Seòmar agus comataidhean

That is correct.

In relation to the detail of previous issues, in June 2022, we responded to two freedom of information requests confirming that two investigations had been carried out in respect of three complaints since 2007. Our judgment was that that was the information that it was appropriate for us to disclose, given the points that I have already made to Mr Lumsden.

Yes.

There are a couple of significant issues there.

I am happy to look at what further information would be helpful in following public expenditure to outturn. Going from budget proposals to enactment and then to the autumn and spring revisions and the outturn involves quite a number of steps. I appreciate that the numbers are quite high level by the time that we get to outturn. Inevitably, many budgets perform as we expect while others go either side of our expectation. We try to display that information in the revisions that are made in the autumn and spring and we report on that in the outturn. If there are changes that we can make, I am happy to engage in that.

Social care is a fundamental issue. The level of delayed discharge is way too high and is a source of enormous concern to ministers. We have taken a number of steps and have had a number of discussions, including a lot of dialogue with local authorities, to tackle that.

The problem of delayed discharge is the product of at least two factors, and perhaps a third. I am certain that our systems are not yet proactive enough and are not sufficiently preventative in supporting people at home to avoid their having to go into hospital. Lots of good work is going on around the country. There are low-level care packages that deliver just enough support to keep people in their own homes. A variety of public and third sector support services assist in that endeavour, but I accept that there are probably not enough services, which results in some people being admitted to hospital when we really should be able to support them at home and avoid them going there in the first place.

Part of the problem with waiting times at accident and emergency is that our hospitals are congested. Some people who come in through the front door of A and E should not be coming. Other people, who need to come in through the front door of A and E and then go out the back door and into the hospital, cannot make that journey quickly enough because the hospital is congested with people who really should be out of hospital and back home. They are not at home, because we do not have sufficient capacity to support people who might need higher-volume care packages than the other people I talked about, who might need very modest amounts of social care support.

I do not think that that is all about the third thing that I am debating in my mind, which is the availability of money. For once, I do not think that there is a shortage of money in social care. The issue is a shortage of people. We have lost a lot of people from social care. If I think about the community that I represent, a lot of people who were delivering social care had come in from other countries to provide that support and many of them have gone away.

For completeness, I must recognise a point that I acknowledge that the deputy convener has made on many occasions during parliamentary debate, which is that social care salaries may not be high enough to attract people when they make choices between different areas of economic activity. We have undertaken a local government pay deal that has been designed to strengthen pay for those at the lower end of the pay scale. I hope that that will help us on that journey, but we must remain open to that legitimate issue.

A number of steps are under way under the Covid recovery strategy. In essence, they envisage a focus on the person-centred delivery of public services. That requires a great deal of alignment of activity from a range of organisations. The work on taking forward that approach is a constant part of the policy agenda that we are taking forward with our local authority partners, the national health service and other players. That is about reforming the way in which we deliver services, so that we support people more directly rather than relying on them to link up public services themselves.

Secondly, we are looking carefully at the functions of different organisations, and colleagues have set out to the Parliament some of that work—for example, in the field of skills, or in what is under way on the national care service.

Lastly, in the discussions that we have had this morning, I have highlighted work on the public sector workforce, and the range and selection of tasks that we expect to be undertaken as part of ensuring that the sector is appropriately sized and equipped to meet the challenges that we face.

Thank you, convener. I add my comments to yours in relation to the bereavement that Mr Gibson has experienced, and I send my sympathies to him and his family.

I welcome the opportunity to meet the committee to discuss the pre-budget scrutiny of the 2023-24 budget and issues in relation to the public finances. The preparation for the budget takes place against a challenging and highly volatile landscape with significant implications for our fiscal approach. From the Covid pandemic to Russia’s illegal war in Ukraine and rising inflation, we are in the midst of a cost crisis that is having profound impacts on households and businesses across the country, as well as creating significant strain on the public finances.

That cost crisis has now been exacerbated by the United Kingdom Government’s mini-budget, which involved substantial unfunded tax cuts, led to rises in mortgage costs, sparked turmoil in the economy and has been described as

“the worst unforced economic policy error”

in a

“lifetime”.

I wrote to the committee yesterday to share the Treasury’s latest estimates of the block grant adjustment impact of the cuts to income tax and stamp duty land tax, which imply a £540 million net benefit to the Scottish budget over three years, including this financial year. In the space of just 10 days, that estimate has fallen from £660 million, which is a fall of 18 per cent.

As the committee is aware, those estimates should be treated with a significant degree of caution because they are not informed by independent forecasts from the Office for Budget Responsibility. They also assume that Scottish tax policy will remain unchanged. However, the United Kingdom Government’s mini-budget poses important questions for our devolved taxes policies. My judgment is that we need to take the appropriate time and care to consider those implications as part of our annual budget process. As part of that work, I have established an expert panel of economists who will assess the impact on Scotland of the Chancellor of the Exchequer’s fiscal approach.

It is also essential that we engage more broadly on the tax and spending choices that are before us, including our commitments, priorities and values as a Government. Alongside the review, I will therefore publish a discussion paper to encourage public engagement on those important and difficult choices on tax and public expenditure.

The committee will be aware that the Office for Budget Responsibility is now expected to publish its forecast earlier than the originally proposed date of 23 November. The OBR forecasts are crucial to our budget planning and they will allow Scotland’s block grant adjustments for 2023-24 to be calculated. Those forecasts will inform our approach to setting the Scottish budget and will provide information to the Scottish Fiscal Commission to inform its independent forecast. It is vital that we base our budget decisions on high-quality information, and I am unreservedly committed to doing exactly that.

