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I will come to that in my remarks, if that is okay.

The dialogue that we have had so far this morning speaks again to the strong alignment across the Parliament and the committee to improve the system, which is working very well for many just now but could work even better for many others. I look forward to continued constructive engagement on that throughout the remainder of the bill process.

As this is quite a large group of amendments, I would be grateful for colleagues’ patience as I work through them.

Amendment 11, in my name, is a technical amendment that responds to SDS’s written evidence to the committee at stage 1. SDS raised the question whether the bill’s provisions limited training providers’ ability to generate any profit in the course of their business of providing training in the delivery of national training programmes or apprenticeships. The policy intention is that legitimate and proportionate profit is not to be prohibited, and the bill’s initial provisions were not intended to imply such limits. That is why we have lodged amendment 11.

My amendment 12 allows the SFC to limit managing agent fees. During the stage 1 evidence-taking sessions, managing agents set out how they used the funding that they received, with one outlining to the committee that they retained 40 per cent of it. That was, I know, of particular concern to Ross Greer; George Adam raised the matter last week; and other members of the committee have been interested in it, too. Indeed, Ross Greer’s amendment 51 in group 4 also addressed it.

There is a need for managing agents, and they are an established part of the skills system. I acknowledge that issues can arise from the proportion of fees that some of them retain when securing the delivery of training through subcontractors. As I want to ensure that as much public funding as possible goes to the front-line delivery of education and training. I have lodged amendment 12, under which the SFC must determine the appropriate percentage that a managing agent may retain and make that a condition for funding.

I think that that is a proportionate approach that balances the legitimate costs of managing agents with the need to use public money wisely. I believe, too, that it provides the flexibility to respond to individual contracts in practice in a way that putting a number into primary legislation simply would not have done. I therefore encourage members to support amendment 12.

I also want to address Ross Greer’s comments last week about the drafting of amendment 12. In his view, it is vague; I would argue, in short, that it is not. Its drafting shows a deliberate and clear intention. It just takes a different approach to Mr Greer’s amendment, and I hope that the member will be open to it.

Amendment 12 deliberately gives discretion to the SFC to respond to individual circumstances instead of setting a cap in primary legislation, which, even with the ability to change such a cap by regulations, would be arbitrary and inflexible. The amendment also provides that any subcontractors used to deliver training must comply with the criteria in the bill for what makes a training provider, and the amendment is deliberately framed to stipulate that no training provider is entitled to retain more than the “reasonable” fee. That framing is designed to close down the possibility of a provider getting around the restriction by creating some kind of artificial training scheme in order to pass along the funding or by claiming that a subcontractor is not a training provider in the true sense, thereby getting a higher percentage. For all of those reasons, I encourage members to vote for my amendment 12, in preference to Ross Greer’s amendment 51. I hope that that explanation is helpful to Mr Greer, too.

On amendments 30 to 33, in the name of Willie Rennie, I have listened carefully to what the member has said about them, and it appears that their purpose is similarly concerned with limiting managing agent fees. I believe that amendment 12 will do that in a proportionate way, without requiring additional complex regulations that might not allow for appropriate flexibility. In my view, the SFC is best placed to assess what is reasonable in the context of particular arrangements.

Therefore, I ask Willie Rennie not to move his amendments, but I am happy to engage with him further in our dialogue ahead of stage 3. I note that he has had engagement with SELECT on the provisions in his amendments, and I would be keen to hear more from him, in due course, about its concerns.

I support amendments 9 and 10 in the name of Jackie Dunbar. Her amendments ensure that the term “work-based learning” encompasses all the types of activities and learning that currently constitute foundation apprenticeships. I want to take this opportunity to stress that the use of the term “work-based learning” in the bill does not seek to diminish or devalue what we currently know as foundation apprenticeships. The Scottish Government remains committed to increasing the skills of Scotland’s young people through work-based learning; indeed, that is very important, as I argued in our previous session on the bill.

I listened carefully to the evidence given to the inquiry on graduate apprenticeships. Universities will be able to provide work-based learning as appropriate, and current and similar arrangements for graduate apprenticeships will be available. The bill simply adds options. For example, a university could deliver work-based learning and be funded to do so under section 5.

