Seòmar agus comataidhean

A lot has changed in recent times. We have an updated business case, we have 92 per cent of ministerial decisions for statutory processes in hand and we have a new NEC4 contract in use, which was developed in concert with industry. We have the option to utilise a new funding model that is available to us, and we now have a plan that has carefully considered the best sequencing and is about rolling construction through to 2035. Therefore, there is reason for confidence.

I have to caveat that by saying that this is a complex project; it is 11 complex projects. Having certainty in an uncertain world is not always easy. However, I can guarantee that if issues arise—they will arise because that is the nature of major projects—we will work as quickly as we possibly can to resolve them against our delivery timetable.

Yes, of course, convener.

Good morning, and thank you for inviting me to give evidence on my portfolio budget for 2024-25. As you will have heard from a number of my colleagues, the budget has been developed in extremely difficult financial circumstances. The spending decisions of the United Kingdom Government mean that our block grant has fallen in real terms by 1.2 per cent since 2022-23, despite record inflation.

Capital funding is due to contract by almost 10 per cent in real terms, which is of particular concern to me, given that my portfolio carries roughly 40 per cent of the Scottish Government’s capital programme. That has required very difficult choices and reprioritisation towards programmes that most effectively deliver on the Government’s key outcomes. To give the committee an overview, that includes spending of nearly £2.5 billion on our public transport system, including investment of more than £1.6 billion to maintain, improve and decarbonise Scotland’s rail network and extend the peak fares removal pilot.

We will also invest £430 million to support bus services and their users, providing access to free bus travel for more than 2 million people, including all under-22s, with more than 100 million free journeys having been made since the scheme was launched.

We will continue to invest in walking, wheeling and cycling by allocating it £220 million in 2024-25, as well as spending £435 million to support our lifeline ferry services.

The safety of our road network has also remained a significant priority, and we are investing record amounts to maintain, adapt and improve our roads and make them safe for all users. That includes critical work on the A83 Rest and Be Thankful, as well as the A9 dualling programme, with work to commence on the Tomatin to Moy section and procurement of the remaining southern sections.

We are delivering on our commitment to protect our natural environment and halt biodiversity loss through our £65 million nature restoration fund and Scotland’s biodiversity strategy delivery plan, with a further £29 million investment to halt biodiversity loss being provided in the coming year.

We have ensured that our environmental regulators are well equipped to deliver the pivotal role that they play in maintaining a healthy and safe environment, and we are investing almost £40 million in 2024-25 to drive Scotland’s circular economy, to reduce reliance on scarce resources and to reduce waste.

That is an overview. Ultimately, despite the real and very trying funding constraints that have borne down on this year’s budget, this broad and diverse portfolio prioritises tackling the climate emergency and supporting biodiversity while delivering a safe, accessible and resilient transport network for the people of Scotland.

That is the conclusion of my opening statement. If you do not mind, convener, I will hand over very briefly to my colleague Philip Raines, who has a technical update for the committee’s awareness.

And the level 4s.

I whole-heartedly agree. I had the pleasure of attending the Scottish Renewables offshore wind dinner last week, which accompanied its conference, at which the First Minister spoke. What Mr Macpherson has narrated was reflected in the conversations that I had with developers and supply chain representatives. There was definitely a feeling that we must speed up and refine the processes but, equally, there was acknowledgement that that is because we are pioneering, in this respect. ScotWind is the largest floating offshore wind leasing round in the world, and some of what we are doing is among the first times such things are being done. However, that does not take away from the fact that we must refine and speed up the process.

That question is one that has certainly dominated my thoughts a lot as we have been developing the budget.

I will come back to the point about context that I made earlier. We are still dealing with annualised budgets that are self-contained within one year. However, as you rightly point out, the interim target is 2030 and the mid-century target is 2045. Therefore, on the one hand, I am planning policy over a generation and, on the other hand, I am having to think very carefully about the implications of one year’s budget on that.

Despite the exceptionally difficult circumstances that we have faced, I am comfortable that the budget has gone as far as possible to support climate change objectives. I set out at the start, I think, that my three principal objectives were to meet my legal and contractual obligations, to have a safe and reliable transport network and to ensure that we were responding to the climate emergency.

The work that we have done with the Net Zero, Energy and Transport Committee on the joint budget review has allowed clarity on the extent to which the budget supports climate objectives. Of course, we know that, in the whole budget, £4.7 billion is the figure that has been identified as funding positive actions that support climate change. I would draw out key examples from that—heat in buildings, active travel, flooding as a key adaptation move, public transport, concessionary travel and so on—but I will let you come back in.

I did not quite catch the first part of your question, but I absolutely understand what you are asking.

Yes, there are examples. Two come to mind, the first of which is SEPA. Fifty per cent of SEPA’s revenue is raised from charging regimes for those that it regulates, which is an example of making polluters pay for the public service that SEPA provides. That has been very successful and has seen SEPA’s overall revenue increase of late. A proportion of its revenue is public spend, and some of it is raised from those that it regulates.

I can also point to the work within my portfolio on extended producer responsibility, which is being taken forward by Ms Slater. I know that the committee is looking at that with respect to the Circular Economy (Scotland) Bill and the waste route map. The sums that could be raised from polluters through that work would be another example.

In what regard?

We are already working towards very ambitious targets, which is absolutely the right thing to do. I said earlier that the scale and pace of climate change mean that we need action now, across the economy and society: it is an enormous task that none of us should seek to minimise and I am not going to do that.

I cannot pretend that an almost 10 per cent cut in what is available to me for capital spending will not have an impact on expensive projects such as the decarbonisation of transport or our work on heat in buildings. I have done my very best with what has been made available to me and I will seek to fill the gaps where that is necessary by leveraging funding from individuals and institutions in the private sector and by using public money in the very best way that it can be used to stretch it as far as it can go.

I am aware of some of last week’s discussion with the DFM and Mr Gray.

First, ScotWind is supporting my budget because it is supporting Scotland’s budget as a whole in the most difficult circumstances that we have faced since devolution.

Secondly, the value of ScotWind is far greater than the sum of its parts, because we are talking about option fees, rental income and the real prize of unlocking supply chain opportunities that will be worth 10s and 20s of billions of pounds. Realising that is an objective for the whole Government, not just for me or for Mr Gray as part of his responsibility for energy. Some of that money is supporting net zero interventions. For example, Mr Gray has been able to make money available to support the development of the supply chain.

Would I like to see a ring-fenced sovereign fund in future that would support the purposes of my portfolio? Absolutely. However, I am absolutely confident that the whole Government is committed to realising the opportunities from ScotWind and other strategic net zero investments and that ScotWind is already supporting that work.

That would be dependent on discussions at the time—it would not be helpful for me to speculate about that. However, as I say, my view is that ScotWind is already supporting the Government’s budget, a key theme of which is realising net zero.