Chamber and committees

The on-going Covid-19 spend is primarily focused on a range of measures, including the surveillance activity that is under way. That activity considers elements such as the Office for National Statistics’ survey and routine testing in general practitioner surgeries, the wider healthcare system and the care system. We fund those elements to enable us to have that intelligence.

There will also be routine approaches in other elements of intelligence gathering, such as through waste-water analyses and the ONS infections survey. There is also wider work being done on activity in the test and protect arrangements that we have in place.

That is a very live issue, on which I have to take forward dialogue with the Finance and Public Administration Committee to agree a timescale. The protocol between the Government and the Parliament requires us to negotiate that timetable. We know that there will be another UK statement of some sort on 23 November. It is unlikely to be a budget; it will more likely be an assessment of the condition of the public finances and the debt-reduction arrangements that are required. I would be surprised if there is a full budget in late November.

Accompanying that, we will get the Office for Budgetary Responsibility’s analysis of the fiscal measures that have been taken. From that, the Scottish Fiscal Commission will be able to undertake its work and we will be able to pursue a budget thereafter. That all leads me to the conclusion that it is highly likely that a Scottish Government budget will be published before the end of the calendar year.

That will obviously be a material factor within the budget. Mr Fraser is correct that the resource spending review envisages a reduction in public sector employment over the course of the spending review period. We have to live within our means, and the public sector workforce has grown during the course of the pandemic, so we now need to take steps to ensure that the level of public sector employment is sustainable within the resources that we have available to us. That will obviously be a product of the discussions that are had in relation to the budgets that are available for individual areas of public expenditure. The implications for public sector employment will flow from that.

Of course, beyond the resource spending review, there are three additional variables. The first is whether the resource spending review is sustained in the resources that we have available. Just now, it is reasonable to assume that public spending at English departmental level—which matters significantly in terms of what funding will be available to us—is likely to reduce. Given the difficulties that are currently being experienced in sustainability of the public finances, the funding that is available to us might be reduced from what we expect.

Secondly, we are dealing with much higher inherent costs as a consequence of the pay deals in this financial year, which have been much higher than we had envisaged.

Thirdly, there is real uncertainty about the period for which we will have to deal with much higher inflation. We do not yet have the answer to that question, but it is material to the financial volatility with which we are now wrestling.

In essence, without certainty over where the budget is heading in the years to come, it is impossible for me to answer that question just now. I hope that I will know the answer to that when I see the outcome of the UK Government’s statements on 23 November. It all depends on what information we get at that stage. That is genuine source of anxiety for me, because we saw a fiscal event on Friday that did not give us a complete picture of the financial information that is necessary.

If we get a repeat of that in November, I will be trying to construct a budget that will be based on a number of variables that might include significant risk for us. If I do not firmly know the expected budget of the United Kingdom Government for 2023-24, that adds significant variability and uncertainty in the budget that I have to set for that period. We will have clearer answers to that question when we get through the budget process.

Certainly. To give a complete picture, there has been growing pressure on the public finances for some years. The statement that I gave to Parliament on 7 September was not a statement that I was obliged to make; I volunteered to give it, because I wanted to be transparent with Parliament about the gravity of the public spending pressures that we face.

We operate on a fixed budget; by law, I cannot revisit tax during a financial year, and I cannot borrow for day-to-day spending. We have a fixed budget unless we benefit from any consequential funding because of changes in English departmental public spending during the year.

I announced to Parliament more than £500 million of spending reductions and changes, in order to be open with Parliament about the gravity of the difficulty that we face. That is a product of rising inflation and pay costs that are far in excess of what we expected, because of the inflation. That is where we were last Thursday.

On Friday, we had the fiscal event, which in this financial year generates a positive Barnett consequential to the Scottish Government of £35 million, which comes from changes to stamp duty in England. In subsequent years, there will be further Barnett consequentials. There are changes in tax interactions between Scotland and England, and there are plenty of voices demanding that I deliver in Scotland the tax changes that the UK Government has made.

Looking forward, we have some line of sight on the tax position, but I am not at all confident, as I sit here today, that that tax position will hold, because the market volatility has been horrific. How that will all hold is anybody’s guess, and it does not look as though the situation is getting any more stable this morning.

The Chief Secretary to the Treasury told me—

Of course. If the UK financial system is going to collapse, the UK Government will have to change its tax position. It is an absolute mess this morning—a total mess. I have never seen anything like it in my life. I have no idea how that position will prevail.

Why is that happening? It is happening because the markets do not believe that the UK Government any longer believes in fiscal sustainability. If the UK Government wants to prove to the markets that it still believes in fiscal sustainability and wants to protect the tax position that it set out last Friday, it has only one place to go—it must reduce spending. That is why Mr Fairlie heard the Chief Secretary to the Treasury on the television this morning talking about the need for departments to tighten their belts. That translates into plain English as spending cuts.

The Chief Secretary to the Treasury told me on Friday that he hoped to maintain the comprehensive spending review fiscal envelope for the remaining period, but I now hear a message about further restraint. I cannot see how that further restraint will happen without having a negative effect on the budget in Scotland. The outlook for our budget is pessimistic.