Graduate apprenticeships will be covered by the definition of “Scottish apprenticeship”, not the definition of “work-based learning”. Officials will be engaging with Universities Scotland next week, when there will be more discussion on that point.

In the bill, a managing agent is a training provider, and I value the important role that training providers and managing agents play in the current system. I would also be interested in having further engagement, and I do appreciate the constructive engagement that we had from Mr Rennie ahead of the amendments being lodged. As part of our dialogue ahead of stage 3, I would like to listen to more about those points, and I would be grateful if we could use that time to have more discussion.

Several other amendments in the group relate to foundation apprenticeships and work-based learning. Amendment 95, in the name of Miles Briggs, would bring a reference to “foundation apprenticeships” into the definition of “work-based learning”. The definition has already been designed to cover foundation apprenticeships, and will do so in a better way through amendments 9 and 10. Adding the definition proposed in Miles Briggs’s amendment and introducing provision for foundation apprenticeships when we already have provision for work-based learning could be confusing and could risk creating unintended consequences. We have also had a discussion about how we do not want to have the term “foundation apprenticeships” in the bill. Therefore, I encourage Mr Briggs not to move amendment 95.

There are several amendments that seek to replicate existing legislative requirements on the SFC to have regard to various matters in section 20 of the 2005 act or to collaborate with various bodies listed in section 22 of that act. They include amendment 100, in the name of Stephen Kerr; amendment 102, in the name of Miles Briggs; amendment 106, in the name of Miles Briggs—an amendment that would duplicate the provision in amendment 47, in the name of Ross Greer, which I intend to support when we get to that group; amendment 107, in the name of Miles Briggs; and amendment 109, in the name of Pam Duncan-Glancy. I do not consider it necessary to duplicate the current requirements. However, if members do not move their respective amendments, I will undertake to review what is covered by section 20 of the 2005 act and consider their respective issues ahead of stage 3.

Other amendments seek to make legislative provision in areas that would be better handled administratively. I agree with the spirit of those amendments, but putting such matters in legislation would limit the ability of future Governments to change tack and adapt to different circumstances, or for the SFC to have a flexible and agile operation. Those amendments include amendment 101, in the name of Miles Briggs, which would require the SFC to take account of “good practice”. It is unclear what such “good practice” would be or where it would derive from, and, in any case, we already expect the SFC to do that in how it operates in practice.

Amendments 104 and 105, in the name of Miles Briggs, concern SME grants, which are matters for the terms and conditions of grant funding and/or guidance from Scottish ministers. Amendment 115, also in the name of Miles Briggs, relates to cost benefit analyses and equality impact assessments, which are already a requirement for new policies and, therefore, are already catered for.

I am sympathetic to Miles Briggs’s amendment 116, but it is not needed. Transparency, accountability and cost effectiveness will be central principles in the delivery of work-based learning. Where it is necessary to say anything additional about those principles, that can be done through guidance or in Scottish ministers’ terms and conditions of grant to the SFC.

Again, the issue covered in amendment 120, in the name of Daniel Johnson, is best dealt with as an administrative matter. It is not appropriate for the bill to spell out in detail all the matters that should be covered in the SFC’s annual report. The amendment covers one important matter, but there are many others of equal importance.

A number of amendments attempt to protect expenditure on apprenticeships and work-based learning. The proper place for determining budgets is the Scottish Government’s budget bill, following the budget process. Amendment 34, in the name of Willie Rennie, would, in effect, duplicate the Scottish Government’s budget bill process and the process by which money is moved from one budget line to another through the autumn and spring budget revisions. The bill includes specific powers for ministers to provide grants to the SFC to support apprenticeships and work-based learning, and its provisions also expressly require that such grants issued by Scottish ministers be administered by the SFC only for those specified purposes. Scottish ministers set out their high-level priorities for the SFC through the annual letter of guidance. Together, those provisions make clear the purposes for which the SFC must use the funding provided to it.

I refer back to what I said about the letter of guidance and the stage 2 discussions that we have had on how the apprenticeship committee will direct the SFC’s considerations with regard to the deployment and implementation of funding for apprenticeships. I will say a bit more about those points later, so I ask Stephen Kerr to bear with me.

