Chamber and committees

You are right to point out that that was the position. The Scottish budget for 2023-24 set out that it is for individual public bodies to ensure that workforce plans and projections are affordable in 2023-24 and for the medium term. We are really looking for public bodies to ensure that their workforce numbers and models are within their financial envelopes.

If we were to take a policy of returning to pre-Covid levels across the whole public sector, that would be a bit of a blunt tool. In recognition of the fact that some areas of the public sector will, by necessity, have to continue to grow—the health service is one example, and social security, when it is delivering its programmes, is another—the policy needs to be more nuanced than that.

Essentially, we have said that public bodies’ workforce numbers need to be affordable within their financial envelopes. We have set out some workforce scenarios in the MTFS, with low growth being 0.3 per cent and high growth being 2.2 per cent. That is in recognition of the fact that some parts of the public sector will continue to grow. The approach is more nuanced. However, the overall message is that the public sector must ensure that its workforce is affordable and that projections are within the financial envelope.

The permanent secretary can come back in in a minute, but I want to be clear about two points. At the top level, the EQIA looked at the impact on women and girls. During the consultation and my discussions with a range of organisations, that issue was raised and was recorded as having been raised. The matter was clearly raised during the debate that then ensued. The Parliament tried to navigate its way through all those difficult issues to come to a consensus and conclusion. None of that was easy and, when I met you, Michelle, we had long discussions and many issues were raised at that stage. Trying to bring all that together and marshal it to a point at which the Parliament could make a decision was quite difficult. I would say that the Parliament made the right decision. I know that you disagree with that, but ultimately, the Parliament had to make the decision based on all the evidence that was in front of it and that is where the Parliament landed.

Let me comment on the ferries, before we move on to the census. The section 22 report was hugely important and a number of changes flowed from it, not least to do with the governance arrangements at Ferguson Marine. There has been a huge difference. The permanent secretary can go into more detail if required, but there has been a complete overhaul of the governance arrangements, which flowed from that report. It was important that that happened at speed—as it did. It was not a case of saying that lessons would be learned at some point in the future. It was a very rapid response with improved governance arrangements in rapid time.

The Scottish Government made the decision to carry out the census in a different way, which led to some challenges around the participation rate. The work that was undertaken—at speed—to address some of that in order to get the figure up worked, and the figure became one that could then be relied on in terms of the census return.

It would be a strange situation if a Government did not learn lessons. Even when things go well and they are not on a list about which people say, “What about this and what about that?”—even when delivery is good—there are always lessons to be learned about how things might be improved.

I will bring in the permanent secretary in a minute. I would hope that they are not reluctant to do so, because critical advice that could sway a decision really ought to be in there. I guess that you are getting at the question of whether full, frank and free advice becomes compromised if civil servants think that they will be hauled in front of a committee and made to answer for it a couple of years down the line, because the advice did not work out as had been planned. I hope that that is not the case because, ultimately, ministers rely on an honest picture, warts and all, rather than something that is refined because the civil servants think that it will sit easier with ministers. My starting point is that I would prefer the warts-and-all advice.

A number of factors are pressing on our public finances. One is that we have a huge number of programmes, all of which need to be supported, and the financial position has come under increasing pressure. For example, the level of inflation has squeezed the budget and resulted in a significant reduction in the value and purchasing power of every £1 in the Scottish public finances.

Added to that are pay deals. Nobody would deny any public servant a reasonable pay deal, but we have, by and large, had to fund those through the resources that are available to us, which has meant difficult decisions. We saw that with teachers’ pay and the decision that had to be made on the £46 million for universities and colleges. We said at the time that the money had to come from somewhere. Those are real decisions and real issues that have to be navigated.

The medium-term financial strategy that I will soon bring to Parliament will set out the horizon scan of what the public finances are looking like and some of the difficult decisions that will require to be made. Ultimately, one of the reasons that the First Minister set out the missions was that we need to look at everything that we do and spend money on through that lens and ask ourselves some perhaps quite difficult questions around whether each thing delivers those key missions. That will have to guide us through some of the quite difficult decisions that will inevitably have to be made in order to balance the budget. The Scottish Government has to balance the budget. It is a legal requirement; we have no option. My job is therefore to make sure that my colleagues are doing what they can to address all those issues, including the programming.

