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The dialogue that we have had so far this morning speaks again to the strong alignment across the Parliament and the committee to improve the system, which is working very well for many just now but could work even better for many others. I look forward to continued constructive engagement on that throughout the remainder of the bill process.

As this is quite a large group of amendments, I would be grateful for colleagues’ patience as I work through them.

Amendment 11, in my name, is a technical amendment that responds to SDS’s written evidence to the committee at stage 1. SDS raised the question whether the bill’s provisions limited training providers’ ability to generate any profit in the course of their business of providing training in the delivery of national training programmes or apprenticeships. The policy intention is that legitimate and proportionate profit is not to be prohibited, and the bill’s initial provisions were not intended to imply such limits. That is why we have lodged amendment 11.

My amendment 12 allows the SFC to limit managing agent fees. During the stage 1 evidence-taking sessions, managing agents set out how they used the funding that they received, with one outlining to the committee that they retained 40 per cent of it. That was, I know, of particular concern to Ross Greer; George Adam raised the matter last week; and other members of the committee have been interested in it, too. Indeed, Ross Greer’s amendment 51 in group 4 also addressed it.

There is a need for managing agents, and they are an established part of the skills system. I acknowledge that issues can arise from the proportion of fees that some of them retain when securing the delivery of training through subcontractors. As I want to ensure that as much public funding as possible goes to the front-line delivery of education and training. I have lodged amendment 12, under which the SFC must determine the appropriate percentage that a managing agent may retain and make that a condition for funding.

I think that that is a proportionate approach that balances the legitimate costs of managing agents with the need to use public money wisely. I believe, too, that it provides the flexibility to respond to individual contracts in practice in a way that putting a number into primary legislation simply would not have done. I therefore encourage members to support amendment 12.

I also want to address Ross Greer’s comments last week about the drafting of amendment 12. In his view, it is vague; I would argue, in short, that it is not. Its drafting shows a deliberate and clear intention. It just takes a different approach to Mr Greer’s amendment, and I hope that the member will be open to it.

Amendment 12 deliberately gives discretion to the SFC to respond to individual circumstances instead of setting a cap in primary legislation, which, even with the ability to change such a cap by regulations, would be arbitrary and inflexible. The amendment also provides that any subcontractors used to deliver training must comply with the criteria in the bill for what makes a training provider, and the amendment is deliberately framed to stipulate that no training provider is entitled to retain more than the “reasonable” fee. That framing is designed to close down the possibility of a provider getting around the restriction by creating some kind of artificial training scheme in order to pass along the funding or by claiming that a subcontractor is not a training provider in the true sense, thereby getting a higher percentage. For all of those reasons, I encourage members to vote for my amendment 12, in preference to Ross Greer’s amendment 51. I hope that that explanation is helpful to Mr Greer, too.

On amendments 30 to 33, in the name of Willie Rennie, I have listened carefully to what the member has said about them, and it appears that their purpose is similarly concerned with limiting managing agent fees. I believe that amendment 12 will do that in a proportionate way, without requiring additional complex regulations that might not allow for appropriate flexibility. In my view, the SFC is best placed to assess what is reasonable in the context of particular arrangements.

Therefore, I ask Willie Rennie not to move his amendments, but I am happy to engage with him further in our dialogue ahead of stage 3. I note that he has had engagement with SELECT on the provisions in his amendments, and I would be keen to hear more from him, in due course, about its concerns.

I support amendments 9 and 10 in the name of Jackie Dunbar. Her amendments ensure that the term “work-based learning” encompasses all the types of activities and learning that currently constitute foundation apprenticeships. I want to take this opportunity to stress that the use of the term “work-based learning” in the bill does not seek to diminish or devalue what we currently know as foundation apprenticeships. The Scottish Government remains committed to increasing the skills of Scotland’s young people through work-based learning; indeed, that is very important, as I argued in our previous session on the bill.

I listened carefully to the evidence given to the inquiry on graduate apprenticeships. Universities will be able to provide work-based learning as appropriate, and current and similar arrangements for graduate apprenticeships will be available. The bill simply adds options. For example, a university could deliver work-based learning and be funded to do so under section 5.

Graduate apprenticeships will be covered by the definition of “Scottish apprenticeship”, not the definition of “work-based learning”. Officials will be engaging with Universities Scotland next week, when there will be more discussion on that point.

In the bill, a managing agent is a training provider, and I value the important role that training providers and managing agents play in the current system. I would also be interested in having further engagement, and I do appreciate the constructive engagement that we had from Mr Rennie ahead of the amendments being lodged. As part of our dialogue ahead of stage 3, I would like to listen to more about those points, and I would be grateful if we could use that time to have more discussion.

Several other amendments in the group relate to foundation apprenticeships and work-based learning. Amendment 95, in the name of Miles Briggs, would bring a reference to “foundation apprenticeships” into the definition of “work-based learning”. The definition has already been designed to cover foundation apprenticeships, and will do so in a better way through amendments 9 and 10. Adding the definition proposed in Miles Briggs’s amendment and introducing provision for foundation apprenticeships when we already have provision for work-based learning could be confusing and could risk creating unintended consequences. We have also had a discussion about how we do not want to have the term “foundation apprenticeships” in the bill. Therefore, I encourage Mr Briggs not to move amendment 95.

