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At the moment, the SFT is paying for the commercial audit. On which part of the public sector will pay for it going forward, I assume that it will still be the SFT, but we can clarify that if it would be helpful.

Thank you for the opportunity to speak to you this morning about the legislative consent memorandum for the UK Infrastructure Bank Bill. The bill was lodged at Westminster on 11 May, and the legislative consent memorandum was lodged at the Scottish Parliament on 2 September.

The Scottish Government fully supports the aims of the UK Infrastructure Bank, which are broadly aligned with ours. Investment in infrastructure will be critical to meeting our commitment to a just transition to net zero and it plays an important role in supporting regional and local economic growth. The purpose of the UK Infrastructure Bank Bill is to put the bank on a statutory footing by placing its objectives in legislation. It is intended to create transparency, accountability and governance.

The UK Infrastructure Bank has already made its first investments. It has been operating on a non-statutory basis since it was established in July 2021. We welcome the £22 billion of financing capacity and the advisory services that are being made available to local authorities.

Although our aims are currently aligned, the policy landscape in Scotland differs from that of the rest of the UK, with our infrastructure investment plan, our global capital investment plan and our national strategy for economic transformation providing the framework for our policy priorities. Additionally, Scotland’s climate change plan sets a target date for net zero emissions of all greenhouse gases by 2045, which is five years before the UK Government target. The timeframes and nature of Scotland’s transition to net zero will therefore be different from those of other parts of the UK, and delivery will follow a different approach. We have therefore been seeking assurance that Scotland’s interests will be suitably reflected in the design and delivery of UK Infrastructure Bank activity.

The bill as introduced would allow HM Treasury by regulations made by statutory instrument to amend the UK Infrastructure Bank’s functions or the meaning of “infrastructure”. We appreciate that building in flexibility will allow the UK Infrastructure Bank to be responsive to changing priorities over the longer term without a requirement to update legislation. However, it also creates a future risk of divergence from Scottish Government priorities.

There is a clear overlap between the strategic objectives of the UK Infrastructure Bank and those of the Scottish National Investment Bank, particularly with regard to tackling climate change and supporting regional economic growth. In order to ensure that investments deliver maximum impact, we believe that it is imperative that the two banks are able to work together to identify and support appropriate infrastructure projects in Scotland. It is also crucial that Scottish interests are appropriately represented and that there is an awareness of our economic context.

We are therefore seeking an administrative mechanism such as a memorandum of understanding between the UK Infrastructure Bank and the Scottish National Investment Bank in order to support continued alignment in the approach over the long term. We have also asked for confirmation that there will be no funding implications with respect to the Scottish budget.

Scottish ministers are clear that the UK Infrastructure Bank Bill has merit, but some of the clauses continue to cause constitutional concern. The Cabinet Secretary for Finance and the Economy wrote to the Economic Secretary to the Treasury, John Glen, on 9 June offering in-principle support for a legislative consent motion, but that letter made it clear that legislative consent was contingent on the assurances that I have outlined being provided.

We remain in discussions with the UK Government about the assurances that we have requested. I am hopeful that we may be able to secure those, but we are still to receive a formal response. For now, therefore, I cannot recommend consent to the UK Infrastructure Bank Bill as it stands.

Thank you very much, convener.

The Trade (Australia and New Zealand) Bill is very narrowly focused. Although we have some wider and significant concerns about aspects of the free trade agreements with Australia and New Zealand, particularly with regard to agriculture, the focus of the bill itself is only on the implementation of the Government procurement chapters of those deals.

Amendments are needed to procurement legislation to extend duties of equal treatment to bidders from Australia and New Zealand and to make some minor amendments to procedural rules, and the UK Government has opted to confer a power on ministers to make those amendments. As with the power in the Procurement Bill that we have just discussed, the power is drafted too broadly and will be conferred concurrently on UK ministers as well as Scottish ministers with no requirement on UK ministers to secure the consent of Scottish ministers before exercising it in devolved areas. That is clearly unacceptable.

