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Basically, you are suggesting that there will not be any gap in funding. Is that correct?

You mentioned capacity funding of £125,000 for local authorities. I was advised that that did not go anywhere near the real cost of bidding and the work beyond that. I know that there will be a second round of that funding, but would you agree that there are some concerns, particularly in smaller local authorities that do not have resources, that they might have to buy in expertise to prepare bids, which again takes longer, and that that could be a disadvantage? There are 32 local authorities and in 2021 there were only eight awards, so is it worth their while going down that track if they are not going to get anywhere near an award and might be significantly out of pocket, which could have an impact on their council tax payers and service providers?

Will you personally be speaking to Scottish ministers?

Your visit has created a wee bit of a stir beyond Holyrood, I have to say. Earlier this week, I was contacted by the European Marine Energy Centre, which is based in Orkney and is the first and only accredited wave and tidal test centre for marine energy in the world. Over 16 years, the centre has contributed £306 million to the UK economy, supporting almost 200 jobs. Between 2016 and 2020, EMEC received more than £17.4 million from Europe, which was 52 per cent of its total funding.

However, EMEC is deeply concerned. It says that your levelling up white paper, which was published on 2 February, suggests that the UK shared prosperity fund will be allocated entirely through local authorities. That creates a real risk that EMEC and other unique organisations that are crucial to innovation and dealing with net zero will miss out on crucial funding. How will the shared prosperity fund or any other mechanism work to ensure that that does not happen? You said that there might be other funding streams, but if that is the case, it has not been communicated to organisations such as that one.

My understanding is that the £800 million covers all three devolved nations, so it is £450 million for Scotland.

Okay. I am just wondering why the Treasury Committee expressed such great concerns. It seemed to be of the view that that would not happen and that there would be a significant reduction in funding, and the Welsh Government’s analysis backed that view.

I think that colleagues will want to explore that a little further, but I will move on.

The UK Government’s shared prosperity fund is intended to replace, from April, the European Union structural funds that have been lost as a result of Brexit. However, the Scottish Government has yet to receive any detail of how much funding will be allocated to Scotland, and the reality is that the Scottish Government has not been consulted and nor have Scottish ministers had any role in investment proposals or decisions on matters that are devolved to the Scottish Parliament. New guidance on the shared prosperity fund offers no evidence of respecting devolution or acknowledging the Scottish Government as an equal partner. Why?

When the levelling up fund was launched, which was less than a year ago, local authorities were given a very short window in which to prepare bids. I know that there was a big panic in my area to get the bid together. There was a meeting that involved the chief executive, me and the MP—who happens to be my wife, so there was not really any difficulty in getting co-operation. Although the local authority has a different political tint, we all agreed absolutely on the priority for our area, and we secured significant funding, for which we are very grateful. However, what would have happened if the MP had taken a completely different view from mine and that of the local authority, for example? There is a suspicion, given the documents relating to the process, that MPs in effect have a veto. I want you to address that issue specifically.

If you give local authorities only three or four months to prepare bids, it makes things very difficult for some smaller authorities. I know that they can share resources across boundaries, but sometimes they might want to invest only in their own area. They might not have the necessary in-house capacity, which will put them at a disadvantage. Smaller and poorer authorities could struggle in such circumstances. Did you really, in all sincerity, believe that the timescale that was given for the first allocation of the levelling up funding was adequate to ensure that the best possible bids were put together? You might want to rethink that and make more time available in future.

I have spoken to the chief executive since the award was made last October, and he has said that, even though four months have elapsed, there is no money yet. There are a number of hoops to jump through, including a final business case. One of the issues with the funding is the amount of bureaucracy, which is ironic given that the whole purpose is to try to minimise that.

I realise that that was a fairly convoluted question, secretary of state.

Okay. I want to move on to another subject that we have touched on a wee bit. The levelling up funding white paper explains that the UK Government is to embark on

“a process of sustained and systematic engagement and consultation with a wide range of stakeholders, including devolved administrations, on the White Paper.”

It states:

“We will be setting out further detail on a number of these policy commitments in future publications. In addition, we will introduce legislation to Parliament to underpin in statute the changes fundamental to levelling up, alongside wider planning measures.”

We touched on Audit Scotland. In the legislation, will Audit Scotland have a formal role in looking at how effectively funds are spent in Scotland?

We are all pussycats up here, you know.

I thank you formally for coming along in person, which is really important to the committee. We really appreciate people making the effort to do that. I know that you could have spoken to us virtually, but that would not have had the same impact and we would not have been able to scrutinise quite as effectively. The committee has an important role to play in scrutiny, and we look forward to working with you and your colleagues in the months and years ahead. Thank you very much.