Chamber and committees

Absolutely—it is a very important topic.

Technically, the instrument is a continuation of what we have been doing. It puts in place the regulations that allow us to continue to do what we have done up to now, which opens up procurement more broadly. What does that mean in practical terms? Obviously, if we are putting out bigger contracts—which is what happens when they are amalgamated across a wider geography—we run the risk of there being bigger suppliers bidding for them.

There is a separate but very important focus of the Scottish procurement policy on supporting small and medium-sized enterprises to access public sector contracts. That is thoroughly embedded in the process—and I think with some success. We are now at the stage where 47 per cent of Scottish public sector procurement spend went to SMEs in the last published data. That compares with a number of around 20 per cent across the whole of the UK.

We have made some significant progress, but there is always more work to do.

It has become commonplace over recent years for contracting authorities, bound by public procurement legislation, to co-operate where it makes sense to do so. Until recently, it was a fairly straightforward exercise as the procedural rules on awarding contracts—on such matters as minimum timescales and the type of notice that must be published—were substantially the same across the whole of the UK.

Earlier this year, however, the UK Government commenced the Procurement Act 2023, which had the effect of changing the procedural rules that are applicable elsewhere in the UK. That meant that new provisions were needed to cater for the scenario in which a devolved Scottish contracting authority is awarding a contract under an arrangement that is put in place elsewhere in the UK, or vice versa.

The Procurement Act 2023 gave both the UK and Scottish ministers powers to address the issue, and the Scottish Parliament agreed a legislative consent motion on the point. The UK Government exercised its power following engagement with us and, through public consultation, set out in legislation the elements of the 2023 act that will apply to devolved Scottish authorities when they are awarding a contract under UK arrangements.

This draft instrument seeks to mirror the provision made by the UK Government by setting out the provisions of the Scottish procurement legislation, which will apply to UK authorities when they are awarding a contract under devolved Scottish procurement arrangements.

Both the instrument and the UK equivalent legislation are drafted with the intention of applying only such of the provisions of the other regime as are necessary to allow the contract to be awarded. Those provisions can reasonably be described as procedural rules rather than policy-driven rules. The exception is where two or more authorities are conducting a joint procurement exercise and one is leading the exercise on behalf of the others. In that case, the applicable regime would be the home regime of the authority that is conducting the exercise.

This is a relatively technically complex instrument, but it is intended to allow co-operation on procurement to continue as appropriate.

In both directions, the trade is currently pretty minimal. We would hope that that will grow over time, although Iraq is not one of the priority countries in our export plan.

Data that we have—this is from His Majesty’s Revenue and Customs regional trade statistics—show that £45 million of goods were exported from Scotland to Iraq in 2024, but the data shows only £1 million of goods coming in the other way. Both of those are about 8 per cent of the UK total.

I will ask officials to come in on the specifics.

If we look across the public sector landscape, a huge amount of work has been done over recent years to encourage the use of framework contracts in procurement. We have saved hundreds of millions of pounds by doing that in the Scottish context, with different public bodies co-operating on those frameworks. The same can apply across the whole of the UK, where it makes sense to do so.

That has been the case up to now, and all that the instrument does, given the new UK procurement legislation, is enable the process to continue. It dovetails in the different procedural requirements so that co-operation continues to be technically possible.

I will ask officials to come in if they have any specific examples. If there is any more detail that you need, convener, I am happy to come back.

Officials can correct me if I am wrong, but I do not think that there are any instances of Iraqi firms bidding into Scottish public procurement as yet. This instrument is just to add them on to the list of countries that can do so.

As committee members know, while the negotiation of international agreements is a reserved matter, implementation can occur in devolved areas. In particular, agreements often include provisions providing for reciprocal access to public procurement. Accordingly, Scottish procurement regulations set out that bidders from countries to which a relevant agreement applies are entitled to equal treatment when bidding for contracts in Scotland.

The instrument updates the list of relevant agreements by inserting a reference to a new agreement between the United Kingdom and Iraq. The effect will be to ensure that suppliers from Iraq will be entitled to the same treatment as Scottish or other UK suppliers when bidding for contracts that are covered by the agreement. Under the terms of the agreement, Scottish bidders will be entitled to equal treatment when bidding for contracts in Iraq.

It is worth noting that the agreement is based on the agreement between the European Union and Iraq, which ceased to apply to the UK after Brexit. In that sense, the instrument can be largely regarded as a restoration of rights and obligations that existed until that point.

I am absolutely listening, and I am very keen to engage further. As I have said several times, the fact that this is being done in the rest of the UK is an important factor in our considerations. However, we continue to engage extensively with the sector on the matter.

No, except to say thank you very much.

You are asking me why organisations that may have to pay more tax are opposed to having to pay that tax.

I think that that is the reality of where we are. No developers have been identified for a significant proportion of those buildings. As you have identified, the issues have to be addressed for public safety reasons. We had to make a choice about whether all the costs were carried by public finances or only a significant majority of them, with an ask to the sector to contribute towards the costs. We have taken that approach, which is the same approach as the rest of the UK. We are seeking to work on the detail of the levy and engage with the sector extensively to understand its position.

I believe that what I have announced today, and other steps that we have taken to provide mechanisms for relief, will be helpful for developers. In Scotland, Revenue Scotland will implement the levy, rather than having 296 different local authorities collecting it. We will also have one rate in Scotland compared to almost 600 rates in England, which will make it easier for developers. We will collect the levy at completion certificate stage, rather than at building control stage, which will significantly help developers’ cash flow, because they will have to pay the levy only at a point that is much closer to when they will get paid themselves. We are working hard to see what can be done with the sector to make the process as supportive as it can be, given the fact that we are asking people for money.