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I know that it was a massive question, but I personally am not hearing a great deal about the strategic thinking on the challenges and enablers of AI, for example, from Government, even in the face of the considerable uncertainty and complexity. I feel as though it is a juggernaut that is travelling very fast towards us and that we are tinkering round the edges.

We need to get ahead of the game in developing excellence in service provision, even with basic things such as getting small and medium-sized enterprises to actively develop agents to do some of the grunt work. It is about attitude and realising that we have only one choice, which is to seize the opportunity, because the alternative guarantees failure.

That is helpful to have on the record. Such information had not come out, except in the article in The Scotsman, as the cabinet secretary said. The approach is about being firm when money is being obtained fraudulently; it is quite heartening to hear about that firmness of approach. When an error occurs, that is an entirely different matter.

I have one minor point to make. I do not think that we can talk about investing in social security without having clarity on the return on that investment in terms of changed outcomes. That goes back to the discussion that we had earlier. I would be quite wary of using the term “investment”, because it immediately makes someone like me say, “Show me the return on that investment.”

That is not my question; I am simply making the observation that it is helpful for the committee to hear you reflecting on areas that will need further consideration. In the hurly-burly of politics, we hear a lot of stuff such as, “Oh, the Scottish Government—there’s this terrible black hole.” The press focus on what is happening in the Scottish Government, and the absence of clear wording impinges on people’s trust in the ability of the Scottish Government to manage its financial affairs. Although, to you, that might seem counterintuitive, it is helpful for the committee to hear cautious, tempered language that acknowledges the challenges ahead and owns those challenges. If you do not mind my saying it, I do not hear enough of that in this committee. Clearly, decisions have to be made, and every political party needs to be party to those decisions, because the demand-led nature of our benefits system is unsustainable.

I want to briefly make explicit a point that has been implicit in some of the discussions about access to finance. We have heard valid commentary about SMEs: personal guarantees are hugely prohibitive, as is carrying coronavirus business interruption loan scheme loans, bounce back loans and so on. In relation to the college sector being able to access funds under the current structure and Lesley Jackson’s comment about FTs and SNIB, it might be worthwhile for us to put down a marker that access to finance in different sectors is deeply constrained when linked to the economic multipliers that have been mentioned, particularly around housing. We should think about that in a slightly different way.

That is an extremely important clarification, because that approach is different from what is happening in the rest of the UK. The difference between a case that goes through court processes where there is a finding of fraud and a case of suspicion of fraud will skew your figures, so that clarification is helpful.

I will pick up on something that the cabinet secretary said right at the start of the conversation. What did you mean when you said that there was no black hole? There are different meanings of the phrase, which we might go on to, but what is your understanding? What are you saying when you say that?

You have made my point for me. There are nearside considerations in relation to the forthcoming budget, and there are longer-term projections. The Scottish Fiscal Commission has made clear the challenges of the fiscal sustainability of continuing to make social security payments at the rate at which they are currently being made. In your discussions with senior colleagues, at what point do you say, “Oh, this looks utterly unsustainable. How on earth are we going to manage it?” What is the tipping point? How do you model that? That goes back to the questions about opportunity costs.

It would be useful to get your personal reflections on the point at which you start to worry, rather than just thinking, “How do we get through the nearside budget that is coming up thick and fast?” I have never been able to detect any sense of longer-term strategic thinking about the fact that the current level of social security payments is clearly unsustainable as it stands.

Hi, everybody. I have been listening to the session with interest. As the convener set out at the start, one of our key focuses is fiscal sustainability, but we have not really reflected on that thus far. We have touched on the UK balance sheet, which is pretty dismal—it drives everything and ultimately flows through into what we see in Scotland.

We have almost got a counterintuitive challenge here. First, we have touched on the availability of labour, which we know would be a key way of addressing some of those challenges, when we have political drivers against immigration. Secondly, I was surprised that Scottish Enterprise’s submission did not mention artificial intelligence, because it has so many links to skills and productivity, which we have touched on. Finally, I have a gentle challenge to Universities Scotland: you ended up in a position of overreliance on overseas students, but, from a business perspective, any business would be doing the risk analysis of having so many eggs in one basket—of a critical type of customer, if you like.

Are we ready and up for this challenge, given its counterintuitive nature and a backdrop of decreasing and constrained public sector funding against a demand from everybody for more money, often for a good reason, such as wanting to invest? Do we have the audacity of thinking and the leadership that we need? Do we properly understand the almost counterintuitive nature of fiscal sustainability? I appreciate that this is a pretty big question. We have had a nice chat so far. However, will that nice chat really start to shift the dial? That is my question. Elaine, you are nodding—

I thank the witnesses for bearing with us. I will finish on one tiny point on the £36 million. You have extensively laboured the differential approach in how you deal with that in Social Security Scotland, but I did not get a strong sense of how your approach to overpayment through error—not somebody’s fault—differs from that to overpayment when there has been fraud as an intentional act of obtaining money by deception. Okay, you are going to be fair, you are going to be nice and you are going to treat people with dignity but, clearly, fraud is an entirely different matter. How do your processes differ in those circumstances?

We have laboured that point and questioned whether the recovery percentage is 10 per cent or more, but my understanding is that “black hole” is simply terminology to express a projected overspend against projected income. People will say, “Oh, the Scottish Government’s got a black hole”; equally, you could say that the UK Government has got a massive black hole.

I will briefly explore with you an important differential. In the UK Government’s situation, some economists will argue, “Well, of course it’s not a black hole, because you can squeeze people till the pips squeak”—in other words, the UK Government can raise tax, increase borrowing or create money out of thin air vis-à-vis quantitative easing. It is different for the Scottish Government, because the only available fiscal lever is to tax. Therefore, when you say that there is no black hole, do you mean that we do not need to worry about the difference between projected income and projected expenditure because we can just increase tax?

That efficiency, in system terms, is important. However, in the light of the statistics—or projections, I should say—the other important issue is what policy levers you can use so that the differential between projected spend and projected income is not so stark. That is more a decision for the Cabinet Secretary for Finance and Local Government.

When I first got elected, I used to talk frequently about the creation of a sovereign wealth fund. My antipathy to using ScotWind money to plug a hole in revenue expenditure is on the record. This is not going to compute, but I will not ask you what the latest thinking is on a sovereign wealth fund. I do not think that anything is happening in that respect, although it probably should be, because the measures that you are setting out, which are about treating people fairly, cannot remain in place without something ambitious being done to create wealth for the long term. That is my tuppence-worth.