Amendment 103, in the name of Miles Briggs, would require 75 per cent of any grants made by the SFC for Scottish apprenticeships and work-based learning to be given to colleges of further education. That would represent a significant change of emphasis from the current model, in which the majority of training is provided through independent training providers.

Whatever the rights and wrongs of the distribution of funding between the public and private sectors, it would not be appropriate to set a limit in legislation. I go back to my previous point about flexibility. As it stands, amendment 103 would make a smooth transition to the SFC on 1 April 2027 difficult.

Let me turn to other topics covered in this group of amendments. Amendment 94, in the name of Stephen Kerr, seeks to ensure that every young person between the ages of 16 and 24 who is not in full-time education or employment

“is offered access to a publicly-funded Scottish apprenticeship or work-based learning opportunity.”

Although I understand that, in lodging the amendment, Stephen Kerr seeks to be useful, it would be very difficult for any Government to guarantee what he is asking for, not least because it would depend on there being employers and sufficient jobs, apprenticeships and work-based learning opportunities available. I noted the exchange between John Mason and Stephen Kerr in that regard. I appreciate that there is significant demand at the moment, but we must legislate in a way that caters for the circumstances of the future as well as for the short term.

I am supportive of the principles behind amendment 96, in the name of Stephen Kerr. Providing pathways for unemployed persons, people seeking to change careers and people at risk of being excluded from the labour market is entirely sensible; however, making selective provision would cut across the overarching duty on the SFC to secure coherent provision. A similar argument applies to amendment 97.

Amendment 98, in the name of Stephen Kerr, seeks to ensure that steps are taken to expand the range of graduate apprenticeships and frameworks. That might be the right approach in practice, but we would not want to constrain ourselves in primary legislation. In the future, it might be more efficient to have, say, fewer broader frameworks rather than a proliferation of frameworks. Hypothetically, a broad framework that covered the health professions might be preferred over a number of frameworks covering individual professions. We must create capacity for flexibility.

Again, I share the ambition behind amendment 99, in the name of Stephen Kerr, for year-on-year growth in the number of apprenticeships. However, it is important to note that there are certain constraints on the number of apprenticeships that the Government and the Parliament simply cannot control, including whether employers are willing to take them on. In a recession, businesses might be reluctant to hire, so it might be harder to secure the number of apprenticeship starts.

We will discuss the apprenticeship levy in later groups of amendments, but the fact is that the situation is not as Stephen Kerr sets out. It is more complicated and challenging than that, but I will comment on the apprenticeship levy specifically later.

Last week, I acknowledged, in answer to a general question in the chamber, that there is unmet demand. Indeed, one of the reasons for taking this primary legislation through the Parliament is to have a better arrangement for meeting unmet demand in the period ahead. I would also point to the support that the bill has had from the Federation of Small Businesses, which represents the many businesses in the SME sector that are very supportive of the bill. The current system is quite challenging for some SME businesses, and we want to improve the system for them. That is one of the strong reasons why the Parliament passing the bill is the right thing to do, and I look forward to Stephen Kerr’s support at the end of stage 3.

On a wider point, I do appreciate that Stephen Kerr and I did not have any engagement ahead of stage 2. Obviously, I engage with all members of the committee, but, if Stephen Kerr would like to engage with me ahead of stage 3, I would be happy to facilitate that and to listen to him.

Amendment 108, in the name of Miles Briggs, would have no effect; the SFC would, in any case, have to specify the amount of grant that it awarded to a local authority. The bill gives ministers the power to set out in regulations the criteria for a person to be a training provider, and SDS funds a broad range of such providers. Indeed, sometimes the employer is the training provider.

Amendment 110, in the name of Miles Briggs, would potentially preclude some employers and other forms of training providers.

Amendments 111, 112 and 118, also in the name of Miles Briggs, also attempt to delegate the SFC’s duty to secure Scottish apprenticeships and work-based learning to colleges and to do so on a regional basis. The amendments would allow colleges to act as managing agents, and they attempt to restrict the managing agent fee that colleges can retain.

