Chamber and committees

That would be very helpful. Thank you very much.

That brings us to the end of today’s evidence session. I thank Jennifer Henderson and Chris Kerr for joining us and for all the information that they have provided. We now move into private session.

Can you give us a flavour of what the differential in timings for your business customers and your citizen customers might be?

The threat to the refinery is equally a threat to the chemical cluster and a threat to Scotland’s economic economy. Given the recent award of Scottish Enterprise funding to Ineos for the green freeport initiative, what further incentives might be provided through the Forth green freeport, or directly to the cluster, to maximise long-term financial sustainability and enable growth, as outlined in the green industrial strategy?

To ask the Scottish Government how it plans to sustain the economic value of the chemical production sector based around Grangemouth. (S6O-03849)

That line of sight is vital.

Good morning. Thank you for joining us, cabinet secretary. I will pick up on some similar points. We already know that there are concerns that the number of so-called orphan buildings will increase, should disreputable or unethical builders choose to liquidate themselves and re-establish elsewhere. That is a regrettable risk. What is your assessment of whether the introduction of the Scottish building levy could increase the number of orphan buildings? I am not suggesting that the introduction of the levy in and of itself would be the primary trigger, but it might overlay additional financial considerations. Have you considered that?

As we have all said, we will need to wait and see, because the matter is highly complex. There will be uncertainties about risks until the building assessments have been made, and I presume that there will be the same uncertainties about risk elsewhere in the UK, because the assessments have to be carried out.

This is a slightly technical point—and I might not be remotely right. The Chancellor of the Exchequer’s recent change of heart on the fiscal rules will mean that debt will be recast as assets, particularly in relation to investment. Have you given any consideration to what that might mean in relation to whether what might have been seen as debts on a balance sheet, for the UK Government or the Scottish Government, could be metamorphosed into assets?

I am inclined to agree that the £30 million of revenue that it is proposed to raise will probably be too low. Given that we agree that the risks, the uncertainties and, potentially, the costs might be broadly similar, with some regional variations, are you concerned that the issue having had to become a devolved matter has meant that the risk of there being a much bigger bill, with £30 million not being enough, has been passed to the Scottish Government?

I start with a few thoughts on tomorrow’s UK budget. Just as every citizen will be concerned about the sustainability of their own finances, not least pensioners and those in low-income households, the Scottish Government will very quickly have to consider the implications for budget sustainability. Thus far, the omens are slightly mixed. The UK Labour Government made pre-election commitments to protect working people from tax rises, but it is unable to define what it means by a working person.

Leaving aside the confusion that the UK Government has created, I start with a critical consideration of a major policy change that it has trailed: changes to the fiscal rules. The pre-election commitment to stick with the Tories’ fiscal rules has been dumped, at least in part. I welcome the fact that the road to Damascus has been somewhat short. It now seems clear that borrowing for investment is no longer to be considered as debt but rather as asset creation. That could allow for a significant increase in infrastructure investment, which I welcome.

However, that has potentially major implications for the Scottish Government. As we know—and as I have often commented on—under devolution, the Scottish Government has very limited capital borrowing powers. Some have argued that that is to prevent the devolved Government from adding to UK debt. However, if redefining investment as asset creation rather than debt makes sense for the UK, by all logic, the same must surely apply to Scotland. I wonder whether the minister will commit to engaging with the UK Government on the matter.

In June, the Finance and Public Administration Committee launched its call for evidence to inform its pre-budget scrutiny. That has attracted some insightful contributions and, in most cases, support for the Government’s four priority areas. I found the evidence from the Fraser of Allander Institute particularly telling when it argued:

“Ultimately, the most important thing to come from the 2025-26 Scottish Budget will be to what extent the measures that are implemented will reflect these priorities. The priorities are broadly the same as last year—but given that decisions in the 2024-25 Scottish Budget did not necessarily chime with those priorities, a new approach will be needed to ensure that the situation is different this time around.”

Achieving fiscal sustainability while maintaining a focus on key priorities is very challenging but utterly critical. In that regard, I am sympathetic to the submissions from the Royal Society of Edinburgh and the Scottish Chambers of Commerce, which argue that growing the economy is the most important priority, and that it will underpin the ability to address the other three, not least because public finances will grow if the economy grows. It is also a much more effective approach than simply burdening the economy and individuals with more tax hikes. In other words, to my mind, growing the economy will contribute to fiscal sustainability and the pursuit of the Government’s priorities, and there is no sustainable alternative.

I also point out that growing the economy will positively impact the lives of many of those who live and work in Scotland, not least through enhancing employment prospects and household incomes. In some specific areas, there are opportunities to target investment in a manner that supports all four priorities, perhaps the most obvious being investment in new affordable house building.

Of course, there are other matters to take into account to ensure fiscal sustainability, from public sector pay policy, which we have discussed, to tax policy, which has also come up, and I am sure that we will continue to focus on many others in the debate.

Before I conclude, I want to reflect on a further concern that was raised in the evidence from the Scottish Women’s Budget Group and the women’s economic empowerment project, which is about the tackling of barriers to women being able to take on work. Such barriers, such as the inability to access affordable and accessible childcare, inhibit economic growth. The Scottish Government has come out strongly to support women going into work. However, as I have previously argued in the Parliament, we need further sex-based research into the impact of public policy as part of the drive to improve economic policy development.

In summary, enhancing the Scottish Government’s ability to borrow and invest—now reframed as asset creation—and a commitment to the critical priority of growing the economy and sound policy development are all part of achieving fiscal sustainability.