It is difficult for civil servants that one minute they are working on this and the next they are working on that. However, based on what I have seen and experienced, the skill of the civil service is that they are very quick to adapt; they are agile and able to get to grips with new policy areas.

There is a recognition that we have to keep a close eye on head count. We cannot have exponential growth. That means that it has to be an agile organisation and that civil servants will have to pivot, such as they did on Ukraine, for example. Nobody knew how to set up a Ukraine resettlement programme and its being set up was an amazing insight into how the civil service is agile, experienced and able to deal with things that nobody could have predicted in a very efficient and professional manner that delivered a good scheme.

There is maybe a fair point there, but the pay deals came at us due to the rise in inflation. Those pay demands and therefore the pay deals to try—quite rightly—to avoid industrial action were perhaps beyond what had been envisaged in the RSR. That put additional pressure on the budget and the money had to come from somewhere. Part of the EBR process was to help with that.

The former DFM laid out that one of the driving forces was the pay deals, driven by inflation. That would have been quite hard to predict, to be honest. We absolutely want to avoid being in EBR territory again this year, which is why I am undertaking the work that I am with cabinet colleagues to manage those in-year pressures.

You raise an important point. Obviously, I will not stray into commenting on live legal proceedings. However, one of the reasons why we felt it important to challenge the section 35 order was the issue of precedence and the potential chilling effect on other policies.

A section 35 order is a wide-ranging power—essentially, it could be brought to bear on any policy decision making by the Scottish Government that the UK Government does not like or agree with. That approach very much goes against the memorandum of understanding that was in place, in which a section 35 order was to be seen as a last resort and only to be used if everything else had failed. That did not happen in the case of GRR. The UK Government used the order as a go-to first salvo. That action completely blows the memorandum of understanding out of the water.

Where does that leave us? We must be guarded against that chilling effect of not wanting to take forward policies that the UK Government might disagree with. There will continue to be policies that we want to progress with which the UK Government might fundamentally disagree. If we believe that it is in the interests of the people of Scotland to act on an issue, and we have set out a commitment to do so, we should take the matter forward.

Say that we were putting through legislation on minimum unit pricing for alcohol. That is a good example of a policy that the UK Government did not agree with. You can now see how it could use either a section 35 order or the United Kingdom Internal Market Act 2020 to say that that policy would be a disrupter to the drinks industry and that it would therefore not allow it.

We are in new territory. The situation is of huge concern. We need to get a different relationship. Getting into the territory of the memorandum of understanding would be very helpful. We will continue to pursue that with the UK Government, to get away from the threats of not granting an exemption under the internal market act or of using a section 35 order. That is not a good place to be in—and it gets in the way of the good day-to-day working relationships that civil servants have with their UK counterparts and, indeed, that we in Government have with some ministers.

I finish on this point: I have a good relationship with many of the departmental ministers in the UK Government. Much of the problem emanates from the Scotland Office. I will just leave that there.

Some of that will be done on a more formal basis than it might be in other areas. For example, there is a big, high-profile and in-depth public inquiry around Covid.

There has also been a commitment to a further inquiry on Ferguson’s—on top of what has already been done in Audit Scotland’s section 22 report—once 801 and 802 are delivered. Work still needs to be done there that will generate further information and lessons learned in depth.

In other areas, a more rapid, shorter and sharper analysis will take place around whether things have worked. The perm sec can say a bit more about that.

On Ukraine, an in-depth analysis will take place of what has gone well, what the lessons learned are and how the civil service and ministers responded—all that will be captured.

I am concerned to hear that. We might have work to do to reassure organisations that that is not the case. I ask organisations such as SCVO or any others to look at the evidence: many examples exist of organisations that are funded by the Scottish Government and are critical of policy decisions or legislative options—there is no shortage of them. I would have thought that that might have given some confidence to organisations that there are no questions about looking at funding arrangements if they disagree with the Scottish Government, whether or not they articulate that. We might have a job of work to do to make that more explicit.

I meet SCVO regularly. It does a hugely important job in representing third sector interests and I would want it to say if it were concerned. It is very forthcoming in arguing for more investment in third sector organisations—certainly in the meetings that I have had with it.

If that is so, we have some work to do because that should not be the case.