Chamber and committees

There has been a shift, which reflects the challenging capital budget allocation that we face. Not only was there a reduction in the capital allocation to the Scottish Government from the UK Government, but we have to meet significant inflationary pressures within the capital allocations. Some aspects of construction inflation are operating at 17-plus per cent. Not only is that a more challenging level of capital, but its buying power is weakened as a result of the significant inflationary pressures. We have had to balance some of that.

The reduction in the budget for motorways and the trunk road network is about reprofiling some of the life-cycle maintenance work that is carried out. There is some reprofiling of some of the structural repairs programme that was being taken forward, and some aspects of capital land and works have also had to be reduced.

A couple of areas have continued to be a priority. For example, the access road to Argyll and Bute from the A83 at the Rest and Be Thankful continues to be a priority, so allocations have continued to allow the work to be taken forward. There has been an increase in funding for the road safety programme to continue to build on the progress that we are making on road safety measures.

By and large, that is a reflection of the challenges with regard to capital allocations. It is not the case that these things will not happen, but they will take place over a longer period. We are having to stretch out some of the life-cycle maintenance work.

The expectation from our discussion with Forestry and Land Scotland is that the 16,500 hectare target can be managed within the budget settlement that we have provided.

Yes. The £15 million is within that budget and is for the purposes of the pilot specifically; it would cost more than that to remove peak fares across the whole network. Before arriving at a policy decision about whether we work to remove peak fares across the network, we are looking at the cost of that and whether there is budget allocation to provide for it.

Railway patronage has not returned to pre-pandemic levels, and neither has the farebox income, which is why we are having to put in additional investment in order to help to support ScotRail and the Caledonian sleeper service. There is budget allocation in the £1.4 billion to achieve that. Network Rail’s fixed rail network charges have increased, which adds to the cost base and has an additional cost impact; there is budget allocation within the £1.4 billion to meet that. There is also provision in the budget to continue with enhancements, such as the Levenmouth rail link project between Thornton and Leven.

However, given the capital constraints that we are facing, there will not necessarily be the same level of enhancements and expansion of the rail network in future that some people might wish to see; we do not have the capital provision to do that. We believe that the budget allocation is sufficient in order to meet what we have to do in the next financial year. However, we are having to deal with a significant number of inflationary pressures from the cost base and the fixed access charges from Network Rail, too.

It is important to correct something that you said. We have reduced services across the United Kingdom because of reduced demand. There is no point in running empty trains that are not utilised. We have not chosen to reduce services; we have done so because of a lack of demand.

Pre-pandemic, we were going through a process of ramping up services—we were delivering more services per day than we had historically, the rail network was being expanded and service frequency was being increased—but we had to ramp that down during the pandemic. However, patronage has not returned to normal levels, and there is no point in running what are often referred to as ghost trains, which are trains that no-one is on. Those trains would have brought in revenue prior to the pandemic, but now they do not.

He is employed by Network Rail and he is on the board of ScotRail because Network Rail is the major infrastructure provider to ScotRail. He works for and is employed by Network Rail, not by ScotRail.

The fair fares review stems back to our national transport strategy. It was one of the key priorities that we identified as an area to take forward in reviewing our transport policy. The purpose of the fair fares review is to look at how we can address anomalies within the fare structure, whether in relation to rail, ferries or buses. We are trying to identify ways in which we can remove those anomalies, and to look at how to streamline some of the ways in which fares are set for different transport modes.

That is the background to the fair fares review. However, the national transport strategy was published before Covid. Since then, one of the most significant things that has happened has been the big change in patronage on public transport, which has continued to this point. We have not had full recovery in patronage levels, particularly in relation to rail.

The idea behind having a pilot on removing peak fares is to see whether that would help to make public transport—in this case, rail—more attractive to more people, and to test that as a hypothesis that could potentially have a positive impact. The £15 million that we have allocated in the budget will provide for that.

We are taking forward a range of work to identify the most appropriate way in which to carry out the pilot, as it is important that we do that in a meaningful way and that we can be confident about the outcome and the findings that come from it. Therefore, quite a bit of detailed work is going on behind the scenes involving Transport Scotland and ScotRail to identify an appropriate route for the pilot.

The fair fares review overall should be completed in the spring of this year. We then intend to set out some of the proposals that have emerged through the review process. That will also involve a public consultation exercise, which will allow stakeholders, Parliament and the public to have a say on some of the findings from the fair fares review and some of the work that we are planning to take forward alongside carrying out the pilot on peak fares.

