Chamber and committees

I consider all that information because, as a member of the Cabinet, I carry collective responsibility for the Government’s objectives. Therefore, the success of the Government’s programmes, in whatever area of policy they happen to be, matters to me, so I want to ensure that we can be successful. I was heavily involved in the formulation of the child poverty delivery plan, for example, and such issues are material to me in the conduct of policy. However, I come up against hard financial choices. I understand the concerns that people will have about the scale of increase not being as great as we would like, but in a difficult context, I think that this is a rational policy choice, because we have available capacity within existing programmes to support our endeavour.

However, we may not be able to put as much resource into this as we would like to, given the financial pressures that we face, and that is the dilemma that I am trying to square. Ultimately, I have a legal duty to balance the budget, but there has been an increase in financial pressure that has come from a number of places. One is the erosion of the value of our budget because inflation is more than double what was predicted, which undermines the value of our budget to the tune of £1.7 billion. There is also a necessity to resolve public sector pay claims, which are coming in at a much higher rate than was anticipated in the budget. I have to find resources to balance all that, and, in that context, we have to make considered policy choices. Those choices might be difficult and have wider ramifications, but I am trying to make choices that protect the programmes that enable us to pursue the policy agenda to which we have committed ourselves. However, I will keep those issues under review.

Mr Fairlie will be familiar with the range of powers and responsibilities that the Government has within the parliamentary system. Of course, one of the key limitations is that we do not have the capacity to borrow for resource spending purposes, other than for very limited purposes in relation to financial management. Therefore, in the scenario that Mr Fairlie has put to me—a pandemic emerging that would require additional public expenditure within a financial year—in order to prioritise dealing with such a pandemic, the Government could provide support only by taking resources that are allocated to other areas of expenditure. Obviously, I would hope that if there were to be an event that happened at United Kingdom level, the wider workings that we saw during the Covid-19 pandemic would be relevant and would be applied. Obviously, the Government would co-operate with that in any future scenario.

The reason why that needs to be done is that we have to use all the means available to us to support public servants, many of whom work for integration joint boards, to deliver healthcare in our society following increased pay deals to deal with the consequences of inflation.

I do not need to explain this to Jackie Baillie, but I will, just for completeness. The Scottish Government cannot borrow for resource purposes, and we cannot change tax rates during the financial year, so unless the UK Government expands the resources that are available by changing the spending envelope, no extra resources will be available to us.

During my conversation with the Chief Secretary to the Treasury on Friday, I took the opportunity to press the case for increases in public spending. He was entirely unsympathetic to my appeals for that step to be taken, so the Scottish Government must, because we do not have access to flexibility, look at various ways in which we can utilise resources in order that we can afford increased pay claims and address other pressures within the financial year. What Jackie Baillie cited is one example of the steps that the Government has to take.

I have every sympathy with the point that Beatrice Wishart has raised. Indeed, the other week I had the pleasure of meeting Councillor Emma Macdonald, the leader of Shetland Islands Council, after she had published an analysis of the expected increases in costs for people in Shetland and the Orkney islands, which will be at an even greater level because of temperature and limited daylight over the winter.

I have every sympathy with the points that the member has raised and I assure her that we will continue to make representations to the UK Government to provide direct intervention. If we can try to offer support in other ways through some of the financial schemes that the Scottish Government has available, I will ensure that that information is available to Beatrice Wishart’s constituents, so that they might access such funds.

Since the Covid recovery strategy was published, and particularly in recent months, rising inflation, the worsening cost of living crisis and the UK Government’s inaction have made it even more critical for the Scottish ministers to focus our efforts on supporting those who are most in need.

We are undertaking an emergency budget review to assess any and all opportunities to redirect additional resources to those who are most in need, to reduce the burdens on businesses and to stimulate the Scottish economy.

We are experiencing an acute period of volatility and uncertainty, which was started by Brexit and has been exacerbated by the crisis around Covid, the war in Ukraine and, now, the recklessness of the new Conservative Government. The idea that somehow the United Kingdom can be described as a stable economy, in the light of all the chaos and damage that has been done to business, is a fallacy of the past.

One of the issues about which I am most concerned is the scale of energy price rises, even with some of the measures that are now in place, for entirely profitable and sustainable businesses. I give Beatrice Wishart the example—which I have shared openly—of a farmer in my constituency. He explained to me that his energy costs are currently £50,000 a year and that he is being quoted £250,000. A difference of £200,000 is just impossible for that farming venture to find. An individual who is producing food for our domestic market faces the potential of not being able to continue to do so. Beatrice Wishart will have examples such as that one from her constituency.

We have to recognise the enormity of the risk that is faced. The scale of intervention has to be acute, to ensure that businesses that are perfectly viable in every normal circumstance can be assisted through this difficulty, as we assisted them in the context of Covid. However, we should not do that by saddling future generations with the level of borrowing that the United Kingdom Government proposes.

The Covid recovery strategy commits us to actions that support financial security for low-income households. The cost of living crisis represents an unprecedented challenge that is impacting people across Scotland and we are providing significant additional support to help mitigate that situation. By March, we will have invested almost £3 billion in a range of measures for households, supporting energy bills, childcare, health and travel, as well as social security payments.

In our programme for government, we announced several further responses to maximise support for those in need, including a new winter heating payment, the doubling of our fuel insecurity fund to £20 million, £5 million additional funding for discretionary housing payments, and further action to reduce the cost of the school day for families.

The type of powers and responsibilities needed would be the powers to reform the energy market and to apply a windfall tax to energy companies, which will profit enormously from the rise in energy costs. However, under the current UK Government proposals, the burden of paying for all that support will be added to the borrowing stock and obligations of future generations. Those examples show how getting wider powers for the Scottish Parliament would make a difference.

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