Chamber and committees

There are definitely more savings to be made in some areas than others.

We are making progress with bonds—I have given an update on that previously. We are continuing with the due diligence process, in line with what I set out in the 2025-26 budget and the MTFS. There is more work to do, particularly to establish specific structures for a successful first bond issuance and to create the framework for future years. I hope to be able to say more on that later in the year, ahead of the 2026-27 budget. Things are progressing as we would expect. I am happy to give the committee an update on key points.

We are working with the UK Government to address the issues that have been the reason for this work taking a long time, including making sure that we protect Highlands and Islands connectivity and that we have a system that complies with the UK Government’s subsidy control regime. Discussions are progressing well. We will come back with a timeframe that we think is realistic.

So there is some helpful movement there.

I am not going to start ruling things in or out at this evidence session, but we have been pretty clear that we want to work with local government. The framework that I described earlier was about full transparency, open books, no surprises and all that.

On your first point, about timing, I want to assure local government that we very much have its budget-setting deadlines in mind in thinking about how we give enough certainty to local government. Some of that could be to do with what level of agreement we can reach and when with Opposition parties on the budget. I want to be able to give local government enough certainty about their envelopes so that their budget-setting cycles, which run through late February into early March, are not interrupted.

I assure you that that is a priority in my thinking. We need to make sure that councils are able to set their budgets.

I set out in the MTFS and the fiscal sustainability delivery plan the measures that we will have to take to ensure that we continue to provide the services that we want to provide and meet the key priorities that we have set out. The reductions that are set out—mainly through workforce reduction and reform, shared services, doing things differently, efficiencies and better value for money—all face in a direction to ensure that we can balance our budget every year, as we are required to do, and that we can afford the important interventions that we have set out, such as the Scottish child payment and real-terms increases in health funding. That requires us to do all those things, and we are not the only ones doing it. The UK Government is doing it as well, as is the Welsh Government.

Although funding is increasing, the pressures, demographic changes and all that are outstripping that funding. Unless something changes, that will remain the case.

In short—yes, that is what we have to do and that is what we have set out in the spending review. We will show the envelopes going forward and, obviously, it will be up to Opposition parties if they want to change those envelopes, as per the SFC’s challenge.

I touched on that earlier. The problem is that the spending review has not been good for us in resource or, indeed, capital. The capital projection is on a declining trajectory, at a time when we want to be investing and we have ambitions. You are right about the link between infrastructure investment and growing the economy. We have set out some ambitious targets, for example, for the spend on housing—£4.9 billion—which is a mixture of public and private investment. Levering in private sector investment in mid-market rent, for example, is very important and will be a big contributor to affordable housing.

We are also looking at how we can expand that envelope beyond capital departmental expenditure limits—CDEL. That means that we are looking at things such as revenue finance, outcomes-based borrowing, local government and other ways of expanding that capital envelope. We cannot stick only to CDEL, because, as you pointed out, it is declining and there is a gap there. We are looking at ways of expanding that envelope, and I will set that out in the infrastructure investment plan and pipeline.

Our economic plans through the national strategy for economic transformation are very explicit about growing the economy and playing to our strengths. We have a lot of economic strengths in key sectors. We have routed specific support through, for example, the expansion of offshore wind, the support for Techscaler innovation and the support for food and drink, making sure that we invest in areas of growth in the economy. We have a lot of success in attracting inward investment to Scotland, through Scottish Development International and other bodies. We are very focused on that.

We also need to reduce economic inactivity. That is not easy to do, but a lot of our employability programmes are focused on reducing economic inactivity and increasing the value of work and the hours that are worked. We touched on some of that earlier, in relation to the childcare offer and supporting women in particular to increase the value of the work that they do, which helps with their tax contribution.

I go back to two points. The first is that getting it right first time is important. The second is that Social Security Scotland has said that the review process is the next phase in making certain that what people are getting is what they are entitled to.

No, they are not. If a body did not put in an invest to save proposition, that does not mean that it is not getting on with reform work in its area. It will have to meet the efficiency targets and the workforce reduction targets, whether or not it put in a bid to invest to save. It is not that bodies only have to do that if they put in an invest to save bid.

Some of the bids will be a bit more ambitious, so some money is needed to oil the wheels of change, but not every change needs such money to be invested. The invest to save scheme is not the only story in town; it is an important one, but a lot of other work is going on in the background.