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I welcome to the meeting our second panel of witnesses: Paul Bradley, policy and public affairs manager at the Scottish Council for Voluntary Organisations; David Melhuish, director, Scottish Property Federation; and Alastair Sim, director at Universities Scotland.

Thank you all for your written submissions to the inquiry. There are no opening statements so we will move straight to questions.

I will begin with Universities Scotland. I found all the submissions to be really interesting and there is a great contrast between them, so the committee will probably ask you all a similar number of questions.

Mr Sim, your opener is quite direct. The last paragraph on the first page says:

“Put bluntly, other areas of Scottish public life that should be prioritised for investment, including higher education, look as if they will have to fight for the leftovers from the highest priority commitments.”

That is on the back of your saying that the Scottish Government’s priorities should include universities and higher education. The issue with that is that every single organisation—and I mean every single organisation—that comes to the committee says the same thing: we need more resources for our sector. You just have to fill in the name of the sector.

You have made arguments for why you think it should be the universities sector, but where should the resources come from, and how much additional resource should the Scottish Government be putting into the sector?

I appreciate that, and you have made a strong argument, but the two questions that I asked initially have still not been answered. How much additional resources are needed and from where should they come? In the earlier part of the meeting, we discussed preventative spend. A lot of the growth that you are talking about will not come this year or next, but the money will have to come out of the budget this year and next. Where should the resources come from? Local government has made a passionate plea and the SCVO is also keen to have additional resources.

Should the Scottish Government be planning in the resource spending review for additional student numbers, both domestically and from overseas? Would you like a growth programme to be built in? If that is the case, how would you envisage that? Would it be 1 or 2 per cent a year higher? What would the balance be? How do you think the Scottish Government should balance the number of Scotland-domiciled students with those from elsewhere?

You go on to refer to

“the well documented change in consumer behaviour”

and you talk about

“The loss of economic productivity and tax revenue associated with these falls in activity”.

Thank you very much for that.

Mr Bradley, in response to the question

“Does the framework properly reflect the current economic and political context?”

the SCVO stated that

“there is little recognition of the integral role played by the voluntary sector in social and economic life”.

From whom is there little recognition? My understanding is that there is a lot of recognition of that role at all levels of Scottish society, so can you expand your thoughts on that a wee bit?

You are probably aware that last Thursday we took evidence from the Secretary of State for Levelling Up, Housing and Communities, Michael Gove. I put directly to him some of the concerns that SCVO raised in its submission. SCVO and the voluntary and third sector that it represents makes a multibillion-pound contribution to Scotland in cash terms—not to mention the phenomenally important social aspects.

Were you reassured by Mr Gove’s responses? When I put the issues to him, he indicated that the UK Government wants to do a lot more to support the sector.

That appears to have exhausted the committee’s questions. I thank our witnesses for their excellent evidence today.

Was any explanation given as to why the funding came so late in the financial year?

I hope that they will be reassured by that. As you will understand, what has made so many organisations nervous is that, up until this meeting, they have not had any communication. I understand that they have tried to communicate with your department but they have not been able to receive the kind of assurances that you have just given me, which is why they have contacted me as convener of the committee.

Moving on, I note that the Scottish Council for Voluntary Organisations says that it remains “in the dark” about how the UK shared prosperity fund will reach its sector, which has benefited greatly from European funding over the years. How does your department intend to engage with Scotland’s voluntary sector at the strategic and delivery level to maximise the impact of the UK shared prosperity fund?

That exhausts questions from members. I have a few more to wind up, but not too many, and I will give you the final word, secretary of state.

Following on from John Mason’s question about inflation, I note that the prospectus for the levelling up fund, which was published in March 2021, explained that

“Once funding awards are decided, relevant local institutions are responsible for their delivery.”

It states:

“Further contributions from the Fund will not be provided to meet cost overruns after funding has been agreed.”

That was in March last year. Is there an update on that position? You seemed to hint in your answer that there is a possibility of flexibility. We are now in a situation in which we could face 7 per cent inflation, and I am concerned about sustainability. We do not want to have projects that are 80 or 90 per cent complete and end up with white elephants because there is no money available to finish them. It would not help the UK Government, local authorities, the Scottish Government or whoever if that was the case.

Are you telling us that that position has softened? You talked about fiscal discipline, which we all accept is important. However, are you saying that that is no longer written in tablets of stone, as it appears to have been in March last year? I appreciate that the inflationary situation may not have been envisaged a year ago. We might say to people that they just have to manage 2 per cent inflation, but we are getting to 7 per cent, and who knows what the impact of today’s conflict will be? How will that be managed?