Chamber and committees

From the word go, we were persuaded that participatory budgeting was an important element of delivering the just transition fund in north-east Scotland and Moray. It is important for engagement with communities, the bottom-up approach and allowing communities and groups to come together to decide what the just transition means for them before coming up with projects that will help to deliver it in their communities.

A lot of really good, exciting, innovative and creative thinking about the just transition is going on in communities. It has been very helpful in increasing engagement and raising awareness. I indicated that, the first time, 10,000 people voted for the projects; then it was 19,000. That is evidence that awareness is rising, as is engagement. We are committed to delivering at least £1 million a year over this session for participatory budgeting, so that will continue.

I am the MSP for Moray, so I meet the groups in my area in particular. It is inspirational to see how they are addressing the just transition and to hear the debates and discussions that are taking place and what it means for communities in the area. Likewise, that is happening for Aberdeenshire and Aberdeen city. The third-sector organisations help to run that process for us; in fact, they run it on our behalf and are funded to do so. They are playing an important role.

I assure the committee that many projects are being funded. I have a list here—obviously, I can only hold this up at the moment. These are lists, which run over many pages, of the projects that are being funded through the north-east and Moray just transition fund alone. There are many other funds that are not covered—

You are right that the Scottish National Investment Bank is at arm’s length from ministers. We allocated £25 million of financial transactions funding to the bank, and decisions on how and in which projects that money is invested are for the bank. However, one of the bank’s objectives is to support the net zero agenda, and the £25 million allocation is for the just transition. The projects will be delivered and chosen by the bank, not ministers, because it is an arm’s-length body but, clearly, our expectation and agreement is that the £25 million will be funded from the just transition fund.

The reason for using the bank is that it has a lot of experience with financial transactions, which is a resource provided to the Scottish Government by the UK Government. They are complex—they are, in effect, very long-term loans—but they are a way of supporting capital investment, and that is why they are part of the just transition fund. Clearly, we do not have the capital to fund everything that we would like to fund, so that is why we use financial transactions and, in turn, why we use the bank.

As for its transparency, that is an issue to raise directly with the bank, which, I think, you have taken evidence from. I will certainly reflect on the question for our next conversation with the bank. Once the announcements are made, these things will be in the public domain.

I am certainly conscious of it. It is a bigger issue for applicants who do not have the capacity or other sources of revenue to make an on-going commitment to particular types of projects. The smaller the organisation, the bigger the challenge that it will face.

I come back to my original point that the just transition fund has to be transformational. In 10 years, we will have to be able to look back and think, “The public purse invested £500 million in the just transition in north-east Scotland and Moray, and we can see how it has been transformational.” We have to look back at that point and see that it has been transformational, and we can do that only by supporting transformational projects.

As part of the just transition principles, it is not just big shiny projects that have to be funded—we want to fund community projects, too, which can come in a variety of types. However, capital is clearly needed for transformational projects. The emphasis is on capital, and, as I have said, the financial constraints that we face just now obviously mean that on-going revenue commitments are not necessarily affordable. So, yes, I am conscious of the issue, and yes, I am always keen to investigate what more we can do, particularly for smaller organisations.

We have our £75 million commitment, part of which is the on-going commitment of £12.2 million in the draft budget. That is because of the capital constraints that we face as a Government. Both financial transactions and capital funding have been reduced by the UK Government; as you will know—indeed, it has been well documented—the Cabinet Secretary for Finance has talked about a real-terms cut of 10 per cent. That gives us challenges.

We would like to be in a position to put more resource into the just transition fund. Clearly, what is before Parliament just now is a draft budget, so we cannot say too much until we are sitting here with the final figures. I want to make it clear to the committee, though, that this is all due to the financial challenges that we face. We will have ground to make up, and we have the commitment in place for the £500 million over 10 years, so let us all hope that the financial environment improves sooner rather than later so that we can fund all the vital projects that we need for the just transition.

I understand the tension, and I have heard that argument and that point being made many times. First, yes, there will be funding for projects of that nature as we move through the 10 years of the fund; in fact, some projects are being funded already.

