Chamber and committees

I set out at the beginning of this evidence session that we are investing £4.7 billion of capital and resource in positive action in the 2024-25 budget to meet our climate change goals. One could argue that, if whatever amount of the up to £350 million of ScotWind moneys is part of supporting the budget, it is also part of supporting that £4.7 billion of the budget that is tackling climate change.

My dilemma is that in an ideal world—with funding not being so constrained—we would indeed want to create a different fund, almost a sovereign wealth fund or something that would be specifically geared to future action on climate, but, given budget constraints, I would face questions across Parliament were I sitting with £350 million that was either unallocated or being kept for tough times. These times are the toughest, and I am having to use that money to support the budget. Because it is not aligned to a particular part of the budget, the point that I am making about the £4.7 billion is that it supports the budget as much as investment in the national health service or Social Security Scotland. It supports the budget in general and, without it, we would frankly have to make even more difficult decisions than we have to make at present.

The £4.7 billion that is in the budget—

In 2024-25, we are committing £4.7 billion in capital and resource for activities that will have a positive impact on delivering our climate change goals.

As you know, we are enhancing the way in which we categorise the Scottish budget spend. The budget’s dedicated climate annex, annex J, outlines an enhanced taxonomy approach—basically, that is categorisation. It sets out changes to the methodology, expanding its use from just the capital spend that was previously analysed to include resource spend. I hope that that will provide greater transparency for the committee and others across the Parliament on the spend’s alignment with the Scottish Government’s climate objectives over its lifetime. It evaluates each spend line on its potential impact on either Scotland’s emissions generation or its adaptation impact. That will help us to compare not just one budget to another but the trajectory towards the targets. The detail is in annex J, which sets out, across the Government in the various portfolio areas, the positive impact of the cumulative £4.7 billion that will help us on our trajectory.

We have work to do, as every Government has. The target is challenging, as you know, and we have to continue to consider not just the spend but the policies that the Government needs to take forward, some of which are extremely challenging. All of that will be important to make sure that we deliver what we need to deliver.

We are as confident as we can be that we are able to show and demonstrate where the spend—in capital and resource—has a positive impact. However, we cannot rest on our laurels. It is a journey and it has to accelerate. That means that we have to be able to demonstrate not just the spend but the impact of that spend, and our ability to accelerate the changes that need to be made.

Those issues and challenges are not unique to Scotland. Every Government around the world is wrestling with the competing demands of the here and now and the investment that needs to be made—whether that is in changing our transport system or in heat in buildings—that competes with other priorities. Those are really difficult challenges, but that figure and the enhanced presentation of the budget should give the committee and the Parliament as a whole the ability to scrutinise the issue and the spending decisions that we make.

The payment will be revenue, because the drawdown that we are using is resource drawdown. I will get back to you if there is a capital element, but the money that is available to the budget, which I was describing earlier, is resource.

That will be a matter for discussion with Crown Estate Scotland regarding its requirements. Incidentally, I should put it on the record that it does a very good job and has turned things around. The Scottish Government has had a role, too. It has done pretty poorly from the Crown estate in the past, but the work that has been undertaken by Crown Estate Scotland and its use of its assets have led us to quite a transformation, which has been extremely helpful—not least in relation to the budget support that is now provided. That has been a journey from a very different position.

What I have set out is subject to approvals and procurement. There is a process that requires procurement to happen, and there are ifs and buts around that, but all being well, subject to approvals in procurement, we can see the delivery of the seven new small vessels between 2026 and 2028.

That is the plan. If there are any changes to that, we would, of course, bring that to the attention of the Parliament, but that is the intention. We will be able to provide updates as soon as possible after we have those key planks of the process in place. We will be happy to keep the Parliament updated.

Well, what I have set out—

You are right to point to port infrastructure being really important, and we remain absolutely committed to the funding of not just the new vessels, but the port infrastructure to support the ferry services. That is why the infrastructure investment plan set out funding of £580 million and why we have provided more than £100 million in further funding to allow, for example, the purchase of new vessels for Little Minch.

There are two parts to the infrastructure investment plan going forward. First, there will be an update at the end of this month on the projects that are already in train and where they are with regard to any delays.

Secondly, we will produce the next phase of the infrastructure investment plan later this year. We would have liked to align that with the budget but, as you will appreciate, there are quite a lot of uncertainties, given the capital outlook, in where the spring budget will leave us with capital funding. However, we will set out the next iteration of the infrastructure investment plan.

There is no doubt that capital budgets going down will have an impact across the board, but where we are investing in new vessels, we clearly need to make sure that the port infrastructure is there, so that the new vessels have the required infrastructure. That is an important priority.

You mentioned one or two issues in relation to port infrastructure; there are a number of them. As we get the detail on any changes or amendments to the infrastructure investment plan, we will be happy to provide you with that. The next iteration of the infrastructure investment plan will be published later this year.

I take your point. In an ideal world, where there would be no need to plug gaps in day-to-day spend, I can see the appeal of building a sovereign wealth fund with money from ScotWind. The Scottish Government raised £756 million through the ScotWind auction, which is not an unsubstantial amount of money. However, in order to sustain public services, we had no option but to use all the tools at our disposal, including the deployment of funding that has been made available from ScotWind revenues.

Had our budgets been in a different position, perhaps different decisions could have been made. However, the resource spending review allocates £310 million for use in 2023-24 and £350 million for use in 2024-25. There are requirements to bring forward some of that funding into 2023-24 because of the budgetary position. Without that, some of the difficult decisions that we would have had to make, beyond the ones that we already have made, would have been even more profound.

That we are having to utilise those resources in that way shows the limitations of our devolved fiscal powers. We absolutely recognise the importance of offshore wind, which is why the budget kick-starts the commitment of up to £500 million to anchor a new offshore wind supply chain in Scotland. We recognise that there is a potential longevity of benefit from those investments, but, because of the position of public finances, we have had very little option other than to utilise that money.