The bill does not prevent a college from acting as a training provider, and, therefore, as a managing agent, but it would be a very significant departure from current arrangements and would lack the statutory processes and safeguards that apply to the SFC in managing funding. There is also a danger that there would not be coherent provision across Scotland. I am supportive of creating a strong regional partnership, something that I know that Miles Briggs is exercised about, but I believe that that can be done through the bill’s existing provisions and the 2005 act. Therefore, with respect, I am not able to support the amendments.

Amendment 113, in the name of Daniel Johnson, embodies reasonable points about value for money, transparency and fair work practices. However, it is not clear whether the amendment would exclude colleges, given that they are public sector bodies. It is also unclear how the SFC would assess what constitutes value for money and what mechanisms would be used to assess transparent spend. In any event, it is likely that to prescribe fair work practices in such a way would be beyond the legislative competence of the Government and the Parliament, as we discussed last week in relation to other amendments.

I do agree with the intent behind amendment 114, in the name of Pam Duncan-Glancy, but I ask her not to move it, so that I can consider the framing ahead of stage 3 in relation to amending section 20 of the 2005 act.

The 2005 act gives the SFC the power to arrange for efficiency studies in order to improve economy, efficiency and effectiveness in the management or operations of any fundable body. The bill as introduced gives the SFC powers to make recommendations to fundable bodies following an efficiency study.

Amendment 13, in my name, will require the SFC to consult the relevant fundable body before publishing any recommendations that it has issued to the body following an efficiency study. The amendment responds to a concern from Universities Scotland that the SFC had sole discretion with regard to whether to publish recommendations, which could cause certain issues to arise. For example, publication of some recommendations could raise issues for staff or creditors, and it is possible that the SFC might not be fully aware of that possibility. The requirement will give the institution the opportunity to point out any issues before publication. I hope that members agree that that is a sensible addition to the provisions and that they will support amendment 13.

Staying with efficiency studies, amendment 132, in the name of Miles Briggs, would provide that efficiency studies that are carried out under section 15 of the 2005 act may also include consideration of the extent to which the needs and interests of staff are being met, including in relation to fair work principles, which apply to grants that are made to and/or by public bodies. I support that aim, but the second limb of the amendment, as drafted, does not work. I am content to support the amendment and hope that Miles Briggs will be content for me to make any necessary changes at stage 3.

Amendment 14, in my name, will enhance the powers of the SFC to monitor the financial sustainability of post-16 education bodies, and it has been lodged in response to recent issues at the University of Dundee. It will enable the SFC to secure the carrying out of independent examinations into financial sustainability. The provision will also require the governing body to provide such information and make available for inspection any accounts and other documents as may be reasonably required for the independent examination. I anticipate that that information might be used when the SFC is unable to obtain the information that it requires from a post-16 education body, or is dissatisfied with the information with which it has been provided. I hope that members will be able to support amendment 14.

Ross Greer has lodged two alternative amendments to my amendment 14. Amendment 14A would render the scope of the independent examination very wide—too wide, in fact—and there would be no limit on what the independent examination might look at. I therefore cannot support it. However, his amendment 14B would enable the examination of financial governance as well as financial sustainability. That seems appropriate, so I am happy to support amendment 14B.

Amendment 15, in my name, will amend the power in the bill as drafted for the SFC to issue guidance to fundable bodies and any other person it funds. That is in response to the recommendations of the Delegated Powers and Law Reform Committee, which in turn informed this committee’s recommendations in its stage 1 report on the bill. The Scottish Government agrees that it would be helpful to be clearer about what type of content such guidance might include. Amendment 15 therefore sets out an illustrative list of the types of matters that the guidance could cover. I want to be clear that it is still the case that the SFC can continue to issue other non-statutory information, including guidance, that it considers appropriate, including in respect of the topics in the amendment. I hope that amendment 15 meets members’ expectations and that the committee can support it.

A number of amendments in the group would require reports, assessments or information to be provided to or by the SFC. Amendments 137 and 138, in the name of Pam Duncan-Glancy, would require the SFC to report annually to Scottish ministers on the financial sustainability of post-16 education bodies. Amendment 140, also in the name of Pam Duncan-Glancy, would require the SFC to report on the participation of learners from socially and economically disadvantaged backgrounds. Amendment 141, in the name of Stephen Kerr, would require the SFC’s annual report to include information about outcomes delivered, including student progression.