I am keen to discuss and agree with the committee a timetable for that work on the budget, and we will do that in due course. The committee will also be aware that I am expecting to conclude the Scottish Government’s emergency budget review in late October, the purpose of which is to identify any further resources that could be deployed to assist those who face hardship in these challenging days. I look forward to addressing any questions that the committee has.

First, I make the general point that the committee will be familiar with the length of my involvement in the public finances. I have been a minister continuously for more than 15 years. I was finance minister for nine years and I have now come back into that role. I therefore have a fair line of sight of the Scottish Government’s finances, and I have never seen financial strain of the order that I am wrestling with just now—not in the aftermath of the financial crash in 2008 and not even in the years of austerity from 2010 onwards.

The situation is of a different order, and it is a product of extreme volatility as a result of the events that I cited—Covid, which led to an increase in the public sector workforce; the enormous disruption that has been created by the unwarranted and illegal invasion of Ukraine; and the impact of inflation. Frankly, and to be blunt, that has been made worse by the backwash of the mini-budget, which has been a disaster for the situation that we face. The pressures are therefore absolutely colossal. That is why I have already had to come to Parliament to announce reductions in public expenditure this year, and I might have to do more of that in the period that remains. The challenges that we face are therefore significant.

I understand clearly the need to give the public sector workforce reassurance about how we intend to tackle that issue. I have already embarked on discussions with trade unions about the strategic approach to that, because we must take the greatest care in building as much confidence as we can around those approaches.

Undoubtedly, the public sector head count will have to reduce in the spending review period and throughout the current parliamentary session. How that is done is crucial, and I want to do it in the spirit of partnership with our workforce. I want to be open about the steps that we are taking to do that. We already have recruitment controls in place, which are tempering rises in employment. Recruitment controls mean that, in some circumstances, vacancies are not being filled, which reduces the public sector head count but in a managed and careful fashion, which is the approach that I want to take.

With each budgetary event that we go through, we must reflect on how we can best address the strategic challenges. That is the approach that I will take throughout the discussions. I welcome the dialogue that we are already having with trade unions, which have a clear and legitimate interest in ensuring that the workforce is dealt with properly and with courtesy and dignity. That will be my approach throughout that challenge.

In general, that should be the case.

The UK Government would like the idea to be rolled out across the whole of the United Kingdom. It can provide, in essence, a foundation for the approach, through national insurance contribution concessions, but some of detailed and specific provisions that are in the guidance document for England, which I have had a look at, relate to devolved issues, that is, mostly planning and environmental considerations as well as a variety of other questions. The UK Government is engaging us properly on the substance of those considerations.

I rehearsed with Mr Mason some of the issues that I have with investment zones. We have to be careful about the effect of displacement. Does a zone generate new economic activity? Are there alternative ways to support activity? I assure you that we are engaging with the process in a constructive spirit and that the UK Government is engaging constructively with us.

First, I acknowledge Liz Smith’s candid comments. I think that they help the quality of our discussion and reflect the reality of the situation. I also reflect on the exchange that Liz Smith and I had during my closing speech in the programme for government debate on 6 September. One of her colleagues—I will not disclose who the colleague was, to avoid causing any disruption to their prospects in life—told me that it was an example of the more thoughtful contributions that Parliament could do with more of. I am certainly interested in engaging in that type of discussion, because we face difficult challenges and there are no easy answers.

I welcome the timely question that Liz Smith puts to me about economic growth, because it allows me to illustrate the Government’s approach, based on some conversations that I had yesterday at the convention of the Highlands and Islands in Oban, which brings together a variety of public sector leaders from the region. Fundamentally, the Government’s growth agenda is based on the national strategy for economic transformation, from which I would draw out a few key themes. The first is an emphasis on innovation and creativity; the second is an emphasis on the importance of regional economic policy; and the third is a recognition of the importance of activating as many levers in our control as we can in order to support economic activity. Those are three of the big themes from the national strategy that I would draw on.

In one respect, the conversation that I had yesterday with the convention of the Highlands and Islands was enormously encouraging and motivating, because we talked through a more buoyant set of economic opportunities than I have seen in a long time in the area. For example, there are the ScotWind developments, the prospects for technological development around the Beechwood campus in Inverness, some of the related energy activity that is going on in Orkney, Shetland and the Western Isles and a variety of other economic opportunities, including in the tourism sector. There is a huge range of economic opportunities.

However, the challenges that were identified would best be summed up by four factors: availability of the workforce to deliver the opportunities; availability of housing at all levels of the market, not just affordable housing; transport connectivity, including issues about ferry services—those issues were very much to the fore of the discussion—and finally, digital connectivity, where there was a recognition that we are in a much stronger place than before but still have some way to go.

On the one hand, there are some substantial economic opportunities and prospects but, on the other, there are four chunky policy issues, three of which the Scottish Government can help to influence, and one—the availability of people—that is a real shared endeavour and challenge. We have historically low unemployment, although that might not be the case in the period ahead, and we are reducing the level of economic inactivity in Scotland. That is happening slowly, but I expect it to be slow, because trying to reduce economic inactivity invariably takes a lot of focused activity. Fundamentally, however, we are short of people. That is the consequence of the loss of free movement under EU membership.

I am getting a sense that the UK Government is beginning to realise that the loss of migration is a problem—Liz Smith may be party to some of those discussions. I am picking up elements of dialogue within the United Kingdom Government that recognise that the whole of the United Kingdom is getting short of working-age population. I hope that that opens up recognition of some of the steps that we need to take to address that.

I hope that that gives you a flavour of my thinking on those issues.