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The discussions are on-going and I have the next round of them on Thursday. I will be corrected if I am wrong, but I think that that will be the fourth engagement that we have had.

Some of the engagement, not just with parties but with stakeholders, was reflected in what was contained in the budget statement. There is always a balance to be struck between what you put in the budget statement and what might be held back because of the budget issues that you anticipate. We very much front loaded the budget statement with the key planks of our investment and priorities.

The discussions are very positive. I will not divulge the detail, but you will have heard Opposition politicians talk in the chamber about their priorities, so the areas on which they might want us to go a bit further will be no surprise. It is not about fundamental unpacking of and replacing the budget statement. The work is around the edges—for example, if there is a view that we need to go a bit further on something. Those are the types of discussions that we are having. They are very positive, which is a good thing. I have said from the start that I want to try to build the broadest support for the budget that I can. That would be a good thing in the current political climate.

You will be aware that any distribution formula changes come COSLA: The 32 local authorities decide what the distribution formulas are. We do not arbitrarily change distribution formulas that will change the way that—

That was decided by COSLA.

I will come on to that after I make a final point on child disability payment and disability payments and support more generally. Such benefits should be robust and consistent and should meet the test that they provide support for families who are under extraordinary pressure in their day-to-day lives because of a child’s or adult’s disability. The determination processes should recognise that. I will come back to you with an answer about why there has been a big increase in the child disability payment budget—there will be a rationale for that.

As for the two-child cap, we touched on the decision-making process earlier. As we worked through the shape of the budget, the First Minister felt, bluntly, that we were not going as far as we needed to go on tackling child poverty. He challenged us all to look again at what more could be done. There were various options, which we touched on earlier, such as increasing the Scottish child payment or doing something that would be more impactful and more targeted. Having looked at the options that were in front of us and at some of the evidence that child poverty organisations presented, we kept being brought back to the two-child cap.

I apologised to the Scottish Fiscal Commission for our communication at the point when we decided what we were going to do. If I had been asking the SFC to cost that for implementation in 2025-26, there would have been a pretty significant issue. However, given that the costings are for 2026-27, the SFC has been able to provide the costs in good time for the final stages of the budget in February. As I have said, the situation is not ideal. All things being equal, we would have wanted to give the SFC a heads-up earlier.

On the costings, in my interviews on the day of the budget statement, I talked about a range between £100 million and £150 million, which was based on figures that had not been through the Scottish Fiscal Commission’s costing analysis. I accept that £155 million is at the upper end of that range, but we now know the costings that we are working with when making provision in the 2026-27 budget. That is an honest laying-out of the various steps in how we got there.

If there are areas where we can improve transparency, I am more than happy to do that. The written answer that you received set out the detail. If there are improvements that we can make, whether on PPP costs or anything else, I am happy to do that.

I response to your first question, I will give the example of nursing education. The policy of how many nurses are required sits with health, but the money then moves to education. There are some areas in which it would be tricky to baseline, because the policy so clearly sits with, in that case, health. I am happy to reflect on that, whether in relation to PPP costs or to some of the further baselining at the start of the budget process.

I think that the Scottish Fiscal Commission commented that there had been improvements in the transparency of the budget, but that there was still work to be done. I am happy to work with the committee.

The previous UK Tory Administration and the current Labour one have also frozen the thresholds for higher rates until 2028-29, I think—Lorraine King will correct me if I am wrong. Essentially, it would not have been affordable for us to do anything else. That is the honest answer.

We have done what we have done, up to the limits of affordability, to support people who are on the lower rates of tax, and the action that we have taken in that respect and in respect of social security is worth about £400 a year to people on low rates of pay. Unfreezing the higher-rate thresholds would not have left money for investments in health, education, the winter fuel payment and so on. Those are choices that have to be made.

We have decided not to make any further changes to rates and bands, in order to give stability to taxpayers.

We recognise that the tax base and the tax take in Scotland have been very important in enabling us to fund many of the things that we are funding, including delivery of public services. We have £1.7 billion that we would not have if we had made tax decisions similar to those that were made for the rest of the UK. We know that we can go only so far at a time when household budgets are still under some constraint, so, in the light of all that, we made the decision that what was most important for the rest of this parliamentary session was some stability and certainty. The tax strategy sets that out with the commitment that there will be no changes in rates and bands.

We have massively increased baselining of funding—a lot of the local government funding has been baselined—and we have made some significant changes around portfolios. Earlier, I mentioned nursing education. The health service decides how many student nurses we will have, and the money is then passed to education to deliver that training. We have to ensure that the money sits in the right area for the policy, because that will determine how much can be done—in that case, how many nursing students can be delivered by education services.

We have tried to set out the funding in as transparent a way as possible, but there are good reasons that make a lot of sense for in-year transfers. As I said to the convener earlier, if there is more that we can do in that space, we will do it, but there are sometimes some good reasons for in-year transfers.

As I said, we regard investment in social security, including some of the mitigations that I mentioned, as an investment in people and in anti-poverty measures. Giving children the best start in life means they are more likely to be economically productive later in life, so you could argue that it is an investment in society that will give economic returns later.

My answer is that it is about prioritisation. We are prioritising not just social security spend but front-line services. The action that we are taking on fiscal sustainability covers a number of areas and aims, to ensure that we can afford the supports that we are providing. There are seven areas, but I will give you the headlines. They include the workforce, recruitment controls and the changes that we will make on backroom services so that we can prioritise funding for the front-line public service reform programme, on which Ivan McKee has given you a fair amount of detail.

The decisions that we have previously taken on tax provide an additional £1.7 billion in 2025-26, compared with the situation if we had matched the UK Government policy, according to SFC estimates. There is also the work that we are doing to boost and grow the economy, and the investments in the budget will help to do that. The invest to save fund is working to release more funding. The efficiencies that Ivan McKee has set out amount to about £280 million over the past two years and another £300 million over the next two years, but the invest to save fund will go further than that. There are also things such as health and social care reform.

I have laid out those measures because they are all pillars of the sustainability delivery plan. I will provide more detail on that to align with the medium-term financial strategy. A lot is happening across Government, and I am keen to give transparency on that and to set it all out in one place. That is what the sustainability delivery plan will do, and we will publish it alongside the MTFS.

Let me give you an assurance that we will not be unpicking the investments that we are making, whether in green energy, enterprise or any of the other supports that we are putting in place. We recognise the importance of growth. Investment in infrastructure is the biggest growth enabler, and we are now able to invest in affordable housing because of the change in the capital budget trajectory. Obviously, we hope that that will continue through the spending review. There is a question mark there, because we will need to wait and see. However, that investment is important because it is an absolute lever for growth. There will not be any unpicking of those investments. It is really very much around the margins.