Chamber and committees

A lot of the defence expenditure was in capital spending, not resource spending. I am talking about day-to-day resource spending, which is where the figure of 0.8 per cent compared with 1.5 per cent for UK departments comes from. I am talking about resource spending, not capital spending. It is the day-to-day spending that matters here. We have come off very poorly because of where the reserved and devolved areas are.

We should keep things under review, and we should challenge ourselves and be challenged on areas of spend.

As we have discussed on several occasions, the small business bonus scheme serves a number of purposes. It keeps alive businesses that might not otherwise continue to be so, many of which are located on our high streets and in our town centres, where there are challenges. However, that does not mean that we should not look at how effective the scheme is and at whether, if changes were made to it, it could be more effective.

I am a supporter of supporting small businesses, which are the bedrock of our economy. They are still going through a tough time, given the environment in which they are operating.

I am always open minded and I am open to looking at how we can make improvements to any of the schemes and systems that we have in place. We also need to ensure that we do not create dependency—earlier, we talked about creating dependency in the sphere of welfare. Whatever programmes we have, businesses need to be viable. We want to support viable businesses that provide much-needed services and have a much-needed presence in many communities.

We keep things under review and, if we could support businesses in a more effective way, we should be open to doing that. However, in the current climate, in which businesses are struggling, it would be difficult to tell them that we intended to take away the support that we provide through rates relief. That would not be the right thing to do in the current economic climate, which is very difficult, especially for small businesses.

We will continue to discuss the matter, but those discussions should be about improvements to the system. We very much support the principle of supporting small businesses, and if people have ideas about how we can make the current scheme better, I am happy to discuss those further.

We have recognised the issue of wealth inequalities for as long as I can remember and have been very clear on the principle that those who have the broadest shoulders should contribute more. The difficulty has related to our powers to address that. If this exchange is heading in the direction of wealth taxes, for example, I note that I am in favour of them, but they are very difficult to deliver. Looking around Europe, many have tried to implement them, but not many have succeeded and, recently, the Norwegians have had to rein them back. In principle, I am in favour of wealth taxes, but the question is how they are delivered. I believe that the contribution that people with large assets make should be recognised, but finding mechanisms to do so is the hard bit. As you will be aware, the Scottish Land Commission is in the early days of its work on land valuation and all of that.

It is not that we are not interested and are not looking at those areas, but there are a lot of process issues. You know that the ability to move forward with any additional taxation would require huge negotiations with the UK Government and there would be a whole process to go through, on the presumption that the UK Government agreed in principle—although, I am not sure that it would agree in a lot of this space. Something might appear in the autumn budget that could surprise us—who knows? There is a difference between principle and practice and being able to do something that would work and would bring in resources any time soon. I am pragmatic; you could spend a lot of money pursuing something in that area, but it would produce no funding any time soon. I am quite thoughtful about that.

I was involved in meetings on a daily basis with Ivan McKee and colleagues in the run-up to the publication of the MTFS and the fiscal sustainability delivery plan. Those discussions had already taken place and had gone into great detail, and they are on-going in relation to the collective responsibility to deliver savings, which is not just my job or Ivan’s job, but everybody’s job.

Those discussions happened and went into great detail in advance of the publication of the plan. In the end, however, it is the Government’s plan, and it is everybody’s responsibility to deliver it. That is what will happen.

There is risk with everything. There is a risk in getting up in the morning. However, if we do not make change and are not ambitious, we will not be able to deliver what needs to be delivered.

We have already made progress, which gives me confidence that that level of ambition will be delivered. For example, the programmes that have already been working have saved just over £320 million over the two-year period to the end of 2024-25, with projected savings of nearly £300 million over the following two years. We are focused on the single Scottish estate, the national collaborative for procurement and digital programmes, and on securing commercial value for money, cost avoidance and cash-releasing savings. We have a track record. We are not starting from scratch. A lot of that has been driven by the work that Ivan McKee and his predecessors have undertaken.

As I said, the reduction in costs is not optional or simply something that will be nice to do if we can get round to it. It is a requirement, and each part of the public sector, whether it is the civil service or a public body, will have to set out how it is going to contribute.

I reassure members that Ivan McKee is monitoring progress weekly and that returns are scrutinised. I am sure that he would be happy to come to the committee and set out some of the detail to provide assurance on those processes—he is keen to talk to the committee about that. Nevertheless, the process has to happen, because the outcomes will mean that we can sustain investment in our public services on the front line.

Yes—it gets harder.

I do not wish to be cheeky, Mr Hoy, but your party’s press releases, and your lines of inquiry, have often been about admin and corporate costs. If we all agree that there is space to reduce those costs, that obviously has to be done in a way that enables transformation. I will give an example. We met with the Scottish Government’s digital team, who are rolling out a lot of excellent work to help their colleagues in many parts of the public sector to do things differently using automation and smart technology in order to save money. It would make no sense for us to reduce the Scottish Government’s digital capacity in the areas where the team is doing that.

However, the truth is that, in the long run, without a doubt, it is not sustainable across our public sector for each public body—the number of public bodies is quoted to me regularly, including in this committee—to have a human resources department, a payroll department and so on. Our default assumption, therefore, is that we need to move to shared services. Some front-line services can be shared, and we want to encourage that as well. However, with regard to the corporate costs, there is without a doubt the ability to make savings there.

The Oracle investment that we have made in the Scottish Government enables a range of public bodies to be onboarded so that they can be provided with that service rather than having to invest in new up-to-date systems.

There is a lot happening in this space—it has to happen, and it is being monitored within an inch of its life. I suggest that the committee invites Ivan McKee to tell members in great detail about the work that he is undertaking, because I think that that will provide further reassurance.

As I said in my opening statement, we will be setting out a lot of the material in and around the budget periods. It is fair to say that we have been disappointed with the spending review on a number of levels, with the capital position in the block grant growing by 0.3 per cent compared with 1.8 per cent for all UK departments. Essentially, that means that we will have a declining level of capital available to us.

Bearing in mind, too, the point that you have just made about the costs of construction going up, all of that means that we will be required to prioritise the pipeline that we bring forward. We will not be able to do everything now. Clearly, we have already made some commitments and priorities around, for example, affordable housing—indeed, the Cabinet Secretary for Housing will be making a statement later today on that—but we will have to make some difficult decisions. We are looking at the options that might be available to us; for example, we are looking at how we might use revenue-based finance in an appropriate way to fund projects that would otherwise not be funded.

The capital outlook is disappointing. There has been a bit of growth in financial transactions, which is welcome—we use them for housing and the Scottish National Investment Bank—but the overall direction of capital is disappointing, to say the least.

One reason for the major increase in head count has been the increase in responsibilities that came from the devolution of large areas of welfare and the growth of Social Security Scotland. There are other areas too. There has not been growth across the board: the big growth has come from areas—