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I am sure that you, like me, will welcome any costed proposals and alternatives, because we all need to own the issues that relate to the constraints on a fixed budget.

One of the things that is being discussed this week, with a helpful intervention from the Fraser of Allander Institute, is the suggested income tax rises and the effect of behavioural changes. The Fraser of Allander Institute modelling showed the different percentages and numbers that that would wipe off any tax raised, varying from £56 million to £161 million, or 30 per cent to 36 per cent, based on the proposals from the Scottish Trade Unions Congress and the Institute for Public Policy Research Scotland. I appreciate that that cannot be exact. The only time that the numbers can ever be exact is after the event; we all understand that. To what extent are you considering behavioural changes? What would mark the tipping point in a go/no-go decision for you?

Yes, I can understand that. The Fraser of Allander Institute’s paper sets out anticipated effects. As you said, the methodology that it is using will be the same as that of the Scottish Fiscal Commission. My wider concern is around perception. It is extraordinarily difficult—probably impossible—to work out some scenarios properly, but there will be a perception linked to what, in my view, is a relatively low committed spend to entrepreneurs, for example, of only £15 million, although, of course, we have not seen the budget. It is about the wider picture.

Again, it is this same question: what reflections have you made on the perception of people, businesses and investors? I accept that the foreign direct investment stats are very strong—we agree on that—but we are trying to predict how behaviours might change as a result of policy decisions. We have to compare apples with apples, as the convener said. Do you think that the perception, rightly or wrongly, that Scotland is a higher tax environment will play into investment decisions? How are you reflecting on that perception in your decisions on tax rises?

Sorry to interrupt, Deputy First Minister. I suspect that I will strongly agree with what you are going to say. My question, if I have not been clear, was, given the scale of the estate that you have outlined, do you have a worked-up programme in the Government to address that issue? I think that we are all agreed on the scale of the challenge and on the benefits therein. I fully understand your position, but there is a need to move to having something substantive—to have at least a framework—to operate to.

I accept your point, convener. I raised the pupil teacher ratio more as an example than as a specific point. I accept that it will be dealt with later.

Good morning, panel. Thank you for attending. I want to start with a quick question about the Verity house agreement. We know that some broad principles have been established, but, critically, we still need to work out the principles, never mind the details, of any fiscal framework.

Therefore, my question is, what consideration have you given to how the Verity house agreement will change your approach to setting the budget, giving advice to local authorities about budget setting and, indeed, policy making in terms of funding, ring fenced or otherwise?

I hear what you are saying and I accept all of that. You talk about accountability on both sides, and I think that the principles are clear. However, the budget for 2023-24 will be published fairly soon, in December, and local authorities will be asking what specifically it will mean for them in the following year. Have you managed to have any discussions yet with the Cabinet Secretary for Finance about what the interim measures will be? I acknowledge that you said that it will be an iterative process, and I am thinking specifically about local authorities that might wish to, for example, revert to using the more flexible pupil teacher ratio instead of going by the number of teachers and that will, therefore, be making specific budgetary plans based on that, because that is a longer-term issue. I am trying to flesh out how far they will be able to make those decisions straight after the budget, as I am not clear about that.

After Mr Dey’s indication that he would be looking for administrative savings from the Scottish Funding Council, can you tell us what substantive progress has been made on that thus far? In other words, what sums are you going to put on the table, and where will they come from? Failing that, you could just write back to the committee.

I will move on. Given the increasing talk about the Scottish education exchange programme—and again this is a general question—what sense do you have of the budgetary requirements in that respect? Moreover, with the considerable financial challenges that I agree we face at the moment, how will the money for that be found in what is a very constrained environment?

Thank you, convener.

It is me again, cabinet secretary. In the evidence session that the committee had on 17 May, which I appreciate was a while ago, the minister for HE and further education, Graeme Dey, confirmed that work was being done on potential savings from the Scottish Funding Council’s administration costs. I have just a quick question: do you have any update on progress on that? If savings have been identified, are they coming from elsewhere in the portfolio? Can you give us further information on that?

Just to finish this off, can you tell us what timescales you are working to?