Chamber and committees

I will keep to one question, but it will have two strands. COSLA’s submission states that, in real terms, local government budgets have been cut by 7 per cent since 2013. Mr Manning pointed out that, within that, two thirds has gone to ring-fenced areas. Further on, the submission states that those ring-fenced areas have to be cross-subsidised from local government discretionary budgets. Does that imply that a sum comes out in addition to the 15 per cent real-terms cut, in that you have ring-fenced funding that impacts on core and then you have to cross-subsidise? If so, can you attach a quantum to that cross-subsidisation?

That would be helpful. You specifically quoted the early years funding. How much of the funding for that specific policy is having to be subsidised from core discretionary funding?

I understand the point; I am wondering whether you have quantified that. I understand that your budgets are under pressure because of ring fencing. That is where you go from a cut of 7 per cent to one of 15 per cent. In the submission, you imply that, on top of that, you are having to subsidise those ring-fenced areas from your discretionary budget. I am asking whether you have a quantification of what proportion of your budget that is. What is the addition to the 15 per cent effective reduction?

I understand that. However, my question is about a slightly different point. You are saying that the ring-fenced areas for policy delivery are not being sufficiently funded, and I was asking you to clarify by how much. If you can provide that in writing, that would be really helpful.

Managing finances is complicated—I will come on to the 40 financial reports shortly—but I would suggest that managing people is even more complicated and difficult.

At the top end, the MTFS assumes 3 per cent pay growth, but that has been superseded by the most recent pay awards of 5 per cent. Are you saying that the Government’s working assumption is that the payroll bill will essentially remain fixed and that it will therefore have to manage the head count accordingly? Secondly, are the systems and processes in place to enable it to do that? I think that that is being implied or stated in broad terms, but my fear is that without detailed work behind the scenes it could lead to some quite brutal outcomes for people who work in the public sector.

The convener will be delighted that you arrived at the right answer by suggesting that he should convene that body.

I very much approach the budget and the decisions that we have with my small business owner’s hat on. We can look at all sorts of things in terms of complexity, but, to get down to brass tacks, a lot of it boils down to what the Government’s expenditure is. What is optional and what is not? What is fixed and what is variable?

It is clear from Audit Scotland’s submission that the Scottish Government’s £22 billion payroll cost for direct and indirect staff is its single biggest cost. That contrasts with things that are mentioned in the submissions from the bodies that are represented in front us today and from others, such as £1.5 billion-worth of spend on procurement. That is small beer compared with the payroll cost. What are Stephen Boyle’s thoughts on the Scottish Government’s options on head count?

Critically—this is also mentioned in your submission—the Government’s medium-term financial strategy assumes that the workforce will continue to grow at 1 per cent a year. To my mind, that stands in contrast to Government statements about reducing head count to pre-pandemic levels. What handle does the Government have on head count? Where is the Government thinking on how it will manage head count over the coming years?

I understand, but I would like a little further clarification. Do you believe that the data is being captured, which means that the issue is simply one of accessing it, or is the issue that the new agency is not capturing the same level and detail of data that you previously expected to get from the UK social security system?

I hand over to my colleagues Liz Smith, followed by John Mason, to ask questions.

I thank Douglas Lumsden for not asking the follow-up question about what could be done to boost the birth rate.

As we have a few minutes left, I will ask two follow-up questions. First, on fiscal sustainability, the variable that you look at is population change. Your paper shows that the change in the population shape from an upright pyramid to an inverted one will not be smooth—for example, the data shows a glut of 30-year-olds. To what extent does that complicate projections? How feasible is it for you to do as consistent and isolated a forecast as possible when the change in the population is not linear?

I was struck by the regional breakdowns in the forecast that you produced in early December, which were extrapolated from Office for National Statistics data. I am thinking in particular about the breakdowns for growth, employment, earnings and total tax take, in which you showed Scotland’s position relative to not just RUK—although the position relative to the other devolved nations is important—but regions of England such as the north-east, the north-west and the south-west.

However, you have not replicated that approach. I was told that I could do so by going to ONS; I tried, but it was a bit beyond my data-analysis skills. To what extent will that regional breakdown form part of your presentations, on-going analyses, forecasts and longer-term work? It strikes me that comparisons with RUK and comparable parts of England are useful as we grapple with issues of demography, productivity and growth in the economy.