Chamber and committees

I do not believe that I have any relevant interests to declare.

Thank you very much, convener. I am absolutely delighted to be on the committee and I do not have any relevant interests to declare as far as I am aware.

Thank you for having me at the meeting, convener.

I express my sincere thanks to Laura Hansler and the A9 dual action group for bringing the petition before the committee and, indeed, raising the profile of the issue. It is the product of frustration but also grief at the number of fatalities on the road, as well as accidents and near misses, which do not get recorded.

I will make some very brief comments about the matter not being just a Highlands problem. It is an issue of national concern for three reasons. The first is that there is no transition to net zero without dualling the A9. That is contrary to arguments that have been made about it being inconsistent with our move to net zero. However, the Highlands and rural Scotland disproportionately rely on car use and we must have an electrified, dualled A9 for safe use. Secondly, the Highlands relies on the road for economic reasons, which have already been covered. Thirdly, the region is reliant on it when it comes to safety. Above everything else, that third reason is perhaps the most important.

There is a cast-iron guarantee to dual the A9. We are exercised about seeing the timetable and ensuring that it is backed up with appropriate procurement processes, which have come in for some criticism, and a budget. I know the constraints on our budget. Clearly, given a £5 billion capital budget every year, an A9 dualling programme that costs £3 billion needs to be prioritised. That will mean difficult decisions elsewhere but, such is the importance of the project, we need that prioritisation and that funding.

That is all that I have to say, because the topic has been adequately covered, but I cannot stress enough the importance of the programme both to my constituents and to those whose lives have been affected as they wait for the updated timetable—including those who are subject to compulsory purchase orders, who have been waiting in some cases for almost a decade for dualling to go through and the sale of whose houses, for example, has been affected. It also impacts on the rest of Scotland. Those three really important groups want answers.

I thank the committee for its input to the resource spending review. As I have said publicly, this is a particularly challenging time to be setting out our resource spending review. We are recovering from the pandemic, there is an unprecedented cost of living crisis and there is very significant volatility in the fiscal outlook. When the UK Government published its spending review last autumn, which is the basis on which our spending review is drafted, inflation was 3.1 per cent. As members will know, just yesterday, inflation reached a height of just over 9 per cent—a 40-year high—and it is due to increase further.

Despite that, the reason why we proceeded with a spending review was to give our partners as much clarity and transparency as possible. The resource spending review sets out how we will spend £180 billion over the next few years.

In light of some of the challenges, we set out a number of priorities in order to focus where we would spend our money over the next few years. Those include the long-term ambitions of tackling child poverty, addressing the climate crisis, strengthening the public sector and growing a stronger and fairer economy. Despite the challenging circumstances, we have set out an ambitious spending review that maximises that £180 billion over those four key areas.

We have also chosen to prioritise social security in the spending review, and the social security allocation shows the strength of our commitment to building a modern social security system that has dignity, fairness and respect at its heart. Clearly, that will help us to meet our child poverty targets.

My last point before I stop is that it is obviously not a budget. Detailed tax and spending plans will still be a matter for the annual budget process. The spending review is, in essence, a planning document that shows our commitment to delivering on our key priorities.

I look forward to the committee’s questions.

I am very happy to answer that question. The priority at the time was to balance the need for effective targeting—you talked about the four groups of people—with the need to deploy that funding as quickly as possible. We consulted with the Convention of Scottish Local Authorities to understand how we could do that.

It is not often that politicians stand up and accept that processes or schemes are imperfect, but I am pretty sure that when I announced this I accepted that it was imperfect, but that it was imperfect for a purpose. That purpose was to get funding out as quickly as possible. We looked carefully at mirroring what was done with the low income winter payments that were deployed by local government during winter. That took months and months to deploy, and my view was that, in April, families did not have months and months to wait for funding. Therefore, although council tax is imperfect by design it was the fastest way to get money out the door.

The other element is that our council tax reduction scheme is unique in the UK; it does not exist elsewhere, and, if memory serves, it captures about 394,000 households on the basis of low income. It is based on not only property value, but income, so we could use it to reach families, including pensioners, who might not be in council tax bands A to D. The third thing that we did was to increase the fuel insecurity fund.

We sought to target as effectively as possible within the commitment that I made to deploy the funding as quickly as possible. I appreciated the ideas and suggestions that we received from a number of stakeholders, and they were all carefully considered, but all of them would have taken longer to deploy—probably six to nine months longer—and they did not reach as many people as possible.

Yes is the short answer. Shona Robison might have something to add on the policy question.

I do not have the figure in front of me, but I think that the funding will go up by about £100 million over the next five years. The funding is intended to provide a wraparound service for people who are furthest from the job market. That will include disabled people. It is a highly intentional investment that involves the very labour intensive and financially intensive process of working alongside people for 12 months and continuing to support them when they are in work.

I would be happy to follow up on specific policy areas but, from a financial perspective, I would make the point that funding is there. We must remember that such work—if we are serious about it—is extremely financially intensive.

As well as the moral imperative of supporting disabled people into employment, which you have identified, there is the economic imperative of doing so. Unemployment is at 3.2 per cent so, essentially, we are at full employment. We know how desperate businesses and so on are to find workers. Although economic inactivity, if I can use that phrase, is reducing—it is about 21.9 per cent, according to the most recent statistics—there are people in that group who would be keen to work if we can provide the right support. As well as having a moral impact, that would have a huge economic impact.

Those are the SFC’s assumptions, rather than mine.

I am happy to answer on local government, but it is probably a policy question if you want to answer it, Shona.

I am delighted to be welcoming the Chief Secretary to the Treasury to Edinburgh on Monday. We will be meeting to discuss both the spillover dispute and the fiscal framework. We are hoping to announce details about the independent report, which has to precede the review. We are a bit behind time, which is unfortunate, because that independent report should, theoretically, have been completed by the end of last year, and we should be in the review phase. We need to move as quickly as possible.

I am extremely keen that we get a resolution to the spillover dispute, which is about real money. There is a disagreement about the methodology to calculate what the Scottish Government is entitled to. The principle has been agreed—both Governments agree that the Scottish Government is entitled to additional funding as a result of UK Government policy changes on income tax. That principle has been conceded, but we are still in discussion about the quantum of funding, because that is not as clear cut. I have a duty to represent the Scottish Government in that regard, because if there is a principle in place, that raises a question of fairness.

The issue is very specific to my portfolio of finance and economy, in which the outlook—as is the case in every other portfolio—is very challenging. If you look at all the budget lines, you will see that the employability line is going up by a significant margin over the next five years. That is almost entirely driven by our commitments around tackling child poverty. Pam Duncan-Glancy has identified that we need to tackle the root causes of poverty. It is clear that employability has a key role to play in doing that. We want to support families who are not in secure, well-paid employment into such employment through the new offer to parents and the no one left behind approach.

I have identified our four priorities. The nature of prioritising is such that, if you prioritise one area, you have to deprioritise elsewhere. In my portfolio, that prioritisation is clearly visible in the employability line, which is intentionally designed to significantly expand employability services to help us to reach our child poverty targets.