Chamber and committees

The biggest reduction is in financial transactions. The capital reduction is about 13 per cent. As I said, a priority is to re-establish the capital element. It is difficult to do that for financial transactions, and it is more difficult now that we have a further reduction in financial transactions to manage in 2024-25. That affects areas that have been a priority for the committee—the SNIB and the affordable housing supply programme. Reductions in FTs are absolutely the worst thing that could happen.

I will carefully examine the position after 6 March. We have called for additional capital. If you translate the percentage reduction into cash, you will see that it is £1.6 billion less to spend by 2027-28, which is about £540 million a year. That is a lot of investment in affordable housing, health infrastructure and anything else. It is a lot to absorb, so we need the position to be reversed.

We will also consider our position once we get to the end of this financial year, and we will look at our borrowing position. We need to look at all that in the round. I will want to come back to Parliament in the light of all that and consider whether any of the positions can be changed in-year.

Okay—no worries. SNIB’s investment decisions are for SNIB, and we expect it to use its expertise around the table, which is considerable, in making the investments that will align with our priorities, particularly regarding net zero investments.

On funding, SNIB has traditionally relied on financial transactions, because it can make good use of them. FTs are a bit limited in where they can be deployed. Traditionally, FTs have been deployed for affordable housing, and SNIB has been the recipient of them. Unfortunately, the number of FTs that we have had from the UK Government has declined significantly. For 2024-25, I think that they are in the region of £160 million. Therefore, we have taken the decision to put all the FTs to SNIB for its investment programme. We expect SNIB to use that investment in a way that aligns with our priorities.

If you are asking me whether we would have wanted to give more money to SNIB, my answer is, in an ideal world, yes. However, given its reliance on FTs, we are not able to do that because we have fewer FTs to distribute. I will ask Neil Gray to comment on the advisory board.

That is very much the case. In every budget, there is always a tension between investing in the here and now, for example through mitigating the cost of living crisis and supporting household budgets and some of the most vulnerable—the £6.3 billion investment in social security speaks to that—and investing for the future. There is always a balance to be struck.

Clearly, some of our budget is for the here and now—the everyday, and keeping people’s heads above water. If we did not do that, we would be asked why. We are balancing that with some of the investments that are very much about the future and the climate change targets—putting in place the building blocks. The budget attempts to do that. We have the £6.3 billion investment in social security, but we also have £4.7 billion of capital and resource investment that is directly attributable to having a positive impact on the climate change goals. Some of that looks to the future and some will be for the just transition. Around the Cabinet table, we often have to wrestle with those competing demands.

Yes.

Yes: we will come back to you with as much of the detail of that as—

We both signed the letter. I guess that the portfolio lead is Màiri McAllan, but my overarching role across Government is to drill down and make more impactful analysis work better. Philip Raines wants to come in.

For?

We are using the money that is generated from ScotWind to support the budget. Where we end up on the path to balance for 2023-24 will determine how much of the ScotWind moneys that are generated are able to be deployed in 2024-25. The ScotWind resource has proven to be a really important resource in supporting the budget. At the moment, I am not able to tell you how much of that will be able to be utilised for 2024-25, because that will be largely dependent on how much we need to draw down in 2023-24 for our path to balance. Once I know that, after we have had the supplementary estimates and the spring budget, I will be able to inform the committee how much will be available for drawdown in 2024-25, if that would be helpful.

ScotWind moneys have been used to support the budget. In terms of the path to balance for 2023-24, we have to ensure that we can balance our budget, which we are legally required to do at the year end. Although I set out some of the in-year savings, because of the volatility of the budget and the fact that pay deals are beyond what was budgeted for, there is still a way to go in terms of the path to balance for 2023-24.

I want to minimise any drawdown of ScotWind, because the more we draw down in 2023-24, the less is available for 2024-25. I had set out in the medium-term financial strategy last May that we had anticipated having £350 million available to us in 2024-25 to support the budget. Any money that I need to use in 2023-24 to support achieving a balanced budget is money that is not available for 2024-25. You can see why we want to ensure that we minimise any usage—that £350 million, or whatever we end up being able to draw down for 2024-25, is an essential part of the budget to support public services.

We can certainly provide you with the information on the detailed discussions with that organisation about its targets. In difficult times, we have had to prioritise where resources will have the most impact, and part of that discussion involves looking at organisations’ reserves. I am not saying that it is the whole picture or that it replaces every pound; all I am saying is that it is taken into account in relation to the funding that organisations have to deploy.