewed as being one of the contributors to meeting that particular target.

There is a link between the budget and the policy. The policy is set within the climate change plan, and the budget helps to finance that. The carbon assessment that is carried out for the budget allows us some insight into that.

If we remove funding from policy areas that we know contribute adversely to climate change, for example, and use that for measures that will help to tackle climate change and achieve our targets, it is self-evident that there will be a positive outcome. However, it is always difficult to pin down exactly the net benefit that will come from an individual project. One example is peatland restoration. We know that peatland restoration will have a positive impact and that there has been a level of assessment, but it can be difficult over time to pin down how we should shift money around in a budget and why that money has made a bigger contribution than the money that we have taken away from another area.

In the last EU multiyear financial framework, Zero Waste Scotland received £34 million of European regional development funding. Zero Waste Scotland is taking forward work to identify how it could bridge that potential loss of funding in the future and whether there are ways in which it could lever in private sector funding to help to close that gap.

As it stands, there is a lack of clarity around how the shared prosperity fund will operate in Scotland, what its priorities will be and how they will be informed. Will Scottish ministers have a role in setting those priorities? Will it be a lower level of funding than was previously available under EU regional development funding? There is a lot of uncertainty around the issue.

We need to see more progress in the area. We are not in line with the targets that we set, which is why we committed an extra £70 million to invest in our circular economy and recycling in particular, and there needs to be further investment in the public and private sectors.

Until we have clarity around how the shared prosperity fund will operate, there could be a significant loss to the sector if funding is not made available to replace the £34 million that was previously provided under the European Union funding scheme. We still do not know how the UK Government intends to operate the shared prosperity fund and what role Scottish ministers will have in setting its direction in Scotland. A drop-off in funding could have a negative impact on the sector.

I did not see the programme myself; I intend to watch it. I know that SEPA is promoting it to highlight the complexities and the challenges within the sector.

It would be fair to say that the movement in SEPA’s budget is a reflection of the one-off capital uplift that it received last year. That is why there is a realignment within its budget. If you take out that specific capital uplift that it received last year and look at the budget this year, the budget continues to rise. It is also worth keeping in mind that about 50 per cent of SEPA’s income comes from its regulatory function and the charges that it applies for that function. It would be wrong to characterise this as a cut to its budget; it is a movement in the budget, because last year SEPA received a capital uplift specifically for a couple of projects, which sits only within that single financial year.

SEPA continues to make good progress in recovering from the cyberattack. A range of assessments have been carried out on its impact on SEPA’s operations and recovery. We are ensuring that we learn from SEPA’s experience so that other public and private sector organisations can learn the lessons from what was a serious and sustained cyberattack targeted on the organisation. That is being done through our cyber network; the Deputy First Minister is leading on that piece of work to ensure cyberresilience across the public sector in general, as well as working with the private sector. It is a strong partnership and part of that work is about making sure that lessons are learned and that we help to support other public sector agencies and private sector companies to learn the lessons and to put in place measures that can help to minimise the risk of them being exposed to a similar attack.

I reassure you that we are working to try to make sure that we learn the lessons from the SEPA attack across the public estate and the private sector.

I will just unpack some of those issues. It is not long since we published our heat decarbonisation strategy, which was formed following a public consultation that included our colleagues in local government. They had an opportunity to feed into that process and they are able to continue to feed into our policy development in that area. I therefore do not accept the idea that local authorities have not had the opportunity to feed into national policy direction and our national strategy on that. It was an open consultation for them to participate in and to feed into, which they have been able to do.

Secondly, we commissioned work, which was carried out and which involved housing associations and, if I recall correctly, the chief executive of Inverclyde Council, to look at some of the specific challenges that local authorities faced around the heat decarbonisation agenda. The report from that was submitted to the Scottish Government last year, and it fed into the development of our strategy. Again, therefore, local authorities have been involved in helping to formulate that policy and our thinking around it and some of the challenges that we face.

I realise that the scale and nature of the challenge are extremely significant not only for local authorities but for our social housing providers. There are hundreds of social housing providers throughout the country that all face similar challenges. That is exactly why we committed to setting up the public energy agency to support local authorities and social housing providers.

