Seòmar agus comataidhean

I agree about the importance of the twin crises that we face—nature loss alongside climate change. Of course, climate change drives a significant part of nature loss.

Our budget line for biodiversity and natural infrastructure has increased significantly over recent years—there has been a 55 per cent increase overall. It includes £55 million of new funding to extend the nature restoration fund to £65 million.

As you rightly said, that is a multiyear fund. It will work across Scotland, and its objective is to help to create green jobs, to reinvigorate local communities, to reinforce Scotland’s green recovery, and to support large-scale multiyear, multipartner projects that can deliver transformative change. Part of the reason for its being a multiyear funding package is to give the sector reassurance of the level of funding that will be available in future years, to allow some of the long-term projects to be taken forward. Many nature-based projects are long-term ones, so we have sought to provide a funding profile that gives assurance about that.

I do not have to hand further breakdowns of how the nature restoration fund will be utilised at a lower level. However, I would be more than happy to take that away, and I will try to provide more detail, if that would be helpful.

There is.

You raise an important point. There is a capacity issue in the peatland restoration sector. It is a fairly new sector, and a limited number of companies or businesses operate in it. There is also a very small window in which peatland restoration can take place each year, which means that businesses that are involved in peatland restoration often do that work as an add-on to other things that they are involved in, because it is not sustainable in its own right. I think that the work has to be carried out in the September to October period. The sector is growing, and there are limitations in the skills that are available in it. Peatland restoration work is not viable on its own, given the very short timeframe in which it can be carried out.

There are capacity issues in the industry. I am not sure whether that is to do with people not being willing to take up the opportunity to restore peatland. I am not saying that that is not an issue, but I am not sure that it is one of the main issues. I suspect that a big part of that is access to skills and businesses being able to flex to doing peatland restoration work for a short period of time each year. That means taking their equipment away from the other things that they would normally do for the short window of time in which the work can be carried out.

You will be aware that we withdrew the proposed bill because it was criticised on the basis that it was not ambitious enough and would not drive forward the circular economy sufficiently. We decided to withdraw it and reintroduce a different piece of legislation. That is part of the background to the bill.

I expect that bill to come in the early part of this parliamentary session. I cannot say much more than that, because we have to go through a process in Government of agreeing landing slots for bills coming into Parliament and our future programme for government.

I assure you that the bill is viewed as one of the priority bills in this parliamentary session. Given the importance of making progress on the issue, I am of the view that it needs to be one of the earlier bills in the session. I will not go much further than that, but I hope that I can reassure you that it will be in, I would say, the first half of this parliamentary session.

This is partly tied up with the warm home discount scheme. For some time now—indeed, over the past year—we have been pursuing with the UK Government issues such as the future of the scheme and how it should operate, and we have only started to get a response from it. I hope that in the next couple of weeks we will be able to give a clearer indication to the sector about what will happen post-April, but, as I have said, the issue is partly tied up with some of the work that we have been doing on the UK Government’s warm home discount scheme and the reforms that it is planning to make in England and Wales. We want the system to be much more aligned with Scotland’s needs, but it appears that the UK Government is not prepared to allow that to happen.

Our capital budget reflects the cut that we have experienced in our overall capital spend; it is a cut of more than 9 per cent in our capital expenditure from the UK Government, so there has to be give somewhere and we have to reprioritise. I hope that you can see that we are pivoting our capital investment into the areas that can support the green recovery in a much more significant way. We have sought to protect and invest in those areas; I go back to the capital investment that we are making in the circular economy and the investment of £1.8 billion that we are making in the decarbonisation of properties. We are also investing in active travel infrastructure and decarbonising our rail network.

As well as having to sustain a cut in our capital budget, we are pivoting our capital investment to the areas that will help us to deliver our climate change agenda. It has an impact when capital is restricted, but we are trying to balance it out in a way that helps us to deliver our climate change ambitions. I firmly believe that the priorities that we have set out in the budget demonstrate that very clearly and highlight the Government’s intent to make sure that that is the direction of travel.

Let us consider the budget assessment of capital spend, for example. I think that around 92 per cent of the capital spend in the budget is viewed as being low impact or neutral in respect of carbon. That is an overall, positive reduction in carbon impact. That comes through in the carbon assessment process for the budget.

For individual projects, let us take peatland restoration as an example. Our commitment to delivering on the 250,000 hectares is part of our sectoral envelope for meeting our 2030 target, and it is part of our climate change plan. In developing the climate change plan, various envelopes went through an assessment, and part of that involved assessing the impact that individual policies would have in order to see whether they would align with getting to our target of 75 per cent by 2030. The 250,000 hectares figure was viewed as being one of the contributors to meeting that particular target.

