Chamber and committees

We plan to spend more next year on employability than we will spend this year, so there is an increase in the projected expenditure on employability. However, in the emergency budget review, I removed around £54 million-worth of expenditure that was planned to be undertaken on employability in this year.

If we had spent that £54 million this year and I had set the budget that I have set for next year, there would have been a reduction, but we did not do that. We took the money out this year for a reason that I think I explained to this committee; I certainly explained it to the Social Justice and Social Security Committee.

At the moment in the financial year, which was quite advanced, when I had to take the emergency budget review decisions, I had a limited range of sources of expenditure that were not legally committed, and those employability resources were not legally committed. I had to take a set of difficult and abrupt decisions to free up money to be able to afford increased public sector pay bills during this financial year. I reassure Mr Lumsden that there is incremental growth from this year’s actual expenditure into next year on employability programmes to support the child poverty reduction activity.

The other factor that allowed me to remove the expenditure that was planned to be undertaken on employability in this financial year was that we still had capacity in the existing programmes for individuals to enter employability activity. That money could be removed because there was still adequate capacity to enable our child poverty measures to be supported; it is just that we were not expanding the programmes to the extent that we had predicted.

It is undeniable that that could be done, but I have to make a judgment about what resources are available. That is a key point about the Dundee pathfinder in which we are looking closely at what works in supporting people out of economic inactivity and into productive economic activity. Some good learning is coming out of that programme that will influence how we deploy employability expenditure in future.

I come back to my point on capacity. In essence, these are demand-led programmes, so if I, or the Cabinet Secretary for Finance and the Economy, who should be here doing this, find in the course of the next year that there is the need for more investment because the capacity is being used up already, that is obviously an issue for substantial consideration.

I cannot give you that precise information now, but I will write to the committee with the best available information that we have. I am not sure that we will be able to give that number, because there will still be appeals under consideration, but I will give the committee the best information that I can at this stage.

First, let me assure you that I do not think that it applies universally to all capital projects. For example, higher education research expenditure is covered by capital expenditure and it is not affected to the extent that a project that relies heavily on input materials will be affected. Construction projects are a significant concern at the moment because of price inflation on raw materials, and that can obviously affect judgments. That is not me indicating that that judgment will be applied in all circumstances. We have to be mindful of where and when it is appropriate to make that judgment, but it is a relevant factor to consider.

I cannot go further than to say that these matters will be considered on a project-by-project basis. However, the Government fully intends to deploy £6.3 billion of capital expenditure and the point that I am making is, in a sense, a marginal point in relation to the totality of that programme. We will work to deploy £6.3 billion of capital expenditure in the next financial year, so business organisations can look at that and see how it is distributed across the range of portfolio areas and the plans that have been set out in the budget document. They can take some confidence that the Government will invest heavily in the country’s capital estate, but certain projects might not proceed as originally timetabled, although they will be at the margins of the programme.

The discussions with the UK Government on the fiscal framework have, in essence, taken account of the transactional work around the evidence review that is being prepared. I have not had further discussions with the UK Government about the fiscal framework review, beyond that—if my memory serves me right. We have set out some of the issues that we have in relation to the scope of our financial powers and responsibilities, and we will engage with the United Kingdom Government on those points.

We can stay here all afternoon, convener. Liz Smith is not accepting the point that I am making, which is the point that the First Minister was making. The budget parameters were set by the UK Government in autumn 2021, when inflation was flat as a pancake. By the time the financial year started, inflation was galloping like a racehorse and the UK Government had not revised its financial estimates. That is the problem.

Are you asking at what moment it will come?

It depends on whether that arises out of an additional allocation to the Department of Health and Social Care, from which there would be a consequential. For example, no consequentials arise out of the announcements that were made by the UK Government yesterday on the management of NHS pressures, because, as I understand it, the funding came from existing, committed DHSC resources. If there were to be a cash injection from the Treasury into the DHSC to meet the costs of a pay deal—as I understand it, the DHSC cannot offer any more, because it does not have the money to do so—that could give rise to a consequential. However, we are in the realms of many uncertainties and unpredictabilities as we rehearse this question.

We could take forward a range of options in connection with taxation. The Government looks at these questions and sets out its tax position to Parliament when that exercise is concluded. There are of course many other ways in which we could structure our tax system and the option exists for the Government to consider those points.