Those are not the only amendments that call for reporting on a range of information. I am thinking about how much time and resource would require to be applied, mainly by the SFC, to fulfil all such functions, should all those amendments be agreed to. I therefore ask Pam Duncan-Glancy and Stephen Kerr not to move their respective amendments, to allow me, my officials and the Scottish Government to consider all the reporting requirements together and to lodge a suitable amendment to cover reporting duties and responsibilities at stage 3.

I cannot support amendment 133 in the name of Miles Briggs. It would create a new power for the SFC to undertake a review of the activities of a post-16 education body. The SFC already has a duty to ensure that provision is made for assessing and enhancing the quality of fundable further and higher education that is provided by the post-16 education bodies. The SFC has the power to secure efficiency studies of the management and operation of bodies. Governing bodies also have a statutory duty to provide the SFC with such information as might reasonably be required for the SFC to carry out its functions.

Amendment 133 would also enable a wide range of persons to ask the SFC to undertake a review. That broad list could result in the SFC being encumbered with requests for reviews on an ad hoc basis, which would be unmanageable in practice and create inconsistencies across the sector. I therefore ask Miles Briggs not to move amendment 133. Should he do so, I encourage members to vote against it.

Amendments 134, 135 and 136, in the name of Miles Briggs, would require the SFC to monitor the financial sustainability of all training providers and persons who deliver training programmes for employment. It is not the SFC’s role to monitor the financial sustainability of commercial enterprises. There are many more training providers involved in apprenticeship provision and work-based learning than there are fundable bodies. The requirement would be an onerous duty on the SFC, even if it were appropriate. Any concerns about safeguarding public money need to be managed in the same way as other commercial transactions, such as not paying in advance of service delivery, for example. I hope that Miles Briggs agrees and will not move amendments 134, 135 and 136. Should he do so, I encourage members to vote against them.

I completely agree with the sentiment behind Pam Duncan-Glancy’s amendment 139. Nobody wants to see pupils’ learning disrupted. However, I am not convinced that such a legislative framework is the right way to approach that. The circumstances of each situation will be very different and it would be better for the SFC to be able to tailor its response accordingly. I hope that that reassures Pam Duncan-Glancy and that she will not move amendment 139. Should she do so, I encourage members to vote against it.

As Pam Duncan-Glancy said, Daniel Johnson’s amendments 121 and 122 seek to provide for greater transparency in relation to the funds that are received from the UK Government’s apprenticeship levy and how those are spent by the Scottish ministers. I have listened carefully to Pam Duncan-Glancy and Miles Briggs, and to the interventions from John Mason, George Adam and Ross Greer, just as I have listened carefully, in my tenure in this role so far and in my years as a constituency MSP, to the voices of business on these matters. Therefore, I can say in good faith that this is an important discussion.

I and the Government would also like to have more clarity on the exact amount that the Scottish Government receives under the apprenticeship levy, but that is out of our control. Since 2020-21, Scotland has received a Barnett formula share of the UK Department for Education’s apprenticeship levy funding via the block grant, as other members have emphasised. The Scottish Government does not receive a specific allocation of the apprenticeship levy revenue, so we cannot directly link funds raised from the levy to any funding stream.

It is also important to emphasise that, because of the way in which HMRC and the UK Government share information, it would simply not be possible to implement Daniel Johnson’s amendments 121 and 122, or the annual reporting requirement for which Miles Briggs’s amendment 123 would provide.

As I have said, there are issues with the way in which information is shared. We are hopeful that the plans that the UK Government has announced for replacing the apprenticeship levy with the growth and skills levy will provide an opportunity for better information sharing with the Scottish Government. My officials are engaging with that process in order to understand what impacts the changes to the levy might have on Scotland.

For all the reasons that I have set out, I cannot support amendments 121, 122 and 123, and I ask the committee to reject them should they be pressed.

