Chamber and committees

We will simply have to look at that on a project-by-project basis. We need to see what price estimates are coming in for projects and make a judgment on the nature of the sustainability of those projects. That will be an on-going consideration during the year, but it is important that I flag up to the committee at the outset that that is a material consideration in how we proceed through this period.

I am mindful of the fact that there will be wider considerations to be borne in mind—a point that Michelle Thomson has made—about the importance of constant attention to the affordable housing challenge. It is an important point, and one that will weigh heavily in decision making and determination on these points. As we speak, commitments are being made in relation to affordable housing projects in the current financial year, despite the fact that we face enormous external pressures.

Those are technical challenges. My officials wrestle with such questions, as does the Fiscal Commission. We depend on the commission’s final view on behaviour change—as I said to the convener, it is right and appropriate that I depend on the commission’s conclusion.

I was finance minister for many years and have come back into the area after a bit of a gap, and I make the observation that the arrangements are a great deal more complex than they were when I left the role in 2016. The issue that you put to me is just one example of an area where there is a need for a more sophisticated understanding of the choices and decisions that people make. That issue is being constantly addressed, to try to ensure that the work is of the highest possible quality.

Of course, we are talking about predictions and assessments. There will be outturns, and we will see the validity of some of those judgments in due course.

I have not built assumptions on pay into the budget. I have undertaken—using the most careful judgment that I can deploy, by looking at the challenges and pressures that exist across the public sector—to look at what the best distribution of public resources is and, obviously, judgments about pay have to be made within the parameters that are set by those judgments.

That depends on where we end up in this financial year, because I have an expectation—or, perhaps, a prediction—about where we might end up during this financial year, and as I have said to the committee a couple of times today, I am not in a position to see that in balance, so part of the sum that I have not yet been able to reconcile will involve an assumption on certain pay deals. For example, the difference between 2 per cent and 5 per cent for the teachers’ pay deal will be in my contingency element, which I have not yet resolved. If I get to the end of the financial year and have an underspend, and there is the difference between 2 per cent and 5 per cent for a teachers’ pay deal, then that that will go into the carry-over, but if I have not been able to balance this year’s budget, then that money does not exist.

The current Prime Minister.

Michael Gove—I think; it was either him or John Glenn, the Chief Secretary to the Treasury—made it clear to me that they were not pursuing the plethora of investment zones. It was going to be a much more focused proposition. That dialogue is under way between us. We are not in a position to share any details about where that dialogue has reached; it is in the very early stages.

What I am certain about is that the proposition that was available in September is no longer available and it will be a much more focused proposition.

However, it would be fair to say that the sum varies, depending on the assumptions, from about £200 million to £500 million.

The first thing that I would say is that I do not consider our position to have a discernible effect on middle-income earners in Scotland. Essentially, the steps that we are taking are affecting individuals who are in the top two deciles of the population in terms of earnings. We are concentrating the measures that we are taking on the top two deciles—we are not discernibly affecting middle-income earners.

There are many things happening as part of the process of establishing the national care service. Through the work on the national care service, we are investing heavily in improving the resources that are available for salaries for social care staff, for example. The national care service expenditure will sit within an overall budget in excess of £1 billion—£1.1 billion. A substantial part of that is to increase pay for social care staff. My recollection is that about £100 million of that overall budget will be used to pay for the uplift in social care pay to £10.90 per hour, which, of course, builds on the other steps that we have taken to increase pay for social care staff.

The committee will receive an updated financial memorandum on what I would call the logistical arrangements around the national care service in future, and the point that you have raised will be addressed as part of that exercise.

I had discussions with all the political parties in Parliament prior to the budget being set. I concluded each of those discussions by saying that I would resume them once the budget was set out and the dust had settled. We will have those discussions in the fullness of time.

The convener makes an important point, which is that that dialogue is important. I want to make sure that I hear the perspective of other parties and I will do my best to address it. However, the other important point is that I have allocated the resources that are available to me; I have made choices. Therefore, if I am going to reallocate money to address issues that are brought to me by other parties, I have to be confident that they can be funded. That requirement will have to be put on all provisions.

The resource spending review remains a very relevant consideration for all stakeholders who are concerned with the public finances, not necessarily because of the precise details in it, but because it shows the shape of how public finances are developing.

When the resource spending review was set out, we envisaged that there would be two early tough years and then two better years. However, given the UK Government’s statement in November, we will have two relatively less painful years to begin with and then two much more painful years. I could draw a couple of lines on paper and try to present a graph that showed how that all of that fits together but, roughly, what that says to me is that the next four years will be really tough on the public finances. Years 1 and 2 will be years of adjustment, and years 3 and 4 will be years of consolidation and real difficulty.

Some people might say that there is a lot of water to go under the bridge between now and then. However, having listened to the current United Kingdom Government’s plans and to the comments that were made the other day by the leader of the Opposition, I do not get the sense that there would be much of a departure from the public expenditure outlook that has been planned for by the current United Kingdom Government should there be a change of Government after the next Westminster general election.

In answer to Mr Greer’s question, I think that the direction of travel that is set out in the resource spending review remains absolutely valid, although some of the numbers might be different as a consequence of what has happened.