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I absolutely have concerns about it, but I come back to the point that I made at the start of the meeting. I am not happy with the budget settlement that I have. Ideally, I would love to plough more funding into some more of these areas. The fact is that we have the envelope that we have. There are similar challenges across Government, and I know that none of these decisions are easy. Of course, it concerns me.

Some of the cuts to my capital budget also concern me, but, ultimately, we have to try to find a way to work within the envelopes that we have, and that will be no different for HIE. I will work with HIE and with Neil Gray, the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, to make sure that we are still maximising the positive impact that we can have on rural and island areas.

Thank you, convener, for inviting me to talk about the regulations.

The purpose of the instrument is to amend legislation relating to the marketing and production of wine and wine products. First, it will introduce rules that will regulate how products that are marketed as “ice wine” must be produced, with the rules including a definition of ice wine. Secondly, it will update the lists of approved oenological practices that can be used to produce and conserve wine and wine products that are marketed in Scotland.

The relevant existing legislation happens to be European Union retained law, which, from 1 January, will be known as assimilated law. The ice wine provision in the instrument is required because the United Kingdom is acceding to the comprehensive and progressive agreement for trans-Pacific partnership, and the provision is required for compliance with the terms of the CPTPP. Although ice wine is not produced in the UK, it is imported, and a definition of it is required to ensure that consumers can identify products that are made according to specified criteria that apply to its production.

The provision in question amends regulation EU 2019/33 to provide that products may only be marketed in Scotland as “ice wine” or similar terms if they have been produced

“exclusively from grapes naturally frozen on the vine.”

The same provision is being made across Great Britain.

Also included in the instrument are changes to approved oenological practices. Regulation EU 2019/934 authorises specified oenological practices that can be used to produce and conserve wine. The instrument amends the regulation to update those practices to reflect updates to the International Organisation of Vine and Wine’s—or OIV’s—approved methods, which largely already exist in EU law.

The UK is a member of the OIV, and its recommendations form the basis of domestic, EU and many third countries’ wine production rules. The instrument will ultimately ensure that wine producers and importers have access to the latest technological developments and wine-making practices, in line with EU law. The UK and Welsh Governments are making the same changes for England and Wales.

Before laying the instrument, the Scottish Government carried out a consultation through Citizen Space and directly contacted major stakeholders. The consultation ran from 31 August to 8 October. Although major stakeholders such as Wine GB and the Wine and Spirit Trade Association did not respond, they had previously responded to the UK Government’s consultation on the proposals, and the response to that was generally positive. There were five respondents in total to the Scottish consultation, which came from individual members of the public, and their responses advised that there would be either a positive impact or no impact from the proposed regulatory changes. The instrument was also notified to the World Trade Organization technical barriers to trade committee, but no comments were received.

I hope that my comments have been helpful in outlining what the instrument is for. I am, of course, happy to take any questions that the committee might have.

I will give a bit more detail on that. As I outlined in my opening comments, the instrument is, in essence, split into two parts. The definition of ice wine will not really have an impact on producers here, because it is not made in Scotland. It is quite a niche product that is, I think, largely produced in countries such as Canada and Germany.

From the consultation responses that we have received, it seems that there will be no impact in relation to the definition. Obviously there will be an impact on producers that use artificially frozen grapes, as they will no longer come under that definition, but, again, that will not affect our industry in Great Britain as far as I am aware. Perhaps Kevin Matheson has more to add on that.

The changes that are being proposed to oenological practices have been broadly welcomed, and there has been a positive reaction to them. They have already been implemented in the EU, where they have been seen as benefiting exporters and bottlers and encouraging innovation. Again, I do not know whether Kevin Matheson wants to add to that or whether I have adequately covered it.

I want to make sure that we are absolutely clear on what we are talking about today. The last thing that I want to do is put a fear into the industry that levy rates will increase to the absolute maximum that is allowed by the ceiling. This is a technical order. We are raising the ceiling; the levy rates are not being increased.

I come back to the fact that any rise in the levy rates is a matter for QMS and its discussions with its levy payers about that. A proposed rise must come to the Scottish ministers for approval. As I have set out, that is an annual process.

It would have been very difficult for us to prepare a BRIA. As you set out, I wrote to the committee to outline why we did not undertake a BRIA. Had we done so, it would have been purely speculative. There is no proposal on the table for an increase in levy rates. We do not know whether such a proposal will be made or what it would be, so it is not possible for us to make a definitive assessment or to say that there would be a direct impact on businesses when we do not know whether the levy will rise.

The roles and responsibilities in relation to that are set out in the legislation. That is why I am appearing before the committee today to give evidence on the order, which is about raising the ceilings. However, I will be more than happy to keep the committee updated. QMS is undertaking engagement across the country through a range of events to discuss the issue of levies, as well as its wider strategy, with industry. That is a discussion that QMS needs to have. We will be informed and approached if it considers raising the levy, and I will be happy to keep the committee updated.

What is key there is who was consulted and the fact that there were follow-up discussions with the two people who responded to the consultation. It is critical that we engage with the people who would be most impacted by the amendment order, who are the processors. There was also a response from NFU Scotland. There were follow-up discussions and meetings with the two organisations to discuss their concerns about the order. Again, this is about their discussions with QMS should the levy rates be raised. We are talking about a technical order and raising the ceilings, and that was the discussion that we had.

Michelle Colquhoun might want to say something further on that.

It was important that we consulted on the raising of the ceiling and that the consultation was, quite rightly, a separate process from consideration of raising the levy, because they are distinct processes. It is important that we set out that process and that we undertook the consultation in the way that we did.

First, QMS is not a Government-funded organisation. The information that you ask for can be interrogated by the committee or by any member of the public in QMS’s audited accounts, which are published annually.

Again, QMS would put a proposal to me and then it would be up to Scottish ministers to agree on it one way or the other. I am just trying to set out how that fits into the overall process.

Again, we are going down all sorts of different roads here and speculating about what might or might not happen. We have not been in that position in the past. The proposals are put to Scottish ministers for approval.

QMS is a responsible body, and I know that it would undertake that engagement. As I have said, I know that, in this case, that engagement has already started. I do not think that QMS needs any prodding from me or to be told to engage with the industry—it is doing that now. It is in its best interests to do that and to have a good relationship with levy payers.