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That is very clear.

I will pick up a point that some of my colleagues have made. I appreciate, cabinet secretary, that you are responsible for the economy, but the ability to promote growth has to be linked to what happens with finances. The Scottish Fiscal Commission recently produced a report on getting to net zero. To what extent are the key elements of the just transition and getting to net zero understood from an economic perspective? I am thinking primarily about the point that the UK cannot get to net zero without Scotland and, secondly, that under the fiscal framework as it is structured at the moment, Scotland cannot, by law, invest at the sort of scale that is required to trigger a just transition or get to net zero.

Thank you for putting that on the record.

Good morning, and thank you for joining us. We have been nestling around the sides of the budget through the course of the evidence session. We know that the Scottish budget will be particularly tight, and I think that we all understand that without having to go into the detail of it.

Given the cabinet secretary’s relentless focus on economic growth—although I note that she has talked about prosperity for a purpose, which I agree with—against the backdrop of a historical long-term trend of UK productivity being very low relative to that of comparable economies, can she set out her understanding of the macroeconomic environment in the UK? How will the restricted investment in capital, in particular, have a follow-on impact on what she is trying to achieve with economic growth so that we can get vital funding to pay for public services and, of course, increase our productivity?

There is sometimes talk of rediverting revenue to capital. Can you outline the implications in other areas of the budget if that is done?

Following on from that, capital has been extraordinarily important for our enterprise agencies and the Scottish National Investment Bank. Will the cabinet secretary reflect on what she hopes to see for capital going forward? How critical will the 20 per cent cuts on capital over the next five years that the Scottish Fiscal Commission predicts be? What are the implications for the Scottish National Investment Bank and Scottish Enterprise? There have been recent articles in the Financial Times about Rachel Reeves asking for a 10 per cent relative cut in departments.

Before you answer that, I note that my understanding is that financial transactions, which have also been cut, have been used as a loan mechanism because of the absence of capital. That is a potential double drop that limits economic growth and productivity.

A couple of weeks ago, we had the Scottish National Investment Bank and Scottish Enterprise in front of the committee, and Michael Robertson from SNIB—I will just get the Official Report up—commented on the bank’s “perpetual status”. My colleague Murdo Fraser picked up on a question that I had asked the year before about how profit was dealt with under the UK Government budgeting manual. What is the cabinet secretary’s understanding of how the UK budgeting rules align specifically with the UK Government rather than the Scottish Government? The reason why I ask is that Michael Robertson said:

“Where we see potential for advancement within the Scottish rules is on flexibility, and potentially on multiyear investments”—[Official Report, Economy and Fair Work Committee, 25 September 2024; c 28.]

That question is slightly technical, but I wanted clarification of what the UK budget rules are and, therefore, of whether there is any flexibility.

I will be very quick, cabinet secretary. I would not be doing my job properly if I did not ask a little question about the refinery in Grangemouth, which is in my constituency. There has been a lot of talk thus far about opportunities and the work around project willow and so on. However, the cabinet secretary’s interest is in the economy, given her role. A report by Scottish Enterprise noted that the refinery contributed an estimated £403.6 million to the Scottish economy. PWC estimates that, rather than 400 related jobs that could go, there are nearly 3,000. The First Minister has stated that the closure will create a “significant economic shock”. Are we still focusing enough on the economic loss and shock, or is the balance skewed too far at this stage towards what the future might bring?

Yes.

According to the “Fiscal Framework Outturn Report: 2024”, there is still £398 million of capital headroom for the end of 2025-26. What are your intentions in that respect?

I appreciate that. Are you applying rules to headroom, contingency or whatever you want to use? It would be useful for the committee to understand that, because, as you know, as a side issue, we are always looking for greater transparency, so it would be useful to—