Chamber and committees

I was pleased that you invited me, the deputy convener and the convener of the Social Justice and Social Security Committee to a meeting last week to discuss issues with the fiscal framework. I have one question about that. The fiscal framework has helped us through Covid-19 and the early months of Brexit, but what weaknesses have been identified in the framework and how can it be improved and made more flexible? What engagement has there been with the UK Government on the scope of the review and when it will commence?

All of which are inflationary pressures.

Dougie McLaren, do you want to come in with your response to Ross Greer?

Immigration is a factor, but surely we must do more to upskill the 4 to 5 per cent of the population who are currently unemployed at a time when there is a huge number of vacancies in the economy. I am keen for the Scottish Government to do more to address the issue.

You mentioned gas. The Scottish Government has a national collaborative framework for the supply of natural gas, which means that there has been no increase in the wholesale cost of gas since April 2021 and that there will be no increase during this financial year. First, what is the impact on the Scottish Government likely to be next year? I imagine that the framework will have to be renegotiated in view of prices and that the impact will be significant. Secondly, what impact will there be on the private sector, particularly fuel-intensive industries? I have a number of such industries in my constituency—I am sure that that is the case for other members. What, if anything, can the Scottish Government do to assist with the issue?

Thank you for that.

We have exhausted our questions. Cabinet secretary, thank you for answering so many questions so comprehensively. I wish you a speedy recovery. I apologise for the broadcasting glitches, which you valiantly managed to get through; we were able to ask the questions that we wanted to ask.

That ends the public part of the meeting.

Obviously, significant multibillion-pound consequentials have been received from the UK Government since the start of the pandemic. How much of that is still available to allocate? Is there any risk of a clawback? Has there been a guarantee of consequentials from the UK health and social care levy and when will they be delivered?

Good morning and welcome to the seventh meeting in 2021 of the Finance and Public Administration Committee.

For agenda item 1, we will take evidence from the Cabinet Secretary for Finance and the Economy in what is our final pre-budget scrutiny session. Unfortunately, the cabinet secretary is unable to be with us in person as she recently tested positive for Covid-19. I hope that she is recovering well and that she has not been too badly affected by the virus. Members will have received a paper from the clerks along with private briefings from our budget adviser and the Scottish Parliament information centre’s financial scrutiny unit.

I welcome to the meeting Kate Forbes, Cabinet Secretary for Finance and the Economy, who is joined by the following Scottish Government officials: Douglas McLaren, deputy director, budget, pay and pensions; and Claire McManus, fiscal framework team leader. I intend to allow 90 minutes for the session.

Before I open it up to questions from the committee, I invite Ms Forbes to make a short opening statement.

Finally, the health and social care levy on national insurance will impact on the public sector in Scotland to the tune of around £151 million, with £67 million going on the NHS and £31 million on local government. I believe that the UK Government will guarantee that amount. Have you had a guarantee that those consequentials of £151 million will come through?

Also, what impact will the levy have on the private sector, when it comes to economic and jobs growth in Scotland?

Disinvestment is always the key issue in terms of prevention. We will certainly look at that in the months ahead.

I have some short questions to finish off. The first is about the fiscal framework. We have touched a lot on issues about borrowing. Five years ago, when the fiscal framework was agreed at the 11th hour, the budget limits were set in stone. Since then, there has been a 9.2 per cent erosion due to inflation, so I take it that one of the Scottish Government’s asks in the review will be that any limits that are set should be index linked to inflation. Am I right?

I am tempted to come back on that last comment, but I will move on, because I want to touch on a number of issues so that colleagues can expand on them.

The committee often gets suggestions that local government should be provided with more flexibility to, for example, raise revenue on its own. Indeed, we received such suggestions this year. Has the Scottish Government identified any additional revenue streams that it could adopt or could devolve to local government? Will it encourage local government and other bodies to develop their own revenue streams, given the current financial situation?

I am sorry; we seem to have lost the cabinet secretary.

Are you back with us, Kate?