Chamber and committees

I appreciate that, but I do not understand your point. They operate within that environment, knowing that their budget could change during the year, and they have reserves to manage as well. They have the whole range of levers that they can pull, as do we, but we are constrained by that broader picture.

Again, I am not following. Local government delivers services such as education, social care, housing and so on, which are within the total budget. There is complexity in terms of what moves around. Everybody is working within that environment. Unfortunately, we do not have certainty on multiyear funding, and things change in-year.

As we roll out the reform agenda we increasingly find an interconnectedness, with a requirement for flexibility in how funds move. Take whole-family support, for example. That consists of a whole series of funding pockets from different portfolios. The range of public servants who are engaging with a family on the ground will want those elements of funding to be joined up, and that requires a mechanism that allows funds to flow effectively at the local level. That is the reality of what we are doing.

There is very little ring fencing with local government. The vast majority of that has now been taken out and, for the most part, local authorities must now make decisions as to how they allocate the resources.

As we go through the year, there are negotiations with the relevant trade unions and workforces to arrive at agreed pay awards, which obviously have an impact on the budget figures. We do not necessarily know at the start of the year exactly what the figures will be. However, the move towards multiyear arrangements—many of the deals now cover two years or more—will provide us with a bit more certainty on the numbers.

We value our public sector workers and think that they should be adequately rewarded. Obviously, the impact of the cost of living and high inflation flows through into those payments. I think that the general public would be comfortable that we are paying the people who are serving them well to do their jobs, whether they are in the front-line in the health service, in classrooms, or in the police service. Unlike down south, we have avoided the need for industrial action, which is important.

The key question is how much is moved every year.

Do you mean rates of taxation?

Indeed.

You say “significant”, but if you look at that example, I think that £18 million out of £305 million was carried forward, so around 94 per cent was spent. You make an assessment at the beginning of the process of what the demand will be. There are only three scenarios. We either hit it right on the button—which, statistically, is unlikely—or we spend more or we spend less. We have had conversations about spending more on certain demand-led services and less on others. There will always be—

Good morning. The Scottish Government is once again on track to balance its budget despite continuing to face a challenging financial situation. Persistent high inflation, lower economic growth across the United Kingdom, the continued cost of living crisis and wider geopolitical events mean that careful consideration has had to be given to balancing the budget. The UK Government’s decision not to fully fund the increase in the rate of employer national insurance contributions has added to the challenges that we face in balancing the budget.

Our prudent management of the 2024-25 financial year has allowed us to carry forward £557 million through the Scotland reserve, which is being used in full to support the 2025-26 position. Those amounts, in addition to in-year Barnett consequentials and an anticipated increase in the social security block grant adjustment, allow us to provide additional budget cover across portfolios to meet the emerging pressures within this budget revision.

The autumn budget revision sets out the funding changes and amendments to the budget since the 2025-26 Scottish budget was set. The revision that has been allocated deploys almost £1.2 billion of additional funding to support our public services. It contains the usual four categories of changes. The net funding changes increase the budget by £1,137 million and include the provision of £697.5 million to support health services, £173.7 million to local government, additional funding for the increased pension age winter heating payment and the removal of peak rail fares.

All the consequential funding that has been received from the UK Government in respect of employer national insurance contributions is allocated out as part of the budget revision. The technical Whitehall and internal transfers are presented in the document in the usual way. The supporting document to the autumn budget revision and the finance update prepared by my officials provide further background on the net changes as well as updates on information that has been requested by the committee. I am happy to answer any questions.

I will provide the updated number to the committee to show you exactly where we are on that, but there has been a reduction so far in the first six months of the year, which will continue. We have targets for each of the next five years that we will deliver on, as we have in the past two years.

The total operating cost budget has been set during the spending review period. Taking inflation into account, there will be a year-on-year reduction in that budget.