Chamber and committees

Thank you, convener, and good morning. I thank the committee for the opportunity to set out the views of the Scottish ministers on the proposed legislation. I look forward to taking questions. Before that, I will make a few brief remarks to outline my key concerns.

My first concern relates to the case-specific sweeping powers of the secretary of state to ignore the devolution settlement, and to the risk of UK ministers intervening in devolved areas without proper consultation or knowledge of local circumstances.

Secondly, the absence of formal regulatory and enforcement arrangements could undermine confidence in the process, and it could hinder the ability of grant-awarding bodies to make awards to recipients as they have done previously.

My third concern relates to the inclusion of agriculture in the provision. We believe that it should not be included for many good reasons.

My fourth concern relates to the time periods involved, particularly the fact that interested parties will have only one month to appeal any decisions.

Lastly, much of the provision remains unclear, even at this stage, due to the absence of draft subordinate legislation and detailed guidance. Notwithstanding the concerns of principle, the absence of such detail makes it difficult to take a considered view and give consent.

That is a brief outline of my concerns. I look forward to taking questions from the committee.

We are still in discussions. At the end of last week, Mairi Gougeon, the Cabinet Secretary for Rural Affairs and Islands, and I met Paul Scully to go through the issues that I have just outlined, but we did not reach any agreement. We shared our concerns again, as we have done on many occasions. Officials continue to discuss such matters regularly, but unfortunately we have not been able to reach a conclusion on those important issues.

Yes, I echo what you have just said. The underlying point is that there is a lack of clarity and a lack of available guidance. My understanding is that the bank has raised those points. Much of the bank’s work involves lending at commercial rates in a commercial environment, but in a scenario of market failure or a similar scenario in which the bank felt that there was a need to lend money, given its mission, it would require clarity on what was and was not allowed. The lack of clarity in the guidance raises a concern about what may or may not be possible.

That is absolutely right and applies across a range of issues, and it goes back to the points that I made earlier. The bank will have to decide whether things may or may not be done under the subsidy control regime, and if the guidance is not clear, at the first level, that might stop the bank doing things that it might otherwise have done, because of those concerns. As you said, decisions on devolved issues would be made at the UK level, but devolved institutions should be making the decisions based on the specific economic environment in Scotland.

At all levels, it would be preferable and desirable, from a democratic point of view and from an economic and practical point of view, for Scotland to make such decisions and for the Scottish ministers to have powers equivalent to those of the secretary of state.

That is a good question and we have raised it. The cabinet secretary, Mairi Gougeon, had extensive discussions with Paul Scully on this last week. The position that you outlined is correct. Agriculture is normally excluded from subsidy control regimes. It has separate treatment by the World Trade Organization and the EU, through a separate process.

Secondly, agriculture is fully devolved. It is a prime example of an area where we are seeing encroachment of UK Government powers into devolved areas.

Thirdly, of course, Scotland has specific circumstances. That goes back to the point that was made earlier about the fact that the characteristics of the sector in Scotland are different to those in much of the rest of the UK, which means that the ability to have different regimes for subsidies in agriculture within Scotland in practical terms may well evolve over time. Clearly, given that it is a devolved area, we want Scottish ministers and the Scottish Parliament to be able to make decisions on the most appropriate subsidy. Control regimes in wider WTO and trade agreement limitations help us to do that and not to be running the risk of falling foul of concerns raised south of the border about what we are doing. I believe that the Welsh Government is aligned with our position on that.

Our ask is that devolved ministers would have equivalent powers to the secretary of state in that regard.

We have made representations that there should be a review of the timelines in the bill. I mentioned in my opening remarks that interested parties do not have long enough to appeal. We think that the one-month period in which to give notice of an appeal could be extended to allow those parties to raise any issues. In terms of transparency, that has been our commentary on the bill.

Transparency will depend on how good the database is. Awards will be logged on to the database and the information will be available for people to access and look at. However, much will depend on how effectively the database operates—I know that there have been teething problems with the database that has been used for the subsidy control regime. Providing that the database works as it should, that information will be available for people to interrogate.

Absolutely. We are already seeing that. There are examples—I will not go into the details for reasons of commercial confidentiality—in which our legal teams have had to have a good look to understand whether we are able to move forward. They take, as they often do, a very safe view on what is and is not allowed. In the absence of the pre-authorisation process that existed previously, there is an inclination to operate on the side of safety, which means that we have to take a different view on things that we might have done in the past. That is obviously concerning.

We have made that point repeatedly at every opportunity, as I said earlier. There have already been situations relating to support for investment in which there has not been the clarity that there has been previously. The view of lawyers is to be safe rather than to move things forward, so we have had to have discussions in that context, which is concerning because it leads to delays in the processes. As you said, it has a chilling effect and slows things up. In some cases, it might prevent things from happening that otherwise would have happened, because we do not have clarity in advance on what is and is not permissible. Taking a safety-first approach could lead to advice being given that we should not go ahead with something, which is a concern.

As I said, that issue and many others, including the issue relating to the bank, have been raised repeatedly with the UK Government at official level and at ministerial level.