I actually do agree with that, because there is a direct relationship between A and E congestion, delayed discharge and social care in the community. Those three areas are directly linked. What Mr Rowley fairly asks me is whether they are sufficiently well connected in local planning. Ultimately, they involve people. In those three categories—A and E, delayed discharge and social care—we are dealing with people, and we must ensure that services revolve around people. Services must be built around people as opposed to being delivered in little compartments where—I do not intend any criticism of anybody with the language that I am about to use—A and E deals with A and E. I suspect that there are many A and E staff who would love there to be more activity in social care, because it might allow them to get around the A and E department slightly more easily than they are able to just now, and because they might not be quite so up against it in their working day as they are every single day at the moment.

The A and E folk will be focused on the A and E problem in front of them, but they need the rest of the system to deal with the social care issues so that the A and E problem becomes less significant. Therefore, there must be cohesion among those services, and the players in that are the local authorities, the health boards, the integration joint boards and the care providers. Those are the people who have the key to all that. There are arrangements in place to ensure that planning is undertaken to deliver the services in a cohesive way. The challenge that we face is that the work that is being done is not delivering the outcomes that we need it to, because A and E is too congested, delayed discharges are too high and social care provision is not as extensive as it needs to be.

What is driving that? Amongst all that, unemployment is at 3 per cent. Therefore, from that, I deduce—Mr Rowley inadvertently mentioned it earlier—that we come back, I am afraid, to Brexit. I cannot speak for Fife, as I do not represent the kingdom of Fife, but I represent the county of Perthshire. If I were to have gone into a care home in my constituency prior to Brexit, I would have encountered many people working there who had come from eastern European countries—lovely people who were faithfully looking after our loved ones in our communities and delivering care packages. As I sit here, I can think of folk—folk whom I know well—who have now gone back home because they did not feel welcome after Brexit.

As Mr Rowley knows—he does not need me to tell him—our working-age population has been declining for 20 years, and we have now reached a critical point. We got temporary respite from the situation after the expansion of the European Union in 2004. We had all those years when folk came here, made it their home, contributed, looked after our loved ones and played their part in our communities.

Then, in 2016, we took part in the folly of Brexit. We had it inflicted upon us and, as a consequence, we have lost those people from our population. I think that that is a big factor. I do not think that money is the problem; the availability of people is the biggest problem that we face just now.

Mr Rowley said that there might not be all the cohesion that we need; I accept that and assure the committee that I will take it away and consider it. I discuss that issue with the Cabinet Secretary for Health and Social Care all the time, and he understands the relationship between A and E, delayed discharge and social care just as much as I do. I totally accept Mr Rowley’s analysis of the problem, but we do not have all the people we need to ensure that we can deliver a fully connected approach. If we can make it more connected, I will endeavour to do so, but I do not have a magic solution to the people question, because we have committed folly in our decision making.

We undertake an annual risk assessment, and I am deadly serious when I say that, in every year in which I have been a minister, a global pandemic has been in the top category. I remember conversations that we have had around different resilience tables in which the Government has said, “We must be due a pandemic some time soon.” That was always there. When the pandemic came, it came with absolute ferocity, as any pandemic will.

To go back to the point that Mr Mason put to me earlier, we have to be ready. A global pandemic is in the top risks that the Government assesses that the country is exposed to, and cybersecurity risks are increasingly up there. Then there are the natural issues that we face due to Scotland’s climate, such as winter weather and flooding, and the enhanced level of threat because of climate change.

Those are all the factors that we consider, and we need to have a level of preparedness for all of them. We have flood resistance plans and flood alert systems that give us advance warnings of circumstances that might come towards us, and we judge them to be appropriate. We cannot build flood defence systems in every community to protect against every eventuality, but we can make a risk-based assessment about where they are required.

The other week, I was down in Hawick, which is in Mr Whittle’s region. Huge construction works are going on there as part of schemes to protect the town from the River Teviot, because there has been flood damage there in the past. We are responding to risk there.

With a pandemic, there are a lot of things that the state can do. There are the steps that Professor Morris will have gone through with the committee earlier this morning, the expenditure that we undertake, the surveillance measures that we have in place and so on. Those things are all part of equipping ourselves to deal with those kinds of situations.

However, there are also individual preparations. There is one big lesson that we have learned from the pandemic: the healthier you are, the more you will have the capacity to resist it. On a personal level, that makes me ask myself, “How many times have you been out running this week, John Swinney?” Well, it is now Thursday, and Ah’ve no been oot yet.

Obviously, we are engaging with Professor Morris and we have had a number of discussions; I do not want to characterise it as us simply waiting for the end of a process. That is an on-going dialogue to understand the questions that the committee is looking at and the likely direction of travel that will come out of that. We will take steps to ensure that we are responding appropriately, rather than waiting till the end of the process to make a formal response.

It is a fascinating approach from Mr Fraser to say that he does not expect me to come up with a number but then to ask me to come up with a number.