Chamber and committees

I think that that is a fair point. Although interventions around young people are important, we face real challenges in relation to people who face redundancy or have been made redundant because their industries are changing. That is where the national transition training fund comes in; it seeks to provide funding to particular sectors to help their people transition.

For example, I take you back to the tourism recovery plan. Bear in mind that that was the response to recommendations that were established by the tourism recovery task force, which was composed predominantly of industry leaders. They asked specifically for help for reskilling and retraining. An element of the national transition training fund has therefore gone specifically to help the tourism and hospitality industries reskill and upskill their staff. Obviously, they are facing labour market shortages, so it is really important that the right skills are there.

When it comes to people who are moving between sectors—upskilling not within their sector but between sectors—we also have support in place. Perhaps we need to review that support and make sure that it is fit for purpose, as we progress through the pandemic, to help take people from where they are now to where they want to be. The most obvious example of that would be providing support for people in the oil and gas sector, who have, unfortunately, faced redundancy, not because of decisions made by Governments in this country, but through the global reduction in the demand for oil and gas. That support needs to be made available within and across industries.

I will make a final point before I stop. Through partnership action for continuing employment—PACE—which is the wraparound support for employees who face redundancy, we have specific and targeted training available to help. However, it is a huge challenge to equip people with the skills that they need to transition to a new job or a different job in their industry.

We currently believe that the application of block-grant adjustments in relation to the revenues of £4 million per annum under the Proceeds of Crime Act 2002 breaches the Smith commission’s no-detriment principle. That is because we believe that that funding should come to the Scottish Government.

I have written to the Chief Secretary to the Treasury to try to progress resolution of that issue, and we have agreed that it should be resolved as part of the fiscal framework review. It is still an outstanding issue.

Obviously, this is a highly technical area. Claire McManus might be able to supply some information that I have missed out.

The UK Government has announced what money it thinks will be generated and therefore what will come in consequentials, but I encourage the committee to scrutinise what is finally announced, to ensure that the £1 billion—if it is £1 billion—is additional and not netted off elsewhere. That remains my concern, and we will not know the answer to that until 27 October.

It has been well documented that the national insurance increase will have an impact on private and public sector employers, as any increase in taxation will have. There is no doubt of that. Our job is to ensure that the money is used wisely and carefully.

Convener, I promised to provide an update on the small business bonus scheme, in response to Ross Greer’s question. Dougie McLaren says that he is happy to answer the question now, to save writing a letter. That is entirely at your discretion.

That is a good question. We have commissioned the Fraser of Allander Institute to review the effectiveness of the small business bonus scheme, in particular. That work is on-going. The institute is reviewing how effective the scheme is in meeting its policy objective of helping small businesses. The scheme has a huge role to play, especially in local economies and on our high streets. That is the primary review that is on-going.

However, we are regularly asked for additional reliefs. We now have reliefs in place for hydro power, new buildings and recently occupied buildings, all of which will have to be reviewed according to their terms. The business growth accelerator, which incentivises new builds, and the fresh start scheme, which incentivises tenants to occupy previously unoccupied buildings, need to be reviewed on their own merits. At every budget period, we consider again whether either those reliefs are the best use of our limited funds, or there is another way to meet the policy aims—which, I think, we all agree on—through other use of the funding. Such regular reviewing is important.

That is a good question. I might have to write to you on that. It was originally due a number of months ago, but was delayed because of Covid. We wanted to ensure that the reviewers got access to small businesses and had comprehensive data. If my officials do not know whether we have confirmed an updated timetable, I will get back to you in writing about the latest deadline.

Your question highlights the point that some things can be actioned in budgets from year to year; you asked about council tax. A fuller conversation about the right mix of powers and flexibilities is—I think, rightly—for the fiscal framework discussions, in collaboration with the Convention of Scottish Local Authorities. The discussions have, largely because of Covid, perhaps not moved at the speed at which I think either party would have liked them to move. I am committed to getting them back on track.

Our position on council tax, specifically, will be set out in the upcoming budget. I assure you that that budget will be set only after extensive consultation with COSLA’s finance spokesperson, Gail Macgregor.

