Chamber and committees

Yes—of sorts. That probably demonstrates why some of this is quite challenging, because it is such a moving feast.

Obviously, in next year’s financial year, I will have to manage the spending commitments within the budget. Putting in additional funding such as the £620 million is something that we did in previous years. It is not ideal, but it allows us to say that we think that we will be able to get a particular amount of funding. It is a very prudent estimate, but it is subject to change. That allows us to maximise spending decisions. It is quite likely that, in-year next year, there will be additional one-off consequentials.

When we publish our budget, that happens at a fixed point in time, but budget management and shifts happen almost hourly. Even since 9 December, there have been shifts, so you are right to say that, since the £620 million was announced, there have been significant shifts. Some things have got better this year that have allowed us to carry forward the reserve, but some things have got more challenging for next year. I imagine that, if I came back to speak to the committee in a week’s time, other things would have changed.

As you have said, in previous years, as soon as any suitable funding was identified, I redeployed it to new financial support schemes. Now, I would very much like to focus on economic recovery work. We have committed to spend £375 million and my commitment is to spend that £375 million on business support. Some of that will be spent on the emergency grants that are being paid out, but most, if not all, businesses—even those that have been through a challenging time—would far rather be supported to trade and operate fully than to depend on emergency grants. The commitment is that any unallocated funding will be redeployed to economic recovery.

Yes, it will tackle those things. I am leading on the fiscal framework review for local government, and Tom Arthur will take a lead role in that. My hope is that it will sit neatly alongside the resource spending review. Certainly, my intention is to engage as comprehensively as possible with the Convention of Scottish Local Authorities, even in the run-up to an election. I have a commitment to work with Gail Macgregor on the fiscal framework review and the resource spending review.

I sincerely hope not.

We work tirelessly to ensure that our spending is effective. However, the limits make that really challenging. With six weeks or around two months to go until the end of the financial year, if my conversation with Douglas Lumsden is anything to go by, you see how moveable the parts are—and yet I need to land a £40 billion-plus budget within extraordinarily tight parameters. Inevitably, we could take more effective decisions if we were not trying to shoehorn them into arbitrary limits that do not make sense.

That is a fair point about comparing actuals. That is the bottom line for Barnett consequentials. We do not receive what is announced; we receive what is actually spent. Therefore, we have to wait for the UK Government to know what it has actually spent—which comes very near the end of the financial year—to know what we will actually receive. By that point, we will have had to make the decisions on what we will announce and actually spend weeks or months previously.

I therefore absolutely agree that what matters is comparing actuals. You were talking about this financial year. I suppose that the Scottish Fiscal Commission ultimately has the final say on what we are allowed to actually spend. The Scottish Fiscal Commission’s view on what is actually available is therefore really the most important one.

Dougie is nodding. I do not know whether he has anything to add.

I do not recall seeing costings.

I was quoting David Bell—I have the quotation in front of me—who, when asked, talked about fluctuations in the oil and gas sector over the past two years. We all know that the oil and gas industry is vital to Scotland, but its value fluctuates in line with oil prices and decisions that the industry makes. Scotland is disproportionately affected by that because of the industry’s importance to the country.

I had a conversation with some well-known representatives of the north-east oil and gas industry last week. They are making an important argument, which I support, about the need for further diversification. Let us take ScotWind as an example. There is excitement about the supply chain for that because there is great talent, there are great resources and there is, in the north-east, already great investment potential for the transition.

That is already happening. Almost irrespective of what the Scottish Government is doing and has done, industry is already diversifying and considering new opportunities that are on the horizon. That is not an argument to say that there should be anything other than a just transition; I am not making that argument and have never backed it. Industry is already ahead of us in the transition.

My ambition is to grow the tax base—to grow the percentage of tax that each threshold takes—and to ensure that we are less exposed because we have diversified and invested, and have identified our strengths and backed them. I am not saying anything that the industry does not say. It is about creating more well-paid secure jobs; it is not about reducing the number of such jobs in Scotland.

Absolutely. You are right that the quality of debate was higher when we were all basically pushed to a position of ideologically considering what were the best tax options for Scotland, balanced by the need to ensure that we had a sustainable revenue stream. Ultimately, I need to ensure that there is funding to pay for the national health service and so on.

I would certainly be open to doing that; I am always open to ways of improving the budget process. One might argue that, this year, there was less need to engage with Opposition spokespeople because, in a sense, the passage of the budget bill was more secure than it has been in previous years. However, I was still very keen to have cross-party conversations, which I have had with all parties on several occasions prior to and since the introduction of the budget.

If there are ways in which we can strengthen the process—in particular, in considering tax—that will be fine. There is a constant and very live debate on whether non-domestic rates are fit for purpose and reflect the Scottish economy as it currently operates. I am sure that members round the table have different views on that. It is fair that many people ask the question, but the question that I would pose in return is to ask what would replace non-domestic rates.

My priority for the resource spending review is that we improve outcomes. It is a budget process and it is based on affordability, but what we need more than anything to achieve through it are programmes of investment that improve outcomes. The decisions are difficult because of the challenges that face the Scottish economy, which the committee is well versed in, including the ageing population, the changing economic mix and a number of other things including disruption that has been caused by the pandemic and Brexit, which I will not go into.

On the other side, dare I say that I think that we agree on more than we disagree on, across the parties? We cannot ignore those elements. For example—unless anybody corrects me—we all agree that we should pass on health consequentials to be spent on health. In next year’s budget, spending on the NHS will be £18 billion out of £41 billion, give or take, which is a substantial part of the overall budget. On top of that, there is £12.6 billion for local government. With just two budget lines, we have used a considerable amount of the £41 billion.

Therefore, the question is not so much about where and how we spend and whether the numbers are big enough, but about whether we are delivering outcomes that respond to the challenges, in which all of us are well versed. That is difficult—not just for reasons of affordability, which we need to grapple with, but because—to go back to Liz Smith’s question about outcomes—it asks us to question whether the funding that we spend is delivering the most effective outcomes. That is where the difficulty lies.

There are difficulties in relation to affordability that we need to contend with—not least because of what I have just said about health and local government. The bigger issue is that at the end of the resource spending review I would like us to be in a position to reflect that outcomes are better than they were because of the difficult decisions that we have made.

My last brief point is to call for a mature debate. If we make decisions in order to improve outcomes, and not just for straight money reasons, that will inevitably require some funding to decrease as other funding increases.