If you look at public transport from a socioeconomic point of view, you will see that the vast majority of people who use it use buses. We are now at a point at which almost half the population of Scotland are able to travel on buses for free. Obviously, that has a significant financial benefit for those who regularly use buses. If you want to focus on areas that will help people on lower incomes to access public transport, buses would be the number 1 priority, given the sociodemographic profile of those who use buses and the significant numbers who use them compared with rail. As I said, almost half the country is now able to travel for free on buses.

We will have to wait to see how that work takes place over the year and whether we can break things down to the level that you are referring to—not just the capital investment programme but right down to the construction elements and so on. I do not know just now. We will have to see how that work is developed and taken forward in strands 2 and 3.

The intention is that strand 2 will expand the taxonomy and give more data and understanding to provide much greater scrutiny of what is happening in different parts of the Government and its spend in tackling climate change. Therefore, strand 2 should give us an extra layer and give committees an extra depth of understanding on that.

Obviously, strand 3 is to give us the net zero assessment, so that we can have that level of assessment, which will be really important. Again, on the back of the Climate Change Committee’s report published at the end of last year, which talked about having much greater transparency between policy options and choices and their impact, it is important that we have that in the budget so that you can see where we are spending and investing and how that is impacting on climate change.

Between strands 2 and 3, I would hope that we will have a much greater level of detail. I do not know how granular that will be, because I am conscious that it is a new area. It is being developed and managed. The more granular it is, the better. I think that it will help us all in scrutinising the budget, and in policy decisions that we take forward. I hope that we will get a level of detail that committees feel is sufficient for them to properly scrutinise the overall budget allocations.

Yes. A few metropolitan local authority areas in England already have bus franchises. I think that Manchester has one and that there are other big cities using franchising models.

I am not saying that that is the model that local authorities should use; I am saying that, from the engagement that I have had with local authorities, some of them are looking more at the franchising model than at setting up their own bus company because of the capital costs that are associated with doing the latter. It is a different model, and the bus support funding that we are providing allows local authorities to look at developing some of those models, to put more flesh on the bones of what they are thinking about doing and to take that forward.

Yes.

The first thing to say is that the gateway to delivering on the hydrogen economy is onshore and offshore wind providing cheap renewable electricity. Our priority has to be to make sure that we create the opportunities to produce that renewable electricity. That is one of the areas where Scotland is more advanced than many other European countries.

Many countries in Europe—and beyond—are setting very ambitious targets for the production of green hydrogen but, actually, many of their renewable energy projects are not in the consent process, have not been consented to, or do not have leased sites. They are quite a bit behind us, which is why, in some ways, we have an advantage. There are European countries that are in a good place but, for example, the ScotWind leasing round has already been completed, and we are one of the few countries that have got to that point. Norway, which also wants to go into green hydrogen production in a big way, has still to do that leasing round, so it is probably about two years behind us in that process.

That renewable energy element is really important. One of the elements of the budget is that we are creating much more resource in my directorate to support the consenting process for onshore and, in particular, offshore wind, so that we can deal with consent effectively and efficiently, while also dealing with the environmental aspects that go alongside that.

On the hydrogen element in particular, we are taking forward a number of pieces of work. It will be really important that we become not just a production basin but a manufacturing centre for the components, such as electrolysers, that go into the production of green hydrogen. That reaches outwith my portfolio, although I have a direct interest in that, which is very much within the economy side. My colleague Ivan McKee and I work very closely together on how we can maximise the opportunity not only to attract inward investment but to support businesses in Scotland that could pivot into hydrogen production. Last year—I think that it was last October—we published our hydrogen prospectus, which was a proposition that set out the opportunities for businesses in Scotland and beyond to look at manufacturing capacity that is being developed in Scotland. We have had quite a bit of development on that through Scottish Development International and Scottish Enterprise at an international level, which has attracted quite a bit of interest. SE account managers have also taken forward work with businesses that have engineering expertise but are not necessarily in the hydrogen space, to make sure that they understand that they could pivot into that sector. Last October, we held an event in Edinburgh that brought together interested stakeholders and companies from both the energy and manufacturing sides to discuss their prospects and to look at how we can scale up that opportunity. A considerable amount of work is now going on. You probably know SE’s six key priorities better than I do, but I think that hydrogen is one of them. From the point of view of SE and SDI, as well as trade policy, a significant amount of resource has been put into hydrogen, as it is a major strategic priority for us.

In my portfolio and in the trade portfolio, we are taking forward a specific piece of work to make sure that we dovetail all of that work collectively. We have a further meeting on that this month. We are combining the key elements of production and capacity on the energy side in Scotland, the businesses that want to go into it and trade, investment and business growth opportunities, so that it all starts to knit together in a way that is much more consistent in maximising the opportunity.

I am sorry if that was a long answer.