That is an important context-setting question because, as I said the last time I appeared before the committee, next year’s budget feels like one of the most challenging in devolution. I think that every finance secretary has said that since the beginning of devolution, but next year’s budget is particularly challenging for three reasons.

First, the costs of mitigating Covid continue, as do the associated volatility and uncertainty. Therefore, we need to manage those when it comes to self-isolation payments or the national health service. Secondly, we are trying to remobilise all our public services. Remobilising the health service, social care and the justice system requires financial support, as does economic recovery.

Over and above that, the final challenge is the funding settlement that we are receiving. Although they were significantly less, there were still Covid consequentials this year. I think it highly unlikely that we will see such additional funding from the United Kingdom Government to deal with the additional pressures next year. Indeed, the UK Government is already pulling back significantly, with the removal of the £20-a-week uplift to universal credit and the end of the furlough scheme.

All in all, the cost and the need will continue but the funding that is available to us will significantly decrease.

You asked what the Scottish Government’s priorities are. Our priorities are set out in the programme for government. They are simply to continue to support families in need who are dealing with the consequences of Covid and some of the inequalities that it has exacerbated, to remobilise our public services and to drive economic recovery. Those are our three main priorities.

You talked about the Scottish child payment. The First Minister said in the programme for government that we would double the payment to £20 as soon as possible. We will outline plans in the budget for how we will do that.

No. As a Highlander who knows the importance of such roads and who has driven up and down the A9 far too often to count, I think that it is really important that we continue to invest in Highland, northern and north-east communities.

I hope to be able to build a constructive relationship with the new Chief Secretary to the Treasury. I had a good first conversation with him just over a week ago. I am due to see him on 14 October for a quadrilateral meeting about the spending review and I may be able to answer the question better after that meeting. I am happy to provide the committee with an outline of that meeting and an update about how it goes.

Thank you for the invitation to join the committee, convener. I am sorry once again not to be with you in person. I hope that the committee has not started to draw any conclusions from the fact that I seem to have to self-isolate only when I have a Finance and Public Administration Committee evidence session. I also thank the committee for its engagement to date with regard to the budget timetable.

I know that you asked for very brief opening remarks, convener, but I wonder whether I can make some comments that will be helpful to the committee’s scrutiny. I am grateful that, in agreeing 9 December as the date, we have duly balanced the time to develop our budget proposals with the time for due scrutiny. As the committee knows, our position is as ever contingent on our settlement from the Treasury on 27 October, but this year at least we should have firmer and fuller information than we have had for the two previous budget processes. The timing of the United Kingdom spending review and the autumn budget seems to be a return to the pre-Brexit and pre-Covid cycle, but as yet I do not have any insights into whether that means that the Treasury plans an update in the spring.

With this budget, the fiscal framework and the wider devolution settlement will continue to be tested with the related volatilities having increased and the levers and the flexibilities remaining constrained. That applies as much to our in-year management, with the UK Government repeatedly indicating consequential funding of “up to” a provisional amount that is subject to confirmation later in the year, by which time the moment or the need for that funding has often passed. As I have always said, additional funding is generally welcome when it comes, but what I want to emphasise is that the arrangements for confirming the funding generally fall short of what is required, especially during a real-time pandemic response.

I will continue to engage positively with the UK Government as we recover from Covid. I had a meeting with the new Chief Secretary to the Treasury last month, and in the coming days I am due to attend a finance quadrilateral that is focused on the spending review. We will, of course, take our strategic lead from the programme for government, and the budget will reflect and fund the Government’s priorities. Moreover, as indicated in our recent correspondence, we are continuing to carry out preparatory work on a multiyear resource spending review, and we plan to publish a framework for consultation around the time of the budget.

Finally, I will be pleased to answer the committee’s questions on the fiscal framework outturn report, the publication of which fulfils the Government’s commitment to transparency in the operation of the fiscal framework and provides the Parliament with information to support its scrutiny. That report shows a total provisional reconciliation of -£14.8 million that will apply to the 2022-23 Scottish budget, with the final reconciliation confirmed once the final outturn data are published later this year.

I look forward to the committee’s questions.