Chamber and committees

The current Prime Minister.

Michael Gove—I think; it was either him or John Glenn, the Chief Secretary to the Treasury—made it clear to me that they were not pursuing the plethora of investment zones. It was going to be a much more focused proposition. That dialogue is under way between us. We are not in a position to share any details about where that dialogue has reached; it is in the very early stages.

What I am certain about is that the proposition that was available in September is no longer available and it will be a much more focused proposition.

However, it would be fair to say that the sum varies, depending on the assumptions, from about £200 million to £500 million.

The first thing that I would say is that I do not consider our position to have a discernible effect on middle-income earners in Scotland. Essentially, the steps that we are taking are affecting individuals who are in the top two deciles of the population in terms of earnings. We are concentrating the measures that we are taking on the top two deciles—we are not discernibly affecting middle-income earners.

There are many things happening as part of the process of establishing the national care service. Through the work on the national care service, we are investing heavily in improving the resources that are available for salaries for social care staff, for example. The national care service expenditure will sit within an overall budget in excess of £1 billion—£1.1 billion. A substantial part of that is to increase pay for social care staff. My recollection is that about £100 million of that overall budget will be used to pay for the uplift in social care pay to £10.90 per hour, which, of course, builds on the other steps that we have taken to increase pay for social care staff.

The committee will receive an updated financial memorandum on what I would call the logistical arrangements around the national care service in future, and the point that you have raised will be addressed as part of that exercise.

I had discussions with all the political parties in Parliament prior to the budget being set. I concluded each of those discussions by saying that I would resume them once the budget was set out and the dust had settled. We will have those discussions in the fullness of time.

The convener makes an important point, which is that that dialogue is important. I want to make sure that I hear the perspective of other parties and I will do my best to address it. However, the other important point is that I have allocated the resources that are available to me; I have made choices. Therefore, if I am going to reallocate money to address issues that are brought to me by other parties, I have to be confident that they can be funded. That requirement will have to be put on all provisions.

The resource spending review remains a very relevant consideration for all stakeholders who are concerned with the public finances, not necessarily because of the precise details in it, but because it shows the shape of how public finances are developing.

When the resource spending review was set out, we envisaged that there would be two early tough years and then two better years. However, given the UK Government’s statement in November, we will have two relatively less painful years to begin with and then two much more painful years. I could draw a couple of lines on paper and try to present a graph that showed how that all of that fits together but, roughly, what that says to me is that the next four years will be really tough on the public finances. Years 1 and 2 will be years of adjustment, and years 3 and 4 will be years of consolidation and real difficulty.

Some people might say that there is a lot of water to go under the bridge between now and then. However, having listened to the current United Kingdom Government’s plans and to the comments that were made the other day by the leader of the Opposition, I do not get the sense that there would be much of a departure from the public expenditure outlook that has been planned for by the current United Kingdom Government should there be a change of Government after the next Westminster general election.

In answer to Mr Greer’s question, I think that the direction of travel that is set out in the resource spending review remains absolutely valid, although some of the numbers might be different as a consequence of what has happened.

I would not want to be drawn into giving as specific a response as that on an individual sector. What I can say is that organisations and sectors should draw from my original remarks the conclusion that, to be frank, 2023-24 and 2024-25 will be the buoyant years and the two years after that will be much more difficult as a consequence, and that that will have to play through into all sectors of the public finances.

No. A pay policy would never include that type of detail. That is essentially a consequence of the budget settlement that we are able to put in place and the degree to which we can configure services to deliver against those budgets.

The Government has a long track record of preserving public sector employment. We believe that it is important that our public services are well supported by strong levels of employment, although I acknowledge the challenges in recruitment to aspects of public sector employment, which are fairly extensive and which would be helped if we had a different approach to migration policy. I completed my response to one of the points that Liz Smith made to me by noting that I remain concerned about that issue.

I continue to consider the most appropriate time to set out a pay policy. There are a number of variables, not the least of which is the pattern of inflation. I made the point earlier that we set the budget for the current financial year when the inflation climate was benign and we then found ourselves wrestling with pay claims when the inflation level was far from benign. That will be one of the factors that I consider in determining the most appropriate point at which to set a pay policy.

Having said that, there is absolutely nothing to stop open dialogue with trade unions about the agreement of pay levels for 2023-24 at this moment. The absence of a pay policy is not an impediment to that dialogue being advanced. Obviously, we have the mechanisms available in Government to resolve any of those questions should they come to a point where they require a decision.

The point that I was making in explaining the difficulty in which we found ourselves in this financial year was that, having set a pay policy at 2 per cent when inflation was benign, we then found ourselves in a completely different situation.

I question the value of having a pay policy, because I do not think that it actually provides much guidance. The 2 per cent policy provided zero guidance to people as to how they were to navigate this. During the financial year, we put a lot of arrangements in place within Government. I chaired a regular discussion between ministers across the Government to consider the current negotiations and give guidance as to what we considered acceptable in relation to resolving these questions.

Given the volatility that we have, I do not think that a pay policy would help to shape the context. However, I reinforce the point that its absence is not an impediment to dialogue. I really would not want anybody to think that we cannot embark on discussions with trade unions because we do not have a pay policy. That is completely the opposite of my intention.

I am not certain that we will show assessments for the prior year. If we were to do so, they would have to use budget act provisions. The like-for-like comparison that we always undertake involves the budget act provision versus the budget proposal. There is significant variability thereafter, but that approach gives us a valid comparison at one moment in time. I will confirm that point to the committee in writing.