Seòmar agus comataidhean

Yes, and there is also the fact that the problem is persistent. That was a speculative defence on the sector’s behalf, but we could also mount some speculative prosecutions. [Interruption.]

Thank you very much again for your contribution this year—it is much appreciated.

The Scottish tax gap is the difference between what should be paid and what is actually paid in tax. There have been discussions over the years about whether HMRC would start to collect that Scottish-level tax gap data. There is a suggestion in this year’s NAO report that it is considering that. Do you get any sense of how close we are to that figure being calculated and being part of the annual report? This committee would find that very useful indeed.

Is that due to the block grant adjustment?

We—or, perhaps, the committee in the next session—will keep that area under active review, because it is important.

Graham Simpson has some questions for you.

10:00

I will speak to amendments 57, 67 and 68. I have been a member of this Parliament long enough to know that, when we set targets, they are often observed in the breach rather than in the observance, whether it is in the national health service or child poverty. Sometimes, targets are dropped altogether—look at emissions targets and climate change—but they nonetheless provide a statement of intent.

For the avoidance of doubt, I have suggested that one of the targets that we should include—an appropriate target—would be to see a doubling of the size of the worker co-op employee ownership sector by 2030, which is entirely in line with the Government’s stated policy, going back to the programme for government 2021, which talked about a target of 500 employee-owned businesses registered in Scotland by 2030, up from around 200 in 2024. I think that it is a perfectly reasonable target to set. It is commensurate with the Government’s own stated position. It helps in our drive for data collection, which is widely understood to be important in the passing of this legislation. It is also consistent with the approach that is taken by Parliament with the national strategy for economic transformation. Amendment 57 is entirely in keeping with that approach.

My other two amendments in the group relate to reviewing legislation within the first year after royal assent to the bill has been granted. Amendment 67 calls for the Government to consider business tax reliefs, as well as the small business bonus. There are other non-domestic rates exemptions already on the statute book for properties, for example, that contribute towards net zero targets. There is a right-to-buy relief for crofting communities, for example, upon conversion. I am simply suggesting that we take those existing provisions and look at how they might be applied to encourage the growth of the employee ownership sector.

I also draw to the committee’s attention the McInroy review group report commissioned by the Scottish Government that came out in September 2024, which said in its recommendation number 17 that the UK and Scottish Governments should explore potential tax relief. Amendment 67 simply seeks to make sure that that recommendation is not lost or left behind.

Similarly, and finally, amendment 68 is a request to look at procurement rules. When Parliament passed legislation on public procurement in 2014 and 2015, seeking to transpose the 2014 European Union public procurement directive, there was some debate about whether there should be reserved contracts to certain sectors of the social economy. The minister and I have worked together on a business in Larbert—Haven Products—which is a supported business. We have managed to keep it afloat and tried to win public contracts for it.

Supported businesses are covered by the existing legislation. Although the EU directive provided for mutualistic and social enterprises to be an option for reserved contracts, that option was not exercised by the Parliament when the regulations were set in 2015. All that I am calling for in amendment 68 is for that decision to be reviewed. Let us see whether we cannot look at a reserved contract status for certain types of social enterprise, employee ownership, worker co-operatives. That would align with EU policy, but would also be the right thing to do. Again, amendment 68 is simply calling for the Government to review procurement rules in the context set out in the amendment within 12 months of royal assent.

Thank you very much, convener, and thanks for the opportunity to move my amendment.

Amendment 60 is an attempt to change the status of the measures that are set out in the community wealth building action plans, from measures that “may” be covered to measures that “must” be covered. I think that it is important that the action plans must include public procurement, must include land ownership diversification, must include promoting equality, employment opportunities and so on, and must include promoting employee-owned businesses.

My approach reflects two of the recommendations that the committee made in its stage 1 report. The first one, in paragraph 54 on page 10 of the report, talks about the need for

“more consistent adoption of community wealth building”.

Having musts rather than mays points us towards that more consistent adoption.

I am also reflecting paragraph 69, on page 13 of the report. In the context of the statement that needs to be prepared by the minister, I think that that spirit transfers across to community wealth building action plans, where the committee recommends that

“the Bill should clearly articulate what this statement will include, rather than what it ‘may’ include.”

Amendment 60 is an attempt to introduce that approach to action plans. It is also an amendment that is supported by Co-operatives UK.

Amendment 62 seeks to add Co-operative Development Scotland as a relevant body. It remains the co-operative development agency for Scotland, established in 2006, and is under the wing of Scottish Enterprise, which was the minister’s defence in arguing not to include it in amendments last week. However, we are talking about community wealth building, and co-operative development is absolutely central to that.

Last week, I mentioned that the staffing level at CDS, at Scottish Enterprise, has shrunk and shrunk and shrunk over the years. It is now down to a bare minimum of, I think, one and a half members of staff. I compared that with the level at the Wales co-operative development centre, Cwmpas, which has 80 staff working on co-operative development. I suggest that the Scottish Government needs to reflect on that, and I ask the committee to take that into account.

Absolutely—had the bill had a wider scope, I would have introduced amendments that would have called for Co-operative Development Scotland itself to be established on a statutory footing. Back in the days when it was established, there was some discussion about whether it should be the subject of primary legislation. In order to get things moving more quickly, it was decided to set it up within Scottish Enterprise without legislating for it explicitly. So, there is some history to that.

Two other organisations need to be included in this section of the bill, one of which is the Scottish National Investment Bank. I return to the report from September 2024 on inclusive democratic business models, in which recommendation 11 was that the Government should grow

“the role of the Scottish National Investment Bank (SNIB) to intentionally and specifically support”

inclusive democratic business models. I also note that this committee’s report after its own deliberations on the bill at stage 1 included, at paragraph 82, the finding:

“The Bill and its accompanying documents do not set out the criteria used to determine the relevant public bodies. Consequently, the Committee was unclear on how the Scottish Government’s list was developed”.

That view was also reflected in paragraph 89 of the committee’s stage 1 report, which recommended:

“The Committee asks the Scottish Government to consider the organisations identified as having been omitted from the list of relevant public bodies and to provide the rationale for their exclusion. The Committee is particularly interested in understanding the reasons for not including the Scottish National Investment Bank, given its prominent role in supporting economic development.”

How is Skills Development Scotland a relevant body, whereas the Scottish National Investment Bank is not?

My final amendment in this group, amendment 64, would add local government pension schemes to the legislation. For example, the Strathclyde pension fund is a defined contribution scheme worth £31.3 billion—the assets that it manages are to the value of £31.3 billion. Local government pension schemes across Scotland are valued at various levels; one valuation that I saw said that they are worth £60 billion, which is the equivalent of an entire year’s budget for the Scottish Government.

A glimpse at the possibilities that local government pension schemes could offer has been provided by Preston City Council, which is one of the pioneering community wealth building councils. It has pioneered local investment. I also reflect that, in Falkirk in 2015, the local government pension scheme made a significant investment in housing. That is an example of reinvesting in the local economy rather than simply investing in derivatives in the far east, as often happens.