Chamber and committees

It has been great having you here at this morning’s meeting. I want to go back to the issues of energy and the fit for 55 package. You emphasised Sweden’s role in finalising that, so is it now being implemented? I am interested to find out how that policy will reach out to countries that might be on the periphery of European membership or European Economic Area countries in order to meet energy needs within the European Union.

I was in Reykjavik at the Arctic Circle assembly last year, and there was a lot of interesting discussion around the potential for green hydrogen and renewables with sub-Arctic countries, industry, Governments and academics. I am interested to learn how, with green hydrogen and Europe’s hard-to-abate energy sectors, Europe will reach out to those countries that have renewable resources and draw them in to meet its energy needs.

I just want to check that we have the same understanding of the pressures that smaller regularly funded organisations are currently facing, particularly in relation to reserves. Most of those organisations are charities and they are regulated by the Office of the Scottish Charity Regulator. If they dip into their reserves to a point at which they can no longer afford to make redundancy or pension payments, they will be acting outside charities law.

We are being told that that is an issue not for next year but for this year, even though there is some funding this year from Creative Scotland, which is coming from its own national lottery reserves, to keep those organisations going. Their boards are having to look now at their sustainability and whether they should keep going, even though they are currently getting money, because they are dipping into their reserves as a result of energy costs, having to pay staff an increase to meet the cost of living and other issues. Do you agree with that description? Do you understand the issue?

That is good to hear, but I want to stick with the particular pressures that are being faced by regularly funded organisations and those that are in a similar position but get their funding from elsewhere. We heard last week about the disproportionate benefit that those organisations bring, and I want to relate that to the national performance framework indicators that the Government has set—attendance, participation, growth in the cultural economy and the number of people who work in the arts and culture.

Last week, we were told about an arts organisation that operates in Huntly that gets £100,000 a year. It supports 50 artists and puts on 200 events a year. It has a wider economic benefit and spin-off in that town and its surrounding rural communities. That organisation is hitting all the indicators and strengthening our performance in culture. Will there be an impact if even a small number of such organisations go to the wall?

I want to switch to the process of the development and climate proofing of the budget and the implementation of the joint budget review on climate. I welcomed getting the letter yesterday updating us on the progress that the Government is making on that.

I want to ask you about each of the three strands. The first strand that was introduced into this year’s budget is the climate change narrative. I welcomed seeing not just a carbon assessment but much more of a narrative that explains some of the policy choices that were made this year. What are your reflections on that? How might that narrative change in future as more work is done to develop more data?

That would be welcome. Previous committees have looked at the climate change plan and found it absolutely impossible to work out where the cuts in emissions were coming from. At the time, we were told that, because the TIMES—the integrated MARKAL-EFOM system—model that is used is extremely complicated, there are so many interdependencies that it is impossible to work that out. It would be good to have transparency in future.

This area is recognised as being one of international interest. The Fraser of Allander Institute’s report highlighted a number of international examples. Is your department continuing to make connections with other Governments, including the New Zealand Government, about their approach and how we can learn from one another? In some ways, it feels as though we are groundbreaking, yet we are also learning from Governments that have already broken some turf in this area.

In terms of strand 2, the taxonomy feels a bit rough and ready at the moment and it is very much restricted to capital rather than looking at resource spend and what that does. The future taxonomy will be the next big addition to the budget process—the next tool that committees such as this one will have—and it is going to have a greater breadth, covering both capital and resource spend, but what kind of depth can it get into? Will it be possible for us to look at individual capital infrastructure projects and say, “Oh, we can see now not just what the climate impacts will be in terms of construction but what that contributes in terms of net zero”? Will there be a clarity at the appropriate level of budget spend so that we can get our heads around the direction of travel of spending and what the choices have been within that?

I appreciate that the work with strand 2 will be taken forward in strand 3 to give much more granularity. You mentioned the climate change plan and the recommendation from the Climate Change Committee that the next climate change plan, which we will develop this year, should set out explicitly the carbon impact of certain policies. Does that give an earlier opportunity to take things that will go into the draft climate change plan, in particular, and assess those through the budget process?

If the plan has to be very clear about what the carbon impacts of policies will be, surely it would be relatively simple to extrapolate from that and say, “If we are spending on this particular policy in a given year, this is what the climate impact will be.” Does that give us a starting point with the climate change plan this year, whereby we can start to build some of that work into the budget, so that we can see a follow-through from the plan right the way through to spend?

You mentioned earlier the importance of increasing the scale of the roll-out of area-based schemes. How important is the national energy agency in helping to deliver that? Is it possible to accelerate the development of the national energy agency? It feels as though we could be waiting some time before it is up and running to full capacity and it can marshal some of the opportunities that are there for energy companies, councils and the private sector to come in and do things at the scale that we need.

Thank you for the evidence this morning—it has been pretty sobering.

I want to ask you collectively about the policy that your organisations have on reserves. I know that the impact on Creative Scotland’s reserves will be quite big this year, but I am thinking of the policy on reserves more widely. Does the budget, and the headwinds that the cultural sector are encountering, mean that there needs to be a rethink of the reserves policy? Are there particular demands on reserves beyond the budget that organisations will face in the future?

Perhaps Iain Munro can start, and then we will go round the table.

That is useful.