Chamber and committees

The Institute for Fiscal Studies has reported that the local government and finance portfolio will

“see reductions averaging 2.1% a year in real-terms”,

or £472 million, over the spending review period. How can local authorities bridge that gap? You are suggesting that it doesnae exist. Does that mean that council tax rises will be at inflation or below in the spring?

—and of where money is being spent and not spent, so that we can see what is happening in a portfolio. Outside commentators who do not have the opportunity to sit here and question you for two-and-a-half-hours, as we are this morning, cannot see what is happening in reality because they do not have the information.

Sticking with the economy, what is the situation with the Scottish National Investment Bank? The Government is very ambitious about the bank’s work, but there has been quite a significant decline in funding since the ABR—it has gone from £227.4 million to £190.4 million, which is probably a 16 or 17 per cent reduction. I do not see any notes about projects or programmes, so why is its budget being reduced so significantly?

I notice that there is a £34.6 million capital allocation against the 2025-26 ABR budget, but that allocation was not in the 2024-25 outturn and it is not under the 2026-27 budget, so was that one-off spend? It just seems bizarre to go from zero to £34.6 million to zero again.

I will ask a final question before I let my colleagues come in. It looks as though arts and culture spending is growing quite healthily. Creative Scotland’s budget in the ABR was up by a third compared with the 2024-25 outturn, and it is now growing from £89 million to £100.7 million, which represents an increase of about 11.7 per cent.

However, the national performing companies, which gave evidence to the committee a couple of weeks ago, have said that, in some cases, they are operating with more or less the same amount of money as they had before the financial crash. Their budget in the ABR was £24.6 million, and their budget in the 2026-27 budget is £24.6 million. Given that culture spending seems to be growing very healthily—I know that the Government has a policy of increasing culture spend by £100 million over four or five years—why are the national performing companies losing out?

They are getting the same amount of money as they were getting a decade and a half ago. In which other areas of Government spending are people getting the same amount as they were getting a decade and a half ago? In no other area—other than perhaps tuition fee payments—has funding been held for so long without an increase. That means that the national performing companies cannot perform productions that bring money into Scotland or carry out the work that they do in improving wellbeing, reaching out to schools and so on.

Cabinet secretary, you will be delighted to know that we have only 10 minutes left. I intend to use those 10 minutes. [Laughter.]

I will go back to council tax issues and local government funding. There is an issue in relation to local government funding that we have not touched on and which I want to cover. You will be aware of the Local Government Information Unit report on the survey sent to chief executives, council leaders and senior financial officers that found that every respondent intends to reduce spending on services and increase council tax in 2026-27.

The report concludes:

“The scale of council tax increases continues to be significant. Not only is every council planning to raise council tax, every council is planning to raise it by at least 5%. Over a fifth plan to raise council tax by over 10%.”

Surely that is a real concern for the Government.

In previous years, there was the legendary Derek Mackay sofa. The Government would say, “This is all our money. It’s all committed. Blah, blah, blah. We don’t have anything else.” Then Patrick Harvie and his colleagues would negotiate and—lo and behold—£100 million would come out from the back of Derek’s sofa, and local government would have some amelioration for its budget. That tended to be an annual event for some time. What room does the Scottish Government have to manoeuvre on such matters in the coming weeks?

We heard about capital reducing in real terms in future years due to reductions in allocations from Westminster and about significant boosts to the housing budget. However, there is a 14.7 per cent reduction in local government’s core capital budget.

There has been a lot of noise in the chamber about the A96 and the A9—I think the A9 will get £200 million next year. That would pay for a lot of potholes that could be fixed by local government, frankly—if local government was not seeing that 14.7 per cent reduction in its capital.

I am wondering what the Government’s thinking is there, as that is a significant reduction in a year.

That is a welcome development. I appreciate that there is a real incentive to save money if you know that you will get to keep it and spend it elsewhere in your portfolio, instead of it being pinched by someone else.

I am almost done. We suggested in our pre-budget scrutiny report that

“the Scottish Government undertakes a review of the extent to which the level of social security assistance provided supports economic activity”,

but the dedicated review that we asked for does not seem to be taking place. Has the Government done any work, or does it plan to do any work, to see which social security policy has had the greatest impact in reducing poverty and getting people back into productive employment?

When you were engaging with Craig Hoy’s questions on income tax, you said that people will be £32 a year better off. Why does the Government talk only about income tax? Why does it never say that people are, on average, £700 a year better off as a result of lower council tax and water bills? Why does it never talk about the overall tax burden, given that talking only about income tax is somewhat one-dimensional?

Thank you. John, in the chief executive’s introduction to the annual report and accounts, you said:

“Through the year there have also been some significant challenges for a very small organisation to deal with.”

Do you want to touch on some of those?