There are several amendments that seek to replicate existing legislative requirements on the SFC to have regard to various matters in section 20 of the 2005 act or to collaborate with various bodies listed in section 22 of that act. They include amendment 100, in the name of Stephen Kerr; amendment 102, in the name of Miles Briggs; amendment 106, in the name of Miles Briggs—an amendment that would duplicate the provision in amendment 47, in the name of Ross Greer, which I intend to support when we get to that group; amendment 107, in the name of Miles Briggs; and amendment 109, in the name of Pam Duncan-Glancy. I do not consider it necessary to duplicate the current requirements. However, if members do not move their respective amendments, I will undertake to review what is covered by section 20 of the 2005 act and consider their respective issues ahead of stage 3.

Other amendments seek to make legislative provision in areas that would be better handled administratively. I agree with the spirit of those amendments, but putting such matters in legislation would limit the ability of future Governments to change tack and adapt to different circumstances, or for the SFC to have a flexible and agile operation. Those amendments include amendment 101, in the name of Miles Briggs, which would require the SFC to take account of “good practice”. It is unclear what such “good practice” would be or where it would derive from, and, in any case, we already expect the SFC to do that in how it operates in practice.

Amendments 104 and 105, in the name of Miles Briggs, concern SME grants, which are matters for the terms and conditions of grant funding and/or guidance from Scottish ministers. Amendment 115, also in the name of Miles Briggs, relates to cost benefit analyses and equality impact assessments, which are already a requirement for new policies and, therefore, are already catered for.

I am sympathetic to Miles Briggs’s amendment 116, but it is not needed. Transparency, accountability and cost effectiveness will be central principles in the delivery of work-based learning. Where it is necessary to say anything additional about those principles, that can be done through guidance or in Scottish ministers’ terms and conditions of grant to the SFC.

Again, the issue covered in amendment 120, in the name of Daniel Johnson, is best dealt with as an administrative matter. It is not appropriate for the bill to spell out in detail all the matters that should be covered in the SFC’s annual report. The amendment covers one important matter, but there are many others of equal importance.

A number of amendments attempt to protect expenditure on apprenticeships and work-based learning. The proper place for determining budgets is the Scottish Government’s budget bill, following the budget process. Amendment 34, in the name of Willie Rennie, would, in effect, duplicate the Scottish Government’s budget bill process and the process by which money is moved from one budget line to another through the autumn and spring budget revisions. The bill includes specific powers for ministers to provide grants to the SFC to support apprenticeships and work-based learning, and its provisions also expressly require that such grants issued by Scottish ministers be administered by the SFC only for those specified purposes. Scottish ministers set out their high-level priorities for the SFC through the annual letter of guidance. Together, those provisions make clear the purposes for which the SFC must use the funding provided to it.

My understanding is that it is about the cumulative effect and the risk of it creating difficulty for the Government and the independence of the institutions. I am clear that there would be a risk of reclassification if amendment 63 was passed but I take members’ points. I want to make some progress, but I am happy to have further engagement with the committee on the points that members have raised, because they relate to the amendments that I am still to speak to.

I turn to Ross Greer’s amendments 51, 54, 55 and 62. As he said, I prefer amendment 12 in group 8 to amendment 51. It addresses the same issues while leaving discretionary power to determine appropriate levels of payment to the SFC. For context, in England, the cap is in conditions of funding, not legislation, and it is flexible. I hope that is helpful context.

I am certainly happy, as always, to have more engagement with Ross Greer. On the points that have been made about SDS, it is not bound by law, but the SFC will be and will be answerable—that is the difference. As with several amendments in the group, we need to be cognisant of the employment law reservation. However, I am happy to have further engagement.

Briefly, yes.

As I said, I would be more than happy to have further engagement on that with Mr Greer and the committee. I again emphasise the employment law reservation, which we have to consider in thinking about contracting.

Convener, I, too, want to congratulate you, and the committee more widely, on your award.

I also want to thank all the members and stakeholders who engaged with me on the bill between stages 1 and 2. The substantial and constructive engagement that we have had has been, I think, to the benefit of all.

I will speak to all the amendments in this group together, noting that amendment 207, as Pam Duncan-Glancy has mentioned, is consequential. I appreciate why the member has lodged them. It is desirable to have a clear picture that all can understand and which allows everyone to see their roles and responsibilities and where the opportunities might sit with regard to having national direction of skills planning. That is what the bill and the wider reforms of the skills landscape that we are introducing seek to do.

The Scottish Government is committed to leading skills planning nationally while strengthening regional approaches. We have agreed a high-level model for planning that sets out intended roles for the Scottish Government, the Scottish Funding Council and Skills Development Scotland, consistent with the objectives of the proposed amendment.