One of the purposes behind the public energy agency is to bring together the skills and expertise and develop the advice and information that local authorities and social housing providers require to assist them in moving forward with the agenda, so that we do not have 32 local authorities all trying to do it differently and reinventing the wheel over and over. It will co-ordinate that work, provide expertise and provide the necessary guidance and support.

Your final point concerned the green heat finance task force that we are setting up. I hope that, in the next couple of weeks, we will be able to set out the details of its remit and membership. It has been specifically designed to consider how we can lever in external financial support alongside public sector investment in decarbonisation to support colleagues in the public and private housing sectors. They will have an opportunity to feed into that and I expect local authorities to have a role in the task force to ensure that their voices are heard at the heart of developing any recommendations that the Government might implement.

Was the lack of data an issue for the private sector companies—the potential investors?

I get the point that you are making, and it is a reasonable challenge. I will take that point away.

The UK ETS is performing as it was intended to. There have been discussions between the four nations in recent months to consider whether there ought to be some adjustments to the ETS. The four nations decided not to make any adjustments to the capping levels, given some of the energy price pressures that sectors are experiencing. By and large, the ETS is operating as was intended. Clearly, it will have to change and adapt for the future, and that is the work that the four nations are taking forward. I hope that we will be in a position to consult on that in the months to come.

I am not aware of how far the UK Government has got on the implementation of a carbon tax, which would have implications for the ETS. In the discussions that we have had with the Department for Business, Energy and Industrial Strategy about the future of the ETS, there has been no suggestion at any point that a carbon tax might be brought in that would render the ETS no longer viable. Our discussions with the UK Government have given no indication of the implementation of a tax regime that would replace the existing ETS. The order that we are discussing will align us more closely with the European Union emissions trading scheme.

The response is that there is no easy answer to what is a complex issue. More than 250 public bus providers in Scotland provide access to public bus services. Nationalising those services would mean nationalising more than 250 businesses and it would come at a significant cost to the taxpayer. People think that taking things into public ownership is the answer to it all, but to make that possible, we would need capital and revenue that we do not have.

That is why, in order to address some of those issues, we made provision through the Transport (Scotland) Act 2019 for a range of measures, such as bus service improvement partnerships. The range of options that are available to local authorities includes local authority-run bus services. However, again, a local authority would have to capitalise a company for the purposes of achieving that, and that comes at a cost to the taxpayer—it is not cost neutral. The money would have to come from somewhere else to buy over the bus company or to buy buses and then run them.

A franchising mechanism is also available, as is a mechanism for joint partnerships between the public and private sectors. A variety of models is available that, deployed in the right way, could address some of the issues that your constituents have raised with you and improve services. At the same time, we must recognise that the idea of nationalising more than 250 companies overnight and then running them as a national bus service comes at a significant cost to the taxpayer, and the finances are not available for that.

We need to see more progress on the powers that are available under the Transport (Scotland) Act 2019 with regard to supporting local authorities to improve bus services. That has already happened in some cities outwith Scotland—Leeds, for example—where they have been able to transform the quality of their bus services by giving the issue greater priority and by having a much closer local bus partnership to ensure that services reflect local need much more.

I do not know off the top of my head exactly where we are with local authorities bidding into the fund, but I am more than happy to take the issue away and come back to the committee with more details in writing. It is the sort of thing that local authorities will be able to tap into for local bus service provision but, of course, if one big local authority were to decide to do something significant, it could try to call on all of the fund. We therefore have to ensure that it is accessible to all local authorities and that it is not eaten up by one or two local authorities looking to take big projects and proposals forward.

It reflects where Network Rail sees itself in control period 6 and the projects that it can take forward. As you will be aware, a significant number of capital projects were stalled or had to be stopped during the pandemic. The rail system operates on a system of control periods, and the spend reflects where Network Rail thinks it is with regard to the projects that it had intended to deliver in the current control period. It also reflects the efficiencies that it thinks it can achieve in some of the projects that it will take forward in control period 6.

Overall, though, the budget is very clearly about continuing to invest in our railways to improve them, to decarbonise them and to speed up the network, particularly to our seven cities.