Good morning and welcome to the 30th meeting in 2025 of the Finance and Public Administration Committee. The first item on our agenda is an evidence session with the Minister for Public Finance on the Budget (Scotland) Act 2025 Amendment Regulations 2025. The minister is joined by Scottish Government officials Claire Hughes, head of corporate reporting, and Craig Maidment, senior finance manager. I welcome our witnesses to the meeting and invite the minister to make a short opening statement.

There has been a lot of talk in the media about the alleged £1 billion underspend. Do you want to talk us through the Scotland reserve? I understand that £566.7 million has been carried forward. That represents about 79.5 per cent of the cap last year, falling slightly to just under 76 per cent this year.

The Scottish Parliament information centre has provided us with some information on portfolios. Earlier, we talked about how money gets transferred from the same budgets to the same budgets each year. If we compare the position when the Parliament passed the budget with the position now, we see that the finance and local government budget has increased by 9.9 per cent, whereas the education and skills budget has decreased by 8.7 per cent. Other variations are smaller than that—for example, the health budget has increased by 0.1 per cent. The fact that there are such huge variations does not reflect well on the budget process. I have heard what you have said about cross-portfolio working, but surely more must be done to ensure that the budget that is passed by the Parliament is, wherever possible, what is delivered across the financial year.

You also said in your submission that you

“welcome the exclusion of islands in Section 5(d). However, Scottish Government regulations on local business taxation have already acknowledged that some rural mainland areas, such as Knoydart, Scoraig, and Cape Wrath, face similar levels of inaccessibility and challenges as island communities.”

Knoydart can be reached only by boat, for example.

Hazel, in your submission, you said:

“BEFS wishes to highlight its position that not enough action is being taken in policy and practice to promote the productive reuse of vacant and derelict buildings and brownfield land, including for housing.”

Would the proposed levy be a stimulus for that?

I understand that. Of today’s six witnesses, Hazel Johnson is the only one whose submission has been supportive of the levy. The submissions from the other five witnesses are not supportive. What is your view on who should pay for the work that needs to be done? We have heard it suggested that everyone from architects to manufacturers to companies that were involved in previous construction should pay. I do not know whether the cladding was manufactured in Scotland, China or Germany, so I do not imagine that that would be a big source of potential income.

Who else could the Government raise the levy from? We are talking about spending £200 million a year, but it will cost £3.1 billion to remediate cladding in Scotland. The proposed tax is aimed at only 15 per cent of that. It will go some way towards raising funds, but who else should the required funding be raised from? Others can answer that question as well.

But many developers set up single-purpose vehicles—in other words, subsidiaries of the main company—so that when things go a bit awry with a development, the main company has no liability. I have experienced that situation with a number of developments in my constituency, so there will be a myriad of examples across Scotland and the rest of the UK. How likely is it that we will be able to pursue some of the companies that are responsible on a polluter-pays basis? They could simply rename and restructure the company so that it is not the same company that did the stuff that we are all upset about.

If the council does not put in place a bond, the developer can just scarper and the council will be left facing those costs. That has happened with at least two developments in my constituency, and I know that it has happened in other places. If everyone behaved according to the rules, things would be fine, but that is the issue that the Government faces, which is why it is proposing an up-front levy.

Over the years, the committee has pushed for that, and I am pleased to say that there have been some changes in that regard.

Colleagues are keen to come in.

Indeed. Next year, the transfer is going to be £250 million or £300 million. If that money was in the relevant budget, and only £5 million or £10 million had to be moved one way or the other, that would not be the same as having to move such a large sum.

Discretionary housing payments will always be roughly the same amount—they are usually about £75 million or £80 million. Next year, they might be £85 million. We know that the Government will not spend less than £75 million on DHPs next year, so why not just have that money in the local government portfolio to start off with?

The transfer to education and skills for the training of nursery and midwifery students is £49.3 million. If there was £45 million for that in the education budget, members would have a clearer view of what was happening in that area. If you had to move a few per cent here or there, that would be fair enough.

Including the money in the portfolio in which it is spent would present a much clearer and more accurate picture of the budget, not just to parliamentarians but to the wider public.

I thank the minister for his responses to our questions. We now move to item 2, which involves formal consideration of the motion on the instrument. I invite the minister to move motion S6M-19303.

Motion moved,

That the Finance and Public Administration Committee recommends that the Budget (Scotland) Act 2025 Amendment Regulations 2025 [draft] be approved.—[Ivan McKee]

Motion agreed to.