Chamber and committees

The work on public sector reform is an on-going priority, and a variety of public sector organisations will change the way in which they deliver public services to ensure that they can be as effective and sustainable as possible. Through the budget process, we are actively engaging with all public bodies to ensure that steps are being taken to maximise efficiency. As I set out to the Parliament, there are enormous pressures on our public finances and enormous pressures through the demand on public organisations and agencies, so we have to ensure that we have in place appropriate and sustainable methods of delivery in all organisations.

That work is, in essence, an on-going task as part of the work in which we deliver the budget priorities. It is being undertaken in a range of areas, but I will give some examples that the First Minister cited yesterday in the briefing that she gave on the health service. She talked about the way in which organisations such as NHS 24 and the Scottish Ambulance Service are changing their operational practices—and have already changed them—to ensure that they can handle more cases in more demanding circumstances than has been the case up until now.

I assure the committee that the question of public service delivery and the reform agenda is an implicit part of that. Indeed, in my budget statement, I said that there would be significant emphasis on the principles—established through the Christie commission—that emphasised early intervention and prevention and that those would be at the heart of the work that we take forward to deliver person-centred public services. That work was also the subject of a lot of detail that was set out in autumn last year in “Covid Recovery Strategy: For a fairer future”, in which, by joint agreement with local government, we set out how we would move towards person-centred public services. Those plans were openly shared as part of that process.

Convener, the question comes down to the sustainability of the budget challenge, and I was very open with Parliament about the scale of the challenge that we face. I set out a number of factors that would have to be considered as part of implementing the budget. The budget contains significant fiscal pressure that public bodies will have to wrestle with. Public bodies will have to change the way that they operate in this financial year to ensure the sustainability of their public services. Those changes will become apparent as organisations take decisions in order to live within the resources that have been made available to them. However, I assure the committee that that work is actively under way and that it has been for a considerable time.

I had better not give the committee a number off the top of my head, so I had better write to it about that point. Do you have a particular level in mind that you would—

We will give you that figure.

There is a sizeable number of points there. The committee is keen for urgent progress, so I will try to keep this as brisk as I can.

The first thing to say is that I accept Professor Roy’s fundamental point that the Government has to be mindful of these questions. I readily put that on the record, and I consider that matter very carefully in relation to the steps that we take.

Secondly, when we set out our tax position, we set out the position technically, but we also did so in terms of the Government’s values and policies. We set out technical changes, but we also set out why we are undertaking those technical changes. They are based on the principles that the Government adheres to, which are that we believe in progressive taxation and that higher earners should contribute more in taxation than has previously been the case. We apply those judgments.

As I have already set out to the committee in response to your questions, the budget would be without £519 million if I had not taken the decision that I have taken to change the tax approach that is inherent in the budget. That enables us to better and more substantively invest in public services and public priorities.

Thirdly, there is obviously a risk—the Fiscal Commission acknowledges this and sets out the arguments—that people may take steps to change their tax affairs to avoid those consequences. Morally, I think that it is wrong to do that, but it is technically possible for people to do so. I believe that that is morally wrong because people who live in Scotland have access to a set of provisions and services that are different from those that are available in other parts of the United Kingdom. Somebody might change their tax arrangements to avoid paying certain amounts of tax but be prepared to accept that, if their child goes to university in Scotland, they will not pay tuition fees; that they will have access to free prescriptions; that they will, if they have young children, have a better proposition in the early learning and childcare that is available compared with what is available in the rest of the United Kingdom; or that they will pay comparatively lower council tax than people in other parts of the United Kingdom do.

There is a very strong moral dimension to this. People in Scotland have access to what I called in the budget statement a social contract of provisions. I think that it is appropriate that we support that in these very tough times through the decisions that we take on taxation.

Since the budget was set out, on 15 December, I have not had any discussions with the other political parties on the budget provisions. For Opposition spokespeople on finance, I would have thought that I would be the last person that they would want to see over the Christmas break. If there was a choice between Santa and John Swinney arriving for a discussion, I think that Opposition finance spokespeople would probably have chosen Santa.

I think that the committee well understands the challenges that I face. Once a financial year starts and I have set tax rates, we are essentially operating on a fixed budget, unless there is a change through the Barnett formula. That is the position that I find myself in at this moment in this financial year. There is a different set of arguments about the next financial year. I have completely accepted that, and I responded to that in the budget statement with the changes to the tax position that I set out. However, there is literally a remaining amount of money to be spent between now and 31 March, and I have to live within that limit. As I have said to the committee, I am yet to be confident that I have a path to balance within that. That is a significant position that I never found myself in at this stage in the financial year in the nine years in which I was the finance secretary. I find myself in an entirely novel situation that is not a particularly welcome one, but it is a novel situation nonetheless.

When I have finished this evidence session, I will meet my finance team to take stock of where we are and what further steps we have to take. If, for example, I were to make further commitments beyond what we are already committed to in this financial year, I would have to find the money for them, and that would have to come from not taking forward other programmes that might be there to be taken forward. I have looked very carefully at what is called the remaining spend analysis for this financial year, and not an awful lot of flexibility remains for me in the next three months.

Because of the simple point that the First Minister is making in that article, which is that the Scottish Government’s budget for the financial year 2022-23 was essentially formulated in autumn 2021, based on UK numbers at that time, when inflation was at the consistently low level that it has been at for most of the past 30 years and that by the start of the financial year we saw inflation galloping up to 11 per cent, but there was no change to the fiscal arrangements that were being made available in 2022-23 to take account of that.

I will try to give the committee a more considered view.

Any costs arising from the establishment of the national care service will be contained in the budget line, which is the sum of £1.1 billion for social care support and national care service delivery. As I said earlier, a revised financial memorandum will be sent to the committee to reflect the up-to-date assessment of how that will be taken forward, but that budget line includes a range of other items, not least of which is the uplift to social care pay that will be taken forward. Of course, the work on the national care service is about more than just the establishment of the infrastructure of the national care service. It is also about the issues of pay and recruitment, which we have talked about on many occasions.