Chamber and committees

In my letter to the Finance and Public Administration Committee, I have set out the specific changes that are being made. If further changes are to be made, I will do that transparently.

I have been completely open with the Parliament. There is no obligation on me to come to the Parliament in September with the statement that I made. I could have left it all to the autumn budget revision. However, I have a duty of candour to the Parliament. It should hear the issues and difficulties with which I am wrestling. Those should be set out to members. Any further changes of that nature will be set out in a similar fashion.

The judgment that I was making there was based on looking at the available data on the levels of usage of public transport in the current context. We fixed our budget—obviously, concessionary travel is a crucial social and economic benefit in our society—and made our best estimates of what we reckon will be the uptake of the concessionary travel scheme.

We looked at the data that is available to us through the financial year showing the degree to which people are returning to public transport in the aftermath of Covid—there is obviously a degree of nervousness or anxiety about using public transport—and made a judgment about where we think that demand will eventually settle.

Again, there is a degree of judgment involved here and, ultimately, if we find that the budget line exceeds what I have predicted in the latest update, we will have to meet that cost from other areas in the budget. However, I hope that the steps that we have taken will be appropriate and that the predictions about the budget will have the necessary accuracy.

I am aware that different approaches are taken in different parts of the country to what support is available to people—for example, the arrangement for my son’s national entitlement card was handled through the school and done very efficiently. It was a totally straightforward process and there was no difficulty whatsoever, and he is now using his national entitlement card with some gusto.

Given that the scheme has been open since only January, there have been high levels of uptake in a relatively short space of time. We are promoting awareness of the national entitlement card among young people, and we encourage them to take it up. We make necessary judgments about the volume of usage, which allows me to make the judgment that I have made about the size of the budget.

The £82 million is a product of decisions that were taken by the United Kingdom Government, which gave rise to a consequential. As members know, those consequentials come into our budget but they do not come in with a badge on them; they come in as consequentials and we decide their allocation. Obviously, a range of measures to assist with the cost of living challenges are provided in Scotland that are not provided in other parts of the United Kingdom, and we have allocated resources for those measures. The £82 million had been allocated into the Scottish Government’s budget to help us meet the various elements of expenditure that we put in to support our programmes that assist with the cost of living and other matters.

I would pause before adding the two numbers together, Mr McLennan, if you will forgive me. The point that I am making is that, whatever we say about the erosion of value, £700 million in hard money, which we did not anticipate at the start of the financial year, has to be found in the budget, which has to balance by the end of the year. That is the challenge with which I am trying to wrestle.

I will come on to that. Looking at the comparative example from the Republic of Ireland, dramatically different decisions are being taken by an independent country that is in close proximity to us and has made different constitutional choices. There is an important lesson for us in that comparison.

I am very happy to engage with all groups as much as I can on the issues. I listen to people’s perspectives, and I think that I have a track record of listening to different views. When I was finance minister, I enjoyed my interaction with the Women’s Budget Group; I have huge respect for its work and have valued it enormously. However, I have to make this point to the committee bluntly: if people are going to complain about the choices that I have made, they have to give me alternatives.

When I look at the way in which Government engages, there is extensive engagement with organisations in the formulation of our plans. At a personal level, I am involved in some of those discussions, but my colleagues—principally, the Cabinet Secretary for Social Justice, Housing and Local Government, as well as the Minister for Just Transition, Employment and Fair Work—take forward a range of discussions with organisations that have an interest in the sphere of employability.

Generally, the Government has every opportunity to hear and understand the perspectives of different organisations in that respect. Obviously, we will continue that dialogue. I will be talking to a range of interested parties as I finalise issues around the emergency budget review. We have had a number of submissions from organisations about what resources should be available to assist with cost of living challenges and where they would be best deployed. The committee will be familiar with the range of propositions that have come forward from organisations, and we will certainly undertake further dialogue on that.

In response to the questions about equality impact assessments, those are carried out in relation to budget statements and programmes and we will continue to do exactly that.

I am grateful to the committee for the opportunity to discuss the emergency budget review and the underlying savings that are of interest to the committee.

As the convener said, on 7 September, I set out to Parliament the hard prioritisation choices that the Government has had to take, with the pressures of inflation placing a significant new burden on our budgets; a burden that was not planned for when the spending review was undertaken by the United Kingdom Government last autumn. People and businesses have been deeply impacted by the cost of living crisis, and the Government has vowed to do everything that we can to mitigate the crisis as far as possible. We must do that while meeting the increased costs of public sector pay and balancing our public finances.

My letter to the Finance and Public Administration Committee highlighted over £500 million in savings and reforecasting that we have had to take forward. The options are challenging, but we must do that in order to move to balance our budget and do everything that we can to help people in need. That is, of course, the harsh reality of having a fixed budget and limited fiscal powers. In addition, the majority of our spend cannot be changed at this stage of the financial year due to contractual and legal commitments. Therefore, there are limited options to make savings.

I should note that the 2022-23 element of our emergency budget review is part of normal financial management practices, with a number of savings arising as a result of natural demand. Formal scrutiny of budget changes will be undertaken through our normal budget revisions process, and impact assessments will, of course, continue to be taken forward as part of the annual budgetary process.

Notwithstanding the financial challenges that we face, the Government remains firmly focused on tackling and reducing child poverty and supporting strong and sustainable growth as part of the national strategy for economic transformation.

Our 2022-23 budget continues to take forward key programmes and policies, such as the increase in the Scottish child payment to £25 per eligible child per week from 14 November, the fuel insecurity fund and widening access to the warmer homes fuel poverty programme.

Finally, I note that I intend to publish the outcome of the emergency budget review in the week beginning 24 October. Further savings are likely to be required to balance the budget. I look forward to this morning’s discussion, and I am very happy to answer questions from the committee.

I do not think that that will be the case, because, as I said to Pam Duncan-Glancy, there remains capacity in our programmes to support individuals and deal with referrals.

Mr Balfour is correct in saying that good progress is being made on narrowing the employability gap among disabled people. That progress has been made in the aftermath of Covid. In addition to that, other existing programmes that remain unaffected by the changes still have capacity to support individuals. I have to concede that, as a consequence of the reduction, the rate of progress in reducing the employability gap might not be as fast as I would like it to be. However, as I set out to the committee, I am faced with some very difficult choices in trying to balance the budget in this financial year. Choices of the type that we are discussing are the ones that remain open to me.

It means that a range of programmes are being funded that, ordinarily, would not have been able to be funded had we not allocated the money in the way that I am allocating priorities today within the Scottish Government’s budget.