On amendment 125, in the name of Daniel Johnson, the allocation and specification of funding is—properly—the purpose of the annual Scottish budget process, as John Mason, George Adam and Ross Greer emphasised, and that would be a better place to deal with it. I encourage Pam Duncan-Glancy, on behalf of Daniel Johnson, to engage with that process to make the case for specific funding to be allocated to skills development.

Amendment 126 would require ministers to

“publish annual targets for growth in... the ... number of skills development programmes”.

Although it might seem helpful to have annual targets, the Government does not want to focus only on meeting prescribed targets but rather to be flexible and meet skills demand where it arises. Therefore, I am afraid that I cannot support amendment 126, either.

Although I understand the motivation behind all those amendments, I urge members to exercise caution about what we put into primary legislation, which would be binding on successor Governments and Parliaments. What matters now might not matter quite so much in the future. Regarding the levy changes, it may well be that we do not receive a Barnett share in the future, and that we will have to consider how we fund apprenticeships ourselves. There is a lot of potential for change.

It might make sense to set targets now for skill shortages or an older age group, but that might be less relevant in the future. Where targets are set, that implies that funding will follow them. In the future, that could mean money flowing away from the priorities of the time. It might seem sensible to require a specific separation of funding, but that would limit the ability for flexibility and for the recipients of funding who work in skills, education and training to optimise how they use their shares of the funding.

In short, there might be unintended consequences from all or any of the amendments in this group. Although I understand why members have lodged them, I hope that they will also appreciate why agreeing to them would not be useful. I therefore encourage Pam Duncan-Glancy, on behalf of Daniel Johnson, and Miles Briggs not to press their respective amendments. Should they do so, I ask members to vote against all the amendments in the group.

I thank Miles Briggs for raising those points. I agree with the importance of traditional building skills and other—to use his word—niche skill sets that we need to be mindful of. However, I stand by what I have said. In my engagement with COSLA before stage 2, it expressed no appetite for councils to have those powers, as far as I am aware. I hear Miles Briggs’s point in general terms about specific skills, and we will consider that further, but I still believe that the amendments in the group are not the way that we wish to proceed.

The bill forms part of our work of reform that is aimed at simplifying the skills landscape and post-16 education and training. It seems to me that adding another suite of fundable bodies would have the opposite effect. It would also apply to local authorities the provisions and requirements of the 2005 act that further and higher education institutions must abide by, which I believe would be undesirable. It would not help us in simplification, and it would create more burdens on local authorities.

Where it is appropriate for the SFC to provide funding to local authorities, the 2005 act, as amended by the bill, makes provision to do that. That would be when local authorities are acting in the capacity of training providers—for example, in respect of national training programmes, apprenticeships and work-based learning.

Therefore, I cannot support any of the amendments in the group, and I encourage members to vote against them if Miles Briggs chooses to press them.

Yes, shortly. Ross Greer’s amendments 178 and 179 and Miles Briggs’s amendment 180 would add additional categories to the list of desirable criteria to which ministers are to have regard when appointing members to the council. Unlike previous amendments in the group, amendments 178 to 180 would not bind ministers.

It will always be challenging to come up with a particular set of skills or experience that everyone is content with. I am not suggesting that the other amendments are without merit. On the other hand, it would be better to commit to working with the committee and other interested members to ensure that the process that we follow for recruiting new council members in 2026, when there are five positions available, secures the right people for the context.

I cannot support the amendments that propose to make the changes that I referred to just a moment ago, those being amendments 173 and 175 to 180. However, I am prepared to come back at stage 3 with suitable amendments to respond to the points that members have made about the skills and experience that are needed on the council. On that basis, I hope that members will not move amendments 173 and 175 to 180.

I also hope that members do not press amendment 172 or move amendment 174. If they do, I urge members to vote against them.

I should note that Daniel Johnson’s amendment 175 is contingent on his amendment 181, which we will come to in group 16. Amendment 181 would remove the apprenticeship committee and replace it with a different committee, and I do not see the benefit of that.

Paul McLennan’s amendment 36 is helpful in that it makes clear that co-opted members of the SFC may receive remuneration and allowances as appropriate, and that ministers will approve them as part of the terms and conditions of their appointment. That is suitable, and I am happy to support the amendment.