As I have said, the bill itself is relatively narrow in its focus on the procurement chapters of the two agreements, but it would be remiss of me not to say a few words about the agreements more broadly. The Scottish Government has had no direct role in negotiations, and we are very concerned by the impact of both agreements. Those concerns are particularly acute with regard to agri-food. The potential for imports to increase is huge: Australia currently exports 5,000 tonnes of beef to the UK each year, but the agreement will allow 35,000 tonnes in the first year, with the figure increasing each year after. Of course, Australian producers do not have to adhere to the same animal welfare and environmental standards that Scottish farmers do.

It is a similar story with the New Zealand agreement, as a result of which access to the UK beef market will rise to 60,000 tonnes by year 15. There are almost no benefits in this deal for Scotland’s food and drink sector. All that it achieves is exposure of the Scottish agricultural market to the most export-oriented food producers in the world.

To what end? UK Government analysis shows that the deal with New Zealand will deliver a 0.03 per cent benefit to UK gross domestic product over 15 years, with the Australia deal contributing 0.08 per cent. At the same time, the UK-EU Trade and Co-operation Agreement will lead to a contraction of UK GDP by 4.9 per cent over the same period. Of course, the economic self-harm of leaving the EU should come as no surprise. It is notable and worth highlighting that the EU has secured the same market access to New Zealand for its own exporters as the UK, but at a much lower cost to its domestic producers.

Being outside the EU and tied to a UK Government that is hell-bent on reaching trade agreements at almost any price so that it can pretend that Brexit is working is an invidious position to be in, but it is the position in which we find ourselves, and we must try to protect Scottish interests as best we can. The impact of these agreements will be felt throughout Scotland—

The cross-border co-operation on procurement is worth exploring. In effect at the moment, on either side of the border, organisations will put in place framework agreements with suppliers to enable them to make use of more advantageous procurement conditions. Organisations on either side of the border will leverage those agreements with the supply base to best effect. That situation already happens. Agreements are created by Scottish bodies with the supply base that organisations south of the border will leverage, and likewise in the opposite direction. Part of the concern that we have is that one effect of the bill as introduced would be to close off that co-operation because of the way in which the bill is drafted. It is a concern that it makes that process harder than it is at the moment. Do you want to comment on that, Alasdair?

At the moment, the meetings are at official level. The discussions are on-going, and officials can give you some dates if you require that. There has not been engagement at ministerial level. Of course, the UK Government has just changed all its ministers and we are establishing contact with them as we speak. I do not have any specifics on that.

We are concerned about procurement, because, as I have said, the power gives UK Government ministers scope to make changes to decisions taken by the Scottish Government and in Scottish Parliament legislation on procurement.

Officials can comment on the discussion, but my understanding is that Audit Scotland will take this on as part of its role because the SFT is an NDPB. On additional resource, that will be part of the overall discussion with it on what resource it needs to do its overall job. As I said, it is quite likely that it will choose to use a commercial audit firm in that regard, which will be far less resource intensive for it. However, I do not know what discussions we have had in that regard.

A memorandum of understanding to provide alignment between the Scottish National Investment Bank and the UK Infrastructure Bank would be helpful to ensure that that alignment is in place. There have been official-to-official discussions on the matter. I understand that those are progressing in a positive direction and that there is an understanding or a recognition on the UK side that that would be a helpful move. We remain hopeful that that will reach a positive conclusion. As I said, however, we are still in discussion on the detail.

It is sometimes hard to tell the difference. The UK Government has many people working in it and a lot of things will come forward that perhaps could be written for different reasons without fully appreciating the implications. That is sometimes the situation and sometimes it is not. I hope that officials will work their way through that and be able to address it. If not, as I said, minister-to-minister engagement would allow us the opportunity to be more direct about the issues that we have with this and how they could be resolved. At that point it will perhaps be clearer as to what the intentions are.

My understanding is that that is the situation now. In devolved areas, we can legislate for that and require procurement to follow certain processes, but for reserved or cross-border bodies that are outside the scope of devolved procurement legislation now, that will continue. We have that difference at the moment and nothing will change in that regard anyway.