Thank you for that opening statement, minister. Before we go any further, I note that committee members are extremely appreciative of the steps that you and your officials have taken to provide so much detail for this spring revision. It is more detail than we have ever had before and I think that it reflects well on the Government, which clearly listened when the committee requested additional detail, so thanks very much for that. That is the view across the committee.

I have a few opening questions. The first one is about paragraph 15 of the finance update, which comes under A.2.2. There is a £217.7 million increase in the justice and veterans portfolio and, in relation to pensions, there is

“£183 million of additional funding for Police & Fire Pensions in Justice & Veterans.”

That appears not to have been anticipated, but one would have thought that pensions can be anticipated well in advance and it is quite a significant sum. Can you give us a wee explanation of that?

But in relation to pensions, you must know a wee bit in advance that folk are going to retire, surely? If it was a few million pounds here or there, I could understand—some people retire early because of ill health, for example. However, £217.7 million is quite a significant sum of money and one would have thought that a sum of that amount would have been anticipated well in advance.

Moving on, I note the reference in paragraph 17 to

“£40 million released from the Affordable Housing Supply Programme due to ongoing supply issues and the effect this has on the pace of delivery.”

Is that because the pandemic has led to construction difficulties? Is it your hope that that money will subsequently be put back into affordable housing?

I found paragraph 30 of section C.1 of the supporting document quite interesting. You say:

“The minor differences between the Scottish Government underspend as reported in the Accounts (and discussed in detail by Audit Scotland) and underspend against HM Treasury budget aggregates arise through a number of reasons; differing accounting and budgeting treatment of capital expenditure, differences in the scoring of working capital for nondepartmental public bodies and different treatment of expected credit losses.”

Having what are, in effect, two different systems obviously makes transparency difficult. Have there been discussions about, or is any work on-going, to try to smooth over some of those differences to ensure that we have a uniform method of accounting?

I would be happy for you to write to Liz Smith on that, minister.

Minister, under section C, “Scotland Reserve and Funding Position Details”, you say:

“Despite this continually evolving, volatile position, reserve limits remain fixed. Those limits being a cap of £700 million with annual drawdowns normally restricted to £250 million for Resource and £100 million for Capital and Financial Transactions combined. As we are currently within a defined period of “Scotland Specific Economic Shock” (as set out in the Fiscal Framework) the annual drawdown limits are waived but the cap of £700 million remains.”

As I mentioned in the previous session, John Mason said only last week that the University of Glasgow has greater reserves than the Scottish Government is allowed to have. That gives some perspective. Can you tell us, because the previous witnesses were unsure when asked directly, when that three-year period of Scotland-specific economic shock will end?

What difficulties are the reserve limits creating for the Scottish Government in delivering on its budget?

Yes, I would certainly be happy with that, but I am not the one who is asking questions on this area—if Douglas Lumsden, Michelle Thomson and Liz Smith are happy, we can take that approach.

Thanks for that, Daniel.

I welcome to the meeting our second panel of witnesses: Paul Bradley, policy and public affairs manager at the Scottish Council for Voluntary Organisations; David Melhuish, director, Scottish Property Federation; and Alastair Sim, director at Universities Scotland.

Thank you all for your written submissions to the inquiry. There are no opening statements so we will move straight to questions.

I will begin with Universities Scotland. I found all the submissions to be really interesting and there is a great contrast between them, so the committee will probably ask you all a similar number of questions.

Mr Sim, your opener is quite direct. The last paragraph on the first page says:

“Put bluntly, other areas of Scottish public life that should be prioritised for investment, including higher education, look as if they will have to fight for the leftovers from the highest priority commitments.”

That is on the back of your saying that the Scottish Government’s priorities should include universities and higher education. The issue with that is that every single organisation—and I mean every single organisation—that comes to the committee says the same thing: we need more resources for our sector. You just have to fill in the name of the sector.

You have made arguments for why you think it should be the universities sector, but where should the resources come from, and how much additional resource should the Scottish Government be putting into the sector?