There is a link between the budget and the policy. The policy is set within the climate change plan, and the budget helps to finance that. The carbon assessment that is carried out for the budget allows us some insight into that.

If we remove funding from policy areas that we know contribute adversely to climate change, for example, and use that for measures that will help to tackle climate change and achieve our targets, it is self-evident that there will be a positive outcome. However, it is always difficult to pin down exactly the net benefit that will come from an individual project. One example is peatland restoration. We know that peatland restoration will have a positive impact and that there has been a level of assessment, but it can be difficult over time to pin down how we should shift money around in a budget and why that money has made a bigger contribution than the money that we have taken away from another area.

In the last EU multiyear financial framework, Zero Waste Scotland received £34 million of European regional development funding. Zero Waste Scotland is taking forward work to identify how it could bridge that potential loss of funding in the future and whether there are ways in which it could lever in private sector funding to help to close that gap.

As it stands, there is a lack of clarity around how the shared prosperity fund will operate in Scotland, what its priorities will be and how they will be informed. Will Scottish ministers have a role in setting those priorities? Will it be a lower level of funding than was previously available under EU regional development funding? There is a lot of uncertainty around the issue.

We need to see more progress in the area. We are not in line with the targets that we set, which is why we committed an extra £70 million to invest in our circular economy and recycling in particular, and there needs to be further investment in the public and private sectors.

Until we have clarity around how the shared prosperity fund will operate, there could be a significant loss to the sector if funding is not made available to replace the £34 million that was previously provided under the European Union funding scheme. We still do not know how the UK Government intends to operate the shared prosperity fund and what role Scottish ministers will have in setting its direction in Scotland. A drop-off in funding could have a negative impact on the sector.

I did not see the programme myself; I intend to watch it. I know that SEPA is promoting it to highlight the complexities and the challenges within the sector.

It would be fair to say that the movement in SEPA’s budget is a reflection of the one-off capital uplift that it received last year. That is why there is a realignment within its budget. If you take out that specific capital uplift that it received last year and look at the budget this year, the budget continues to rise. It is also worth keeping in mind that about 50 per cent of SEPA’s income comes from its regulatory function and the charges that it applies for that function. It would be wrong to characterise this as a cut to its budget; it is a movement in the budget, because last year SEPA received a capital uplift specifically for a couple of projects, which sits only within that single financial year.

SEPA continues to make good progress in recovering from the cyberattack. A range of assessments have been carried out on its impact on SEPA’s operations and recovery. We are ensuring that we learn from SEPA’s experience so that other public and private sector organisations can learn the lessons from what was a serious and sustained cyberattack targeted on the organisation. That is being done through our cyber network; the Deputy First Minister is leading on that piece of work to ensure cyberresilience across the public sector in general, as well as working with the private sector. It is a strong partnership and part of that work is about making sure that lessons are learned and that we help to support other public sector agencies and private sector companies to learn the lessons and to put in place measures that can help to minimise the risk of them being exposed to a similar attack.

I reassure you that we are working to try to make sure that we learn the lessons from the SEPA attack across the public estate and the private sector.

I will just unpack some of those issues. It is not long since we published our heat decarbonisation strategy, which was formed following a public consultation that included our colleagues in local government. They had an opportunity to feed into that process and they are able to continue to feed into our policy development in that area. I therefore do not accept the idea that local authorities have not had the opportunity to feed into national policy direction and our national strategy on that. It was an open consultation for them to participate in and to feed into, which they have been able to do.

Secondly, we commissioned work, which was carried out and which involved housing associations and, if I recall correctly, the chief executive of Inverclyde Council, to look at some of the specific challenges that local authorities faced around the heat decarbonisation agenda. The report from that was submitted to the Scottish Government last year, and it fed into the development of our strategy. Again, therefore, local authorities have been involved in helping to formulate that policy and our thinking around it and some of the challenges that we face.

I realise that the scale and nature of the challenge are extremely significant not only for local authorities but for our social housing providers. There are hundreds of social housing providers throughout the country that all face similar challenges. That is exactly why we committed to setting up the public energy agency to support local authorities and social housing providers.

One of the purposes behind the public energy agency is to bring together the skills and expertise and develop the advice and information that local authorities and social housing providers require to assist them in moving forward with the agenda, so that we do not have 32 local authorities all trying to do it differently and reinventing the wheel over and over. It will co-ordinate that work, provide expertise and provide the necessary guidance and support.

Your final point concerned the green heat finance task force that we are setting up. I hope that, in the next couple of weeks, we will be able to set out the details of its remit and membership. It has been specifically designed to consider how we can lever in external financial support alongside public sector investment in decarbonisation to support colleagues in the public and private housing sectors. They will have an opportunity to feed into that and I expect local authorities to have a role in the task force to ensure that their voices are heard at the heart of developing any recommendations that the Government might implement.