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Yes, we are very conscious of that. I know that the Cabinet Secretary for Finance and the Economy was with you earlier and that you spoke about the guidance and so on. Those issues are very much to the fore in terms of how we support local economic development. It is a priority for the Government and for me.

The issue will be the chilling effect. Risk aversion is part of the issue. We need to be open and clear with those in Scotland who may find themselves in that position. They may look at something and think that it is too difficult and that they do not want to take those risks.

For us to understand examples of that, it is important that they are brought to our attention. We are open to having those conversations and to looking for examples with local authorities and others of where that may be a risk so that we are aware of it and are able to work with those who might be affected and can help them navigate the process as necessary.

You have raised a few different issues. The lack of guidance suggests a lack of detail, which makes it difficult to take a view on some issues. The inclusion of agriculture, as I mentioned, is clearly a concern.

Our concern relates to the use of powers in devolved areas of competence. The UK secretary of state will have powers across the whole UK—they will have a whole list of powers with regard to the operation of the scheme, when it is up and running—but there is no equivalent power for the Scottish ministers in devolved areas. That imbalance runs against the devolution settlement.

We are concerned about that in principle, but we are also concerned about operational aspects, in relation to knowledge and understanding and the specific impact on Scotland. How events unfold in Scotland should have an impact on the nuances of any decisions that are made and on the relative importance of different decisions or subsidies, and the detailed knowledge of such matters is clearly in Scotland.

There is a point of principle about the powers and the erosion of the devolution settlement, but there is also the practical point that we are much closer to the issues than somebody in Whitehall would be.

We must have clarity. As has been said, there are questions about exactly how things will operate and there are concerns about the lack of guidance. There are also concerns that decisions would go to, and fall under the powers of, the secretary of state. Decisions will be taken at the UK level without regard to what is happening in Scotland or in other devolved Administrations.

On whether there should be more detail in the bill, and certainly in the guidelines, on there being different scope to act in different parts of the country, we support that call.

That is one of the areas in bill in which it is important to have guidelines. We have talked about the Scottish National Investment Bank. Much of what it would do would fit in that space. More detail and clarity in the guidelines as to how that aspect will be looked upon in the regime would be helpful.

To be honest, I am not fully up to speed on where we are with the membership of the unit. Hilary Pearce may have more up-to-date information.

From our point of view, we want proper regard to be given to the specific concerns of and issues in the devolved Administrations in relation to the membership of the unit. To do their jobs properly, it is essential for the unit’s members to understand the various ways in which things are done differently in the devolved parts of the UK.

Hilary, are you aware of the situation with membership of the unit?

Yes. It is already the case that we work within the interim regulations that are in place. As I said earlier, there have been examples already where we have had to make decisions on whether we feel support is within or outwith the rules, vague as they are. We will do our best to work within the legislation, but that might be more challenging, complex and difficult than it need be.

I looked at some of the evidence from last week and that is absolutely the case. There has been a shift from a much more rules-based process to one that is more open. The principles are laid down, but the most important part is how different people and organisations interpret them. The risk of organisations not taking steps that they properly should in terms of economic development and other opportunities is a concern.

I will hand over to Hilary Pearce in a minute to give a bit more detail on the conversations that our officials have had with the UK Government about guidelines and some of the specific gaps there. Suffice it to say that, although there have been a lot of conversations with the UK Government at ministerial and official levels, the reality is that the UK Government has been slow to come forward with the details of what the guidelines look like underneath the very broad-brush principles. That matters because organisations need to understand where the lines are, what is allowed and what is not allowed in various scenarios, which may not be obvious from the broad-brush principles.

Thank you, convener, and good morning. I thank the committee for the opportunity to set out the views of the Scottish ministers on the proposed legislation. I look forward to taking questions. Before that, I will make a few brief remarks to outline my key concerns.

My first concern relates to the case-specific sweeping powers of the secretary of state to ignore the devolution settlement, and to the risk of UK ministers intervening in devolved areas without proper consultation or knowledge of local circumstances.

Secondly, the absence of formal regulatory and enforcement arrangements could undermine confidence in the process, and it could hinder the ability of grant-awarding bodies to make awards to recipients as they have done previously.

My third concern relates to the inclusion of agriculture in the provision. We believe that it should not be included for many good reasons.

My fourth concern relates to the time periods involved, particularly the fact that interested parties will have only one month to appeal any decisions.

Lastly, much of the provision remains unclear, even at this stage, due to the absence of draft subordinate legislation and detailed guidance. Notwithstanding the concerns of principle, the absence of such detail makes it difficult to take a considered view and give consent.

That is a brief outline of my concerns. I look forward to taking questions from the committee.

We are still in discussions. At the end of last week, Mairi Gougeon, the Cabinet Secretary for Rural Affairs and Islands, and I met Paul Scully to go through the issues that I have just outlined, but we did not reach any agreement. We shared our concerns again, as we have done on many occasions. Officials continue to discuss such matters regularly, but unfortunately we have not been able to reach a conclusion on those important issues.

Yes, I echo what you have just said. The underlying point is that there is a lack of clarity and a lack of available guidance. My understanding is that the bank has raised those points. Much of the bank’s work involves lending at commercial rates in a commercial environment, but in a scenario of market failure or a similar scenario in which the bank felt that there was a need to lend money, given its mission, it would require clarity on what was and was not allowed. The lack of clarity in the guidance raises a concern about what may or may not be possible.