Clearly we will pay attention to the balance of the kinds of projects that are supported, but I return to the fact that we have to be transformational. The transformation can happen at different levels. I am not saying that it will happen only through larger projects; indeed, we are supporting lots of small to medium-sized enterprises at the moment. We are working with the energy transition zone—it gets funding. Last year, we funded 10 SMEs, and 14 companies, I think, have been lucky enough in the latest rounds for the energy transition fund. There is a full name for the fund, which I can give you in a second or two—it is called the supply chain pathway and energy transition challenge fund, and it has already supported 24 projects and SMEs, if I am right.

SMEs are being supported. It is not just large projects; as I have said, some community projects have been funded, too. We will pay attention to the balance, but we also have to pay attention to transformational projects, which can be very expensive. Changing the energy used in a community, for example, is a very expensive project, and we have to make sure that such projects are transformational.

The just transition fund is not the only fund that funds the just transition in north-east Scotland and Moray; there are many others. The green jobs fund, for example, supports the creation of green jobs and helps SMEs. It represents a £100 million commitment over five years, and we have already seen enterprise companies deliver on it. There are various funds supporting the just transition.

I understand the concern and absolutely identify with it. Capacity building is a big theme to ensure that it is not just the loudest voices and the same voices that command all the attention of the public sector, the Scottish Government or whoever else. That is an argument that applies not just to this debate but across the board.

Capacity building is really important, and we have to find ways of ensuring that local government and central Government, which have a lot of influence over that, can work closer together to ensure that all voices are heard and that we find ways, if we can—resources are so tight just now—of building capacity so that it is not just the loudest voices that are listened to. As a minister, I make a special effort to make sure that I do not just listen to the usual loudest voices, and I am confident that my colleagues do that, as well. As the participatory budget process shows, we are beginning to involve more people.

Catriona Laing wants to add something.

It is clear that times are quite tough just now—we are all aware of that. I can very much understand the frustration in communities. Energy prices are rocketing. Communities are surrounded by energy resources, and they cannot quite square why they are paying through the nose for energy bills and the contradiction there. I hear and understand the frustrations from community representatives and, indeed, members of the communities whom I meet.

However, we have begun to address that. Of course, the test will be when people see and feel change in society and in their communities. There are many projects under way now—energy efficiency, renewables and various other projects that have come forward—that will, I think, deliver visible change in communities. There is a bottom-up aspect to a just transition; it is not just a top-down process. At its heart, a just transition comes from the bottom up.

The participatory budgeting has been a success. I think that 10,000 people voted in the first year and 19,000 people voted for local projects in the second year. That is nearly a 100 per cent increase. Slowly but surely, more people are engaging in the just transition debates, activities and projects, and expressing an interest. We have to build on that. Participatory budgeting is committed to throughout the Parliament as part of the just transition funds. However, we need transformational projects, and we need transformation that people can see and feel.

Kevin Stewart makes a powerful point. We are open and transparent. Everything is in the public domain in terms of who receives the moneys and grants and of the various projects that are being supported. However, clearly, there is a communication challenge. If that is your experience, I am sure that it is not the only example. I often speak to people who are suspicious of £X going to businesses and not community groups. There are, obviously, some tensions in that debate. I have to explain that, if we are going to transform the economy, we have to work with the business community and support big transformational projects that will potentially create hundreds, if not thousands, of jobs in the coming years. We cannot achieve that transformation without supporting such projects, but, likewise, we want to support smaller projects and communities. I understand that people want full transparency and to understand the rationale behind those decisions.

I agree that we have to get it right, and I will certainly reflect on your points. As I said, as we go through the just transition process, there are a couple of communication challenges. One is about ensuring that everyone is aware of how the fund is working and making a difference in north-east Scotland and Moray. Secondly, a lot of other activities are happening in Scotland just now that support just transition. We have to bring that together to get the big picture and tell the full story. I am very keen to pursue those two aspects this year.