I am happy to consider what we might be able to publish ahead of stage 3, but I also want to put on the record the Government’s commitment to transparency, collaboration and delivering a system that meets Scotland’s strategic skills needs. I am also happy to take on board many of the aims that are set out in Pam Duncan-Glancy’s amendments in our approach, not least on consultation. It is, of course, the norm for the Scottish Government to consult and engage with key stakeholders in the development of policy, and I do not intend to deviate from that in our approach.

However, it would be inappropriate to tie future Governments to a policy approach by making it statutory. There are also some issues with the drafting of the amendments. For example, elsewhere in the bill, provision is made for “work-based learning”, which includes but is not confined to foundation apprenticeships.

For all those reasons, I cannot support amendments 38, 39 or 207, and I ask Pam Duncan-Glancy not to press amendment 38 or move the others in the group and allow me, my officials and the Government more widely to consider what more information on our national skills planning approach I can provide to Parliament ahead of stage 3.

I would be grateful if Pam Duncan-Glancy could provide a bit more context for that question.

We have paid careful attention to trade unions throughout the process. As I said, amendment 69 is not competently drafted. We could consider the matters that it raises in relation to trade unions further ahead of stage 3 but, at the moment, I urge the committee not to back amendment 69—indeed, I urge Ross Greer not to move it.

I thank Miles Briggs for setting out the rationale behind his amendments. However, the intention and wording of amendment 70 are unclear. If he is suggesting that we should have a provision that effectively allows grant funding to be passed directly to employers rather than staying within the SFC’s direct oversight, I am sure that he can see how that might prove challenging if universally applied. That sort of national training programme might be a good idea in some circumstances, but I am unsure whether such a provision is necessary, and I do not consider the wording to give the intended effect. However, I am happy to consider the matter further ahead of stage 3, if the member is minded to do that.

I am pleased to support amendment 71, in the name of Ross Greer, and amendment 72, in the name of Miles Briggs. Amendment 71 will bring transparency to the terms and conditions that are set by the Scottish ministers when providing grant funding to the SFC. Amendment 72 implicitly emphasises the importance of compliance and results in return for public money by setting out how the SFC could impose repayment conditions.

Although I have no issue with the spirit of Daniel Johnson’s amendment 73, it is problematic on several fronts. The term “transparent on spend” is not defined, and we would not want a grant recipient to need to publish details of all their expenditure. That could be unnecessarily bureaucratic and sensitive in respect of certain matters such as staff salaries and subcontracting.

More importantly, by requiring the SFC to impose a condition that the person “adopts fair work practices” in all circumstances, regardless of the nature of the business, amendment 73 would have the effect of mandating employment terms and conditions. Unfortunately, that is strictly outwith the competence of the Parliament. As there is an employment law reservation, the amendment should not be supported.

Miles Briggs’s amendment 74 is in similar terms. Although the provision is not framed as an essential grant condition, the amendment is unnecessary, as the bill already gives the SFC a broad power to make grants subject to such terms and conditions as it considers appropriate to impose. It is for the SFC to decide what grant condition may or may not be appropriate, depending on the nature of the training programme and the grant recipient. I appreciate the desire for legislation to expressly allow for the SFC to impose a condition in this space, and I am happy to look at that further to ensure that we have a provision that is workable and within legislative competence. I commit to doing so at stage 3 and therefore ask Miles Briggs not to move amendment 74.

Likewise, Ross Greer’s amendment 75 would make a provision that would be more appropriately placed in the contract or offer of grant that is made to the person providing the national training programme. In addition, the purpose of the provision appears to be to penalise financially employers who do not adhere to fair work principles. That therefore relates to the reserved matter of employment rights and is outside the legislative competence of the Parliament I therefore ask Mr Greer not to move amendment 75 and, if he does, I urge members to vote against it.

I will be moving amendment 4 and will ask members to support it. I hope that members will also support amendments 71 and 72. As stated, I cannot support amendment 70 as it is currently drafted and I ask Miles Briggs not to move it, as that will allow me to consider the matter further ahead of stage 3. If he does move it, I encourage members to vote against it.

My amendments 1 and 2 insert references to post-16 education bodies into sections 3 and 4 of the Further and Higher Education (Scotland) Act 2005, as amended by the bill. Those are the general duties on the Scottish ministers and the Scottish Funding Council, and the amendments align with the language previously used in the provisions and throughout the 2005 act. The amendments respond to concerns raised by the Educational Institute of Scotland about creeping privatisation of tertiary education, which is absolutely not the policy intention nor the effect of the drafting of the bill. I have listened to the EIS’s concerns, and I am happy to provide the amendments by way of reassurance that there is no shift in that direction. I hope that members can support the amendments.

I am pleased to support amendment 25, in the name of Willie Rennie. The requirement for provision to address current and future economic need is fundamental to the planning and provision of tertiary education and funding, and I expect that that would be true of all Scottish Government Administrations.

With regard to the other amendments in the group, I will wait to hear the debate and members’ comments, and provide my views in my closing remarks.

I move amendment 1.