Chamber and committees

This is why we prefer people in the room.

Cabinet secretary, thank you very much for spending so much of your morning in responding to our questions. That ends today’s deliberations.

It is just that, in real terms, there will be a decline in education over the next three financial years and then, suddenly, there will be quite a dramatic increase, and that is repeated in a number of portfolio areas. Time is against me, so I cannot ask all the questions about that that I want to ask, but I will try to touch on a number of areas. Colleagues can follow up on some of my questions if they so wish.

Another area is local government. Local government is alarmed and, although you have said that it will have a fair settlement over the years ahead, I do not believe that it would agree with that. How does the static budget—or declining budget, when inflation is taken into account—allow flexibility for local government? Local government spends much of its funding on statutory services. It has to provide those services; it does not have a choice. Statutory services already have a higher proportion of spend than perhaps they did five or 10 years ago, because of the relative reduction in local government resource. That is one point in relation to local government.

Also on local government, if there is greater flexibility—for example, I know that you are looking for public sector workers to be more productive, but perhaps over a four-day flexible working week—how will that impact on other areas of the economy, such as transport? There has been a significant reduction in the number of people who are using public transport, not only because of a lack of reliability. For example, in my area, there is a lack of bus drivers; we have also seen rail disputes. There are issues across the UK in that regard. What would be the knock-on effect on the retail sector if lots of public workers were staying at home?

You have talked about the multiyear estates programme. From reading the document, there seems to be an enthusiasm for selling off surplus public buildings if, for example, there are going to be fewer people in the public sector and more people may be working in a hybrid way or from home. The difficulty for local government will be that, in some areas of Scotland, there might not be much demand for those surplus public buildings, whereas in other areas, such as Edinburgh, there might be significant demand. That would mean that some local authorities would be unbalanced in terms of the resource availability.

I know that that is a fairly convoluted question, but it is about how local government will be able to innovate and reform and, at the same time, cope with those huge changes over a relatively short time.

Iceland has always been socially cohesive, but it was also historically one of the poorest countries in Europe. Independence in 1944, harnessing geothermal power and victory in the cod wars in the 1970s probably had a significant and positive effect.

I am comparing the MTFS with your forecasting document. The £250 million is exactly the same as the figure that the Scottish Government gave, but you have put in £591 million for 2026-27, whereas the Scottish Government has just £400 million in 2024-25.

Yes. I am just wondering why the Scottish Government has not included those figures but you have done so. That was all. There is a difference of £191 million.

Thank you very much.

Good morning and welcome to the 18th meeting in 2022 of the Finance and Public Administration Committee.

Agenda item 1 is evidence taking from the Scottish Fiscal Commission and then the Cabinet Secretary for Finance and the Economy on “Scotland’s Economic and Fiscal Forecasts—May 2022” and the Government’s resource spending review and medium-term financial strategy. For our first evidence-taking session, I welcome to the meeting Dame Susan Rice DBE, chair, Professor Francis Breedon, commissioner, Professor David Ulph, commissioner, and John Ireland, chief executive, Scottish Fiscal Commission.

Before we move to questions, I ask Dame Susan Rice to make some opening remarks. Good morning, Susan—over to you.

In that regard, the Government is caught in a wee bit of a squeeze, in that fiscal drag is not bringing in as much money as it might have anticipated, because pay is not keeping up. At the same time, the Government is faced with significant pay demands.

I have one final question, which I hope is on an optimistic note. Section 2.4 of the spending review document is titled “A Stronger, Fairer, Greener Economy”, and there are a lot of positives in there. Again, you talk about the national strategy for economic transformation

“stimulating entrepreneurship; building new markets; increasing productivity ... developing ... skills”

and “embedding entrepreneurship”. You also talk about an investor panel, an inward investment plan and an export growth plan, which are all very positive.

What kind of impact do you believe that the strategy will have by the end of the period up to 2026-27, which we have been discussing, in relation to increasing investment, jobs and job retention? Many businesses, when they get to a certain level, move outside Scotland. What impact will that new cultural change have on Scotland and our revenue base?