Chamber and committees

Yes, that is the intention. The problem at the moment is the level of uncertainty, which makes it very challenging to set out a position, because it could be buffeted and changed by forthcoming fiscal events. I hope that the publication of the medium-term financial strategy in May will be an opportunity to look at the longer term. Just before Christmas, I provided an updated report on some parts of the reform programme, which is a critical part of the financial outlook. Even if we set aside the fiscal decisions that were made in the autumn statement, the outlook is likely to remain challenging, for all the reasons that I set out in the previous MTFS.

My intention is to give you regular updates every six months on the on-going work to get us to a more sustainable position in relation to the size and function of the public sector, with a particular focus on the reforms that we are taking forward.

All those external factors in relation to where inflation will end up are concerning. We can make assumptions based on the best estimates of the key organisations that are projecting where inflation will land, but those estimates are not guaranteed and inflation is material to where pay lands, given the pay metrics.

That relates to critical infrastructure. We continue to support Scotland’s trunk road network by providing more than £1 billion for critical safety, adaptation, maintenance and improvement priorities. That will come in waves, depending on where investments are required. Because of the commitments that we have made on the A9 dualling programme, including Tomatin to Moy, the A83 at the Rest and Be Thankful and the operation of the M8 Woodside viaduct, a number of projects require that investment. That will ebb and flow, depending on what the critical—

I anticipate that that can happen, although the delivery timeframes might need to reflect the challenging financial environment and the capital budget challenges. We will continue to work with SPT and Clyde Gateway on profiling the delivery of those projects, which remain important. We want to work with those bodies on how they can continue to deliver on the commitments.

The tax advisory group is more about the long-term position of our tax policies—about the strategy and the longer-term plan for our tax position. That involves looking beyond year-to-year budget horizons. The group was never intended to provide an input to each budget. Apart from anything else, the divergence of views around the table at the group would probably not land in a space of collective agreement. We have those divergent views to ensure rigour in and challenge to the strategic position of tax policy.

The performance framework remains important for priorities and delivering them. That is overlaid with the First Minister’s key missions, which home in on what is important and on how to focus and prioritise. Given that we have less to go around, how can we prioritise and focus on the things that really matter? That was the starting point to how we constructed the budget.

I do not have the figure at the top of my head but, yes, we have that information. Not all organisations are public bodies—universities are not public bodies, so I do not have insight into what reserves each of them has—but we know the level of reserves for public bodies and local government. That has increased, actually.

We will give an update on the capital delivery of the existing infrastructure at the end of January and the infrastructure investment plan will be in the spring to align with the spring budget. It will be important to see what that looks like before we introduce the IIP revisions as the budget could end up impacting positively or negatively on capital.

We base our figures on the Scottish Fiscal Commission’s analysis, which takes into account behavioural change. We recognise that we require more evidence, which is why I talked earlier about the work that HMRC is doing.

So far, the evidence that is in front of us is that there is no widespread concern about behavioural impact and that we still see net in-migration. However, the HMRC work is important in relation to being able to drill further into whether we can establish behavioural change in various income bands, which the HMRC research could show. Andrew Scott may wish to add something.

Again, those were difficult decisions but, with falling budgets, difficult decisions have to be made. To be blunt, we have had to prioritise front-line services—particularly our investment in the NHS—and that has meant some very difficult decisions elsewhere.

It is also against a backdrop of average earnings in Scotland now growing faster than in the UK. We have seen record income tax receipts, with Scottish income tax alone forecast to raise about £18.8 billion in 2024-25 to help fund services. There are a number of indicators that show, on productivity as well, that the Scottish economy is improving in its performance.

On where we are supporting investment specifically, it will not surprise you that we are looking at our investment in net zero, particularly. We are working with business investors to launch a new green industrial strategy. We have tried to ensure that our enterprise agencies will be focused on the key priorities. They will not be able to do everything, and they will need to do fewer things than before, but they will prioritise where they deliver their support services.

In an ideal world, with budgets not reducing, we would not have had to make any of those decisions, but we have had to. The prioritisation for all our public bodies will mean that they will not be able to do the range of things that we have previously asked them to do but will have to focus on key priorities.

First, there is a risk because the UK Government is counting international students in trying to reduce the number of people who are coming to the UK. I do not think that that is the right thing to do, and it will put pressure on our university sector.

As regards the position of students from more deprived backgrounds, increasing numbers of those students have been able to access university places. We want that trend to continue, and we want the attainment gap and opportunity gap to continue to be addressed. We will continue to pursue that as a clear policy objective.