Chamber and committees

I am saying that the resource spending review is not a budget. We have used what the SFC called reasonable assumptions to set our budget. However, we are setting a budget based predominantly on the UK Government spending review of autumn last year, which is completely out of date—it has not been updated to reflect inflation. Therefore, the numbers will fluctuate further.

To clarify, I was saying that, in the finance and economy portfolio, the budget for some areas will go up, but that cannot happen for all areas. For example, the budget for training and employability is going up.

The national strategy for economic transformation calls on all parts of the enterprise and skills landscape to focus on fewer objectives and to do them really well. For example, it calls for a focus on productivity, some of the new markets and entrepreneurship. I like to think that focusing on those key objectives means that enterprise and skills organisations will align all their spend and workforce to achieving them.

Looking across the board, some public bodies will be better at some things than others. For example, the Scottish National Investment Bank has an important role to play in scale-ups and Scottish Enterprise has a great track record when it comes to start-ups. Scottish Enterprise focusing on start-ups, the Scottish National Investment Bank focusing on scale-ups and both of them trying to ensure that they do not just duplicate each other’s efforts would be an example of aligning to NSET and to the agencies’ track records of success. Scottish Enterprise has generated significant revenues for the public purse as a result of very attractive investments.

A second example is something that I have already talked about, which is a recurring theme when it comes to business grants. Where does a business go first for grant support? Does it go to Business Gateway, SE, Highlands and Islands Enterprise, VisitScotland if it is in the tourism community or the Scottish Government? Right now, it is confusing for businesses but, in each of those organisations, there are teams that do similar things. The question is how, through collaboration and discussion, we make a more effective relationship for business. There is good practice on that already. The enterprise agencies are completely on board and have already started some of that work.

The way that we are doing the former is through embedding conditionality. Businesses should not, for example, be able to access grant support without signing up to fair work principles. Rather than being a particular focus, it should be the status quo and the norm that businesses can access Government support only if they adhere to fair work principles.

It is not an easy either/or situation, because we also know, from the NSET work that was done, that Scotland has some of the greatest potential in the high-growth sectors—for example, in the areas of technology and renewables. I do not think that we can neglect some of our core industries, although they should expect to receive support only if they meet those conditions. With regard to future growth ambitions, which is where we maybe have a slight difference of opinion—

With regard to our growth ambitions, we want to see far greater rates of successful scale-ups, because we know that that is where a lot of jobs are created.

I feel equally passionate about it, and I appreciate that much is challenging and difficult about the resource spending review, but I do not think that it is unreasonable to set out a programme for improving our outcomes; doing so goes hand in hand with efficiency.

In the examples that you identified, I do not know how many people or teams had to manage that application or what the cost of that additional time and inefficiency was. If we are serious about achieving our objectives, we have to make sure that the processes are there and efficient and that we have the right people and teams to deliver them.

The resource spending review does two things: first, it sets out the challenges of the financial position, which I cannot change, because I can spend only what the SFC forecasts; and, secondly, it sets out the fact that, if we want to improve our ability to meet our objectives, we will have to take a long, hard look at how we achieve that. I have used the example of the enterprise and skills space. I am sure that we all have businesses in our constituencies that go to five, six or seven different public bodies, because five, six or seven public bodies provide grants. That is inefficient. We want to make it easier for businesses to access the help that they need in a one-stop shop.

I have used the SFC’s forecasts, which are based largely on the UK Government’s spending review and on tax and social security forecasts.

They all have an important role to play, but they need to ensure that they are as efficient as possible and focused on the core objectives that we have set. My impression, based on my extensive conversations with the enterprise agencies and VisitScotland, is that they are all on board with that and get it.

I would say so—yes. Certainly it is embedded in the resource spending review. The medium-term financial strategy focuses a lot more on the funding that we have available, and the resource spending review focuses a lot on how we are going to spend it. That is the distinction between the two documents.

I go back to identifying the four objectives. Tackling child poverty is completely in line with the national performance framework. Transitioning to net zero is completely in line with the national performance framework. Economic recovery and resilient public services are also completely in line with it. I would say that this resource spending review is far more focused on outcomes than perhaps many things are.

Let me just say that we are spending £1.8 billion on the Scottish child payment, which will go up to £25 per week. That will just about mitigate the cut to universal credit of £20 per week.

There is a more balanced answer to that, and hopefully a more balanced question behind it than I was asked in the chamber. I accepted in the national strategy for economic transformation that increasing productivity is one of the most important objectives that we can have as a Government, a society and an economy. We take it as read that increasing productivity matters, and we need to up our game on that.

You still have to accept that between 2007 and 2019 we saw significant growth in productivity; indeed, productivity in Scotland grew by 10.7 per cent compared with 5.2 per cent in the rest of the UK. Why is that important? It is important, because it brings us back to the question of what we need to stop doing, because it might be dragging down productivity, and what we need to keep doing, because it might be boosting it. That is what the national strategy tries to get underneath.

Our economy is recovering right now, and we have the unique circumstance of a record low unemployment rate of 3.2 per cent. We cannot do much more with regard to the labour force if unemployment is at 3.2 per cent, with the exception of trying, as I said earlier, to work with those who are classified as economically inactive and get them into the labour market. There is work that we can do on migration, too.

I did not catch everything that the SFC witnesses said, but they made it quite clear that Scotland is exposed to an ageing demographic and, as far as earnings are concerned, to the situation with the oil and gas industry. While there has been a significant increase in financial services down south—the figure is about 16 per cent, if I remember correctly, but I would need to double check that—the oil and gas industry in Scotland has had a challenging time, which has had an impact on earnings. You have to distinguish between wages and productivity a little bit; they are linked, but I think that these are two different questions to which there are two different answers.