Chamber and committees

Absolutely. I fully appreciate that. In your report, you talk about how you expect inflation to get back to around 2 per cent. Once oil prices have jumped, and if they do not increase any more, the following year there will be zero inflation in oil prices—there is a platforming effect. I understand that you expect long-running inflation to go back to normal, rather than behave as it did in the 1979-82 phase, when inflation was at 27 to 30 per cent for two or three years.

Let me go back to taxation. In your report, you said:

“From 2024-25 the UK Government intends to reduce the basic rate of income tax to 19 per cent. The income tax BGA will reduce accordingly, thus supporting net Scottish income tax funding.”

The committee has quite a good understanding of that point, but it would be helpful if the commission were to expand on it, for the benefit of the Official Report.

That is a question that we will probably want to put to the cabinet secretary—although I expect that, prior to the budget deliberations, she will want to plead the fifth amendment in that respect.

I have one more question before my colleagues come in. On page 18 of “Scotland’s Fiscal Outlook: The Scottish Government’s Medium-Term Financial Strategy”, it says:

“The assumption of future Barnett consequentials beyond the core Block Grant is based on analysis of historic data.”

The strategy suggests £250 million in assumed future consequentials next year and £400 million after that.

In paragraph 32 of your report summary, you talk about consequentials of £250 million, rising to £591 million in 2026-27. That is £191 million more than the figure in the MTFS. Can you talk about that? Will you also say how the Scottish Government fared in terms of its assumption about the £620 million, which the committee deliberated over considerably, and whether—or how much of—that came forward?

Why is your £591 million figure different from the Scottish Government’s £400 million figure?

If an employer such as the Convention of Scottish Local Authorities were to say to unions that local authorities were happy to provide workers with a 2.4 per cent pay rise—I do not think that it is even offering that—because that equated to the GDP deflator, then straightaway there would be difficult discussions. Is the GDP deflator still an appropriate measure to use for forecasts?

It is just that, in real terms, there will be a decline in education over the next three financial years and then, suddenly, there will be quite a dramatic increase, and that is repeated in a number of portfolio areas. Time is against me, so I cannot ask all the questions about that that I want to ask, but I will try to touch on a number of areas. Colleagues can follow up on some of my questions if they so wish.

Another area is local government. Local government is alarmed and, although you have said that it will have a fair settlement over the years ahead, I do not believe that it would agree with that. How does the static budget—or declining budget, when inflation is taken into account—allow flexibility for local government? Local government spends much of its funding on statutory services. It has to provide those services; it does not have a choice. Statutory services already have a higher proportion of spend than perhaps they did five or 10 years ago, because of the relative reduction in local government resource. That is one point in relation to local government.

Also on local government, if there is greater flexibility—for example, I know that you are looking for public sector workers to be more productive, but perhaps over a four-day flexible working week—how will that impact on other areas of the economy, such as transport? There has been a significant reduction in the number of people who are using public transport, not only because of a lack of reliability. For example, in my area, there is a lack of bus drivers; we have also seen rail disputes. There are issues across the UK in that regard. What would be the knock-on effect on the retail sector if lots of public workers were staying at home?

You have talked about the multiyear estates programme. From reading the document, there seems to be an enthusiasm for selling off surplus public buildings if, for example, there are going to be fewer people in the public sector and more people may be working in a hybrid way or from home. The difficulty for local government will be that, in some areas of Scotland, there might not be much demand for those surplus public buildings, whereas in other areas, such as Edinburgh, there might be significant demand. That would mean that some local authorities would be unbalanced in terms of the resource availability.

I know that that is a fairly convoluted question, but it is about how local government will be able to innovate and reform and, at the same time, cope with those huge changes over a relatively short time.

Iceland has always been socially cohesive, but it was also historically one of the poorest countries in Europe. Independence in 1944, harnessing geothermal power and victory in the cod wars in the 1970s probably had a significant and positive effect.

That was because I am trying to allow other people a chance to come in. Therefore, I do not want to ask about too much.

Also, when businesses put an application in and ask when it will be dealt with, it would help if there was a detailed timescale for that, so that the businesses are not just told “mañana”.

Scotland and the whole of the UK pay significantly more to procure simple, straightforward things, such as road upgrades, than countries in continental Europe pay. Will that issue be addressed? Are we going to look at the procurement costs here compared to elsewhere? If procurement costs were reduced to continental levels, that would release significant funding to enable us to have more projects. How often have people driven along the road, got stuck at road works for half an hour and then found that nobody was even working there? It does not matter what time of day or night people go past, there never seems to be anybody there—or else one guy is in a digger and 10 folk are looking at the hole that he has dug. I am sure that we have all experienced that. I raised it with Stewart Stevenson 15 years ago. He said that it would be looked at, but I am still waiting. Those are real issues that we have to address. Adversity is the mother of invention, so surely this is the time to really address those issues. What focus will there be on procurement? I do not want to be in a situation in which, three or four years from now, we are still asking the same questions but not seeing significant improvement, other than less money being spent on the ground.

Colleagues are clearly keen to come in, so I will ask my final question, which is about the social justice, housing and local government portfolio. I noticed that, in that area, 96 per cent of the increase in spend over the next four years will be on social security. Half of that increase is related to further devolved welfare benefits and half is related to choices that are made by the Scottish Government. Given the paucity of resources and the fact that, for example, the police will face a zero budget increase at a time of rising cybercrime, and that various other areas will have to deal with fixed budgets, is it the best use of public money to spend an extra £1.2 billion on benefits? What will be the impact to the wider economy of that spend and of removing people from poverty, which is clearly what that spend is about?

Yes, but when you talk about private funding, you are not talking about businesses; you are talking about home owners having to invest significantly in transforming their houses.