Chamber and committees

Given the tough financial environment, we had to look at the priorities in the rural affairs, land reform and islands budget. We will continue to provide farmers, crofters and land managers with the most generous package of direct support in the UK, which is worth more than £600 million in 2024-25. We will also continue to support people who are farming and crofting in our most remote and fragile areas through £65 million for the less favoured areas scheme in 2024-25—we are the only country in the UK to provide that vital support. We have also committed to delivering a new round of agri-environment investment as part of the overall £30 million budget.

I contend that, in a tough financial round, we have prioritised what we are able to invest in. We have also prioritised things such as peatland restoration; we are investing £26.9 million to help to achieve the peatland restoration targets. We have worked in partnership with Scottish Forestry on utilising some of its reserves to ensure that it can continue to deliver, particularly on its tree-planting targets.

It is a tough budget, but we have tried to prioritise the sector’s priorities within that.

We looked at the forestry budget in relation to the resources that Scottish Forestry has—I mentioned its reserves—and its targets and how it can continue to deliver on them.

Difficult decisions have had to be made. If those decisions had not been made, reductions in the budget would need to be made elsewhere. We will continue to work with Forestry Scotland and other organisations to ensure that they can deliver on the core ambitions that they have set out.

The key things that matter, and that will be prioritised by the agencies, along with their partners and the Scottish Government, relate to support for business and investment and ensuring that that aligns with the key priorities for delivery.

We have recognised that we sometimes ask our enterprise agencies to do 101 things, but we cannot ask them to do 101 things if resources are constrained. As ministers, we therefore need to be clear about the key things for delivery in relation to the agencies’ core functions in order to avoid duplication of things that other organisations are doing, and to ensure that the enterprise agencies are focused on the key interventions that their organisations, working with others, can bring to the table. That will help to ensure that there is investment in the key sectors for growth, whether in the Highlands and Islands or the south of Scotland, and that the agencies support businesses to start up and expand in those key sectors.

As ministers, we can sometimes be guilty of asking them to do a myriad of things. We need to be clear that the priorities that we set for our enterprise agencies—or, indeed, any other public organisation—take account of the resources that are available and at their disposal.

We are asking them to focus on the key things that will make a difference. Some of the other things that we have traditionally asked them to do will perhaps need to happen more slowly over time. The letters that we will issue to each enterprise agency will set out the key things that we will ask them to deliver over 2024-25. Some of the things that are not garnered together as key priorities will have to either not happen, or happen more slowly.

I can certainly write to the committee with that figure. There will be huge differences between the levels of reserves. Creative Scotland’s reserves have been pretty well discussed in the public domain, but there will be other organisations whose reserves have had less scrutiny. We should not necessarily see the issue as a negative—such reserves might be pertinent to investment plans and reforms that organisations plan to undertake—but we also cannot ignore it. It has to be part of the picture when we consider how we get to a more sustainable position with some of the necessary reforms and think about how reserves are utilised in the short to medium term.

That also includes the UK-funded annually managed expenditure—student debt—so we do not have control over that. That is included in that figure. Alison, do you want to say something?

Some of it will relate to particular areas of delivery that are required at a particular time. I will turn to Alison Cumming for the detail, but I think that part of it will be around the requirement for us to support police pensions, which is reflected in the budget for the police. Some of it will relate to particular cycles of requirement and investment, and the police budget is reflective of that.

The budget is, in very difficult circumstances, trying to invest in as many areas as possible to deliver on the Government’s objectives, but there is less money to be invested. If we were to have increases in all the areas that you mention, it would mean reductions in budgets elsewhere. We have to make choices to deliver a balanced budget. Those choices are not easy, but we are in consultation with Neil Gray and other ministers on what we will do to ensure, for example, that our enterprise agencies are focused on the key things that matter.

The skills review that Withers delivered challenged us to ensure that our skills delivery landscape—which involves a huge, multi-billion pound investment—delivers better impact for the economy and that our apprenticeships deliver. Graeme Dey is taking forward some very important work to ensure that what our apprenticeship system and college offerings deliver is more aligned with what businesses say they need to fill the skills gaps in their sectors.

Taken with the strategic investments that we are making in green energy and renewables, we have tried to align a declining amount of resources, particularly on the capital side, to have the best impact that we can. Those decisions are not easy, and if you asked me whether I would prefer not to have had to make them, that would of course be my conclusion. However, in the light of falling budgets, we have to be clear—and we are being clear—with our agencies that the focus needs to be on delivery.

There has been an analysis of the impact of the £500 million investment, of which the £69 million is the first tranche. I do not have that in front of me, but I can forward it to the committee. That investment was explicitly recommended by the investor panel, which said that investment in that sector is the one key investment that the Scottish Government can make that will have a substantial return for the Scottish economy. We have talked about the constrained capital resources. Given that there is less money to invest, we have to be pretty strategic about where we can invest, and we have identified that area as important.

The Fraser of Allander figures that you referred to show that Scotland is seen as a good place to invest because of that certainty of objective. It is very clear, with no ifs or buts, that that area of the economy will continue to see investment, and that speaks to international investors who are looking to make choices about where they invest.

No—because the Scottish Funding Council has not completed its discussions with the sector.

I take the point that universities that rely more on the teaching grant, particularly the smaller universities, are in a different financial position from larger universities that are sitting with large reserves, which we were talking about earlier. Their differing positions will be taken into account in future discussions.

As I said to the convener earlier, the easy thing is to point to areas of the budget where there are challenges with falling resources; the more difficult thing is to put forward a proposition on what different decisions would be made. I would be happy to hear them.