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I will see you next week.

Meeting closed at 12:33.

Yes. In theory, the 2 per cent could go to zero. In theory, it could go negative, I think, but I will ask officials to clarify that. It is my understanding that it could also increase above that 2 per cent. I do not think there are any limits on that, but Merlin Kemp can clarify.

Okay—where to start with all that? I will invite Merlin Kemp to come in in a minute.

Something needs to be clarified in relation to the first year—2027-28—but, when a tax is devolved, a calculation is done to find out how much has been raised in Scotland, and that is what constitutes the BGA. Therefore, we will start from the position of where we are, not from the position of where we are relative to the rest of the UK, if that calculation is done correctly. That needs to be worked through. As you will have seen with other taxes, the first year involves a settling-in process so that we can get more accurate data in order to set the baseline for the BGA.

The percentage of the total UK rental market that is in Scotland should not have an impact, but there might be an impact if there were differential growth rates in that market. I accept the point that you are making, but that will be for a future Government to consider.

You have a valid point. As you said, it is not a big number in the scheme of things, but conversations on the fiscal framework are on-going both on the specifics of this change and, more broadly, with regard to increased borrowing powers. You are right to say that, as flexibility increases, the risk increases by the nature of it, and the whole point of having borrowing flexibilities is to build a cushion against that risk.

I will defer to officials in a minute. My understanding is that that is indeed the case. I will ask officials to clarify, but I suppose that we could say that we could charge a lower rate of tax on income from property than we do on other income, which would be an interesting scenario.

You said that that is all income, but surely the expenses would be netted off?

The member is right that the proposals around local government pension schemes do not fit in with what this bill seeks to do. There are potential issues with regard to how they would conflict with the current duties on scheme managers, administering authorities, fiduciary duties and so on, which would need to be explored.

However, I absolutely agree with him on the issue more broadly. There is huge potential there, and I have engaged in that regard with local authority pension schemes and with the Deputy First Minister, who will be leading on that work as part of her investment responsibilities. The member makes a valuable point—work has already been done on that, and more is being done.

Amendment 101, in my name, seeks to bring reporting on community wealth building action plans into line with similar obligations that are attached to the community wealth building statements that the Scottish ministers will provide. Amendment 101 was influenced by the stage 1 report.

I am of the view that reporting on progress in community wealth building action plans is very important, but I do not want to stipulate too high a degree of complexity in the bill. It is more important that we give local authorities and other community wealth building partners the flexibility and autonomy to set meaningful local targets that they can use reliable data to measure progress on. The dialogue on producing community wealth building guidance with the Convention of Scottish Local Authorities and others is a helpful place to do that.

In general, I favour a streamlined and enabling approach to monitoring progress on community wealth building measures, and I ask members to support amendment 101.

Turning to the other amendments in the group, I know that issues associated with monitoring and target setting have been at the forefront of members’ thinking on the bill, and I welcome the contributions from the convener and Murdo Fraser in that regard. The Government’s position is not to support any of the other amendments in the group. I will explain why that is the case separately, but I thank the convener, Murdo Fraser, Richard Leonard and Lorna Slater for the amount of time and thought that they have given to framing some of the amendments in the group. I repeat my offer to discuss the issues around monitoring and target setting prior to stage 3.

I will briefly set out some thoughts on a number of the amendments. A key running theme is the interaction with current procurement policy and law. Amendments 20, 27, 39 and 39A would impose additional or annual reporting requirements, and the requirement for an additional report to be laid before Parliament would be disproportionate. Authorities already publish annual procurement reports under the Procurement Reform (Scotland) Act 2014. Adding further statutory reports would risk duplication and diverting resources away from delivery. Ministers have the power to specify by order the matters that must be contained in annual procurement reports, and I would be happy to give a commitment to engage with stakeholders on whether it would be appropriate to use that power to address some of the matters that members have raised.

Amendments 17, 26, 26E and 57 collectively seek to impose statutory targets or reporting requirements on procurement activity, including awards to local businesses, co-operatives and alternative ownership models, and on measuring spend within or outside local authority areas. Although I understand the intent, imposing statutory targets risks being bureaucratic. Targets are difficult to establish, maintain and monitor, and could undermine flexibility for local authorities and partnerships.

I reiterate my commitment to work with members to find a way that we can perhaps—

I am certainly happy to look at that. As I said, there is a process in place to keep those requirements under review. I take the point that the convener makes.

Moving from procurement to tax matters, amendment 67 seeks a review of business tax reliefs to support community wealth building. Matters relating to devolved tax should, of course, be taken forward in tax-specific legislation, with consultation, to avoid unintended consequences

The Scottish Government reviews non-domestic rates policies regularly and is currently undertaking a review of land and buildings transaction tax. We will work with businesses to examine reliefs ahead of the next revaluation in 2029. I understand the intent behind the member’s amendments and am happy to engage with him on this area in advance of stage 3.

10:30

On community empowerment, although accountability is vital, if we prescribe rigid mechanisms such as citizens panels or audits, we risk turning engagement into a tick-box exercise. Guidance, and community wealth building partnerships working, will more effectively achieve meaningful involvement. The Scottish Government has considered feedback from the 2023 community wealth building consultation and the 2019 Scottish Land Commission report, and our focus remains on supporting local authorities to meet statutory duties under part 8 of the Community Empowerment (Scotland) Act 2015 and associated guidance. We will keep those requirements under review.

For completeness, the Government will resist amendments 17, 28, 68, 108, 110 to 112, 139, and 141 to 143. As I have set out, that is for reasons of proportionality, duplication or practicality.