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Without a doubt, yes. We have to look with care at capital projects. I am looking all the time at what the expectations are on capital projects because of the disruption to supply chains from Covid, exacerbated by the illegal invasion of Ukraine and all the disruption that comes from that, and the impact of energy costs. All of those factors are putting pressure on capital project budgets and we have to be very careful in the management of those sums.

Throughout my involvement in any of these questions, I have always been struck by the importance of investment certainty and attracting commitment to the market. I will take the example of renewable energy. Since 2007, we have given absolutely cast-iron policy certainty on our commitment to renewable energy. The reason why we have such phenomenal progress on getting to a position whereby, in essence, Scotland’s net electricity requirements are generated in their entirety by renewable energy is that we have given that certainty to the marketplace.

Therefore, I accept, fundamentally, the argument that Michelle Thomson puts to me. The Government has given a long-term commitment to the Scottish National Investment Bank. Although, as the committee will understand, I am not at the stage of defining particular budget numbers, the Government is committed to supporting the Scottish National Investment Bank and all of its purposes in the long term.

However, in all honesty, I cannot assure Michelle Thomson that I can insulate Scotland from the damage that has been done by the chancellor’s decisions and the investment uncertainty that has been created, because, fundamentally, the pension funds that she talks about will look at the United Kingdom and the decisions of the United Kingdom Government. I am not surprised that they are all very anxious and nervous about it, because it has been a total fiasco since a week past Friday. I cannot overstate the damage that has been done—on top of an already really volatile situation—by that fiscal recklessness.

I fear—I am really worried—that, in order to go from veering off to that extreme to the other extreme of creating market certainty, the casualty will be public spending, in particular the public spending that vulnerable people in our society depend upon. That is my big fear about where we sit today.

We monitor the position very carefully. The data on transactions and on the volume of tax generated is published monthly. The information about what has happened to the number of transactions and to revenues will be available. If we decide to change LBTT rates in any way, that will be part of the projection work that is undertaken and information about that will be set out to Parliament.

There are a number of things that we have to do to address that issue. Mr Greer’s characterisation of much of the debate is entirely accurate.

In the course of the limited period of time that I have been back in the finance and economy portfolio, many people have told me to, invariably, use the reserves, but they are all being used; borrow, but we cannot borrow; increase tax, but we cannot increase tax by law; and, finally, get down the back of the sofa and see what is there. Those four options do not provide answers to the challenges that I face, hence my statement to Parliament on 7 September.

Some of the answers to the problem that Ross Greer has raised lie in the points that I exchanged with Liz Smith in the programme for government debate and in our discussion during this meeting. In Parliament, we need to have a totally realistic, open discussion about the relationship between tax and spending. What we are prepared to argue for in spending terms, we need to be prepared to argue for in tax terms. I use “tax” as a catch-all for tax, revenue raising, level of borrowing—in other words, the income side of things. Let us have a proper discussion about that. I am very open to having that discussion. I not sitting here saying that there are easy answers; really difficult decisions will have to be taken and we will have to have a climate of openness.

I do not know whether you heard me say this in my opening remarks, but I am doing two things this year that I hope will help in that respect.

First, I have invited three significant economic voices to provide commentary to our debate—dispassionately; it is for them to construct their contributions. I had a briefing session last week with Professor Anton Muscatelli, Professor Frances Ruane and Professor Mike Brewer, and I invited them to reflect on the issues with which we are wrestling. I suspect that the discussions in this morning’s meeting will be a helpful reference point for them. They will contribute to the debate and set out some of the issues that we have to consider. I expect that group to make a couple of interventions in the debate. I have told it that I do not want recommendations and that it is up to me to decide what to do and what to put to the Parliament. However, I want it to help to inform commentary and discussion on the situation and to be as dispassionate as possible.

Secondly, I will open a consultation process on the various challenges that we face when it comes to tax and public expenditure. I will publish a discussion paper to encourage public engagement on choices. I expect to do that around the timing of the emergency budget review.

The Government has taken forward the legislation on the national care service and we are developing those propositions. Obviously, we are having a lot of consultation and dialogue on those points. Today, we have not really got into specific funding decisions about particular areas of policy, so I would not want to give commitments on particular decisions that the Government is making on any aspect of policy, other than to say that we intend to fund what we have committed to doing. However, it all has to be fiscally sustainable and I am wrestling with that challenge in this financial year because we have had a number of significantly increased costs, principally through pay deals and the loss of value through inflation. We have to make sure that all of our current delivery of the budget is fiscally sustainable and that future years are fiscally sustainable as well.

Those will be set out in the financial memorandum that is associated with the bill.

I do not think that I used the word “grown-up” at any stage in my answer to Mr Greer—I possibly argued for a more considered discussion. I am all for that. I do not mean to be disrespectful to anybody, because I am as much a player in that as anybody else, but we probably need to have a more considered debate in Parliament about some of these questions. I give the committee the assurance that I will endeavour to do that through my stewardship of this brief for, I hope, a very short time—if the finance secretary happens to be listening to the session.

I tried to demonstrate that by coming to Parliament with the statement on 7 September. That was not a statement that I was required to make, but I made it because I felt that, in the interests of openness and transparency, I should tell Parliament what I was doing to wrestle with the in-year financial pressures. Normally, that is done in the autumn and spring budget revision process, which does not attract an awful lot of attention, but we are wrestling with some substantial issues.

Therefore, there is a need for us to have an open, considered discussion. I am not persuaded that we need more legislation to do that, because, to go back to what we have talked about, the existing legislative framework on the Scottish Fiscal Commission puts some substantial obligations on Government to adhere to the legislation and for Parliament to be informed by the Fiscal Commission of its conclusions and views. However, I am happy to consider any further relevant points.

The connection to the discussion about the national performance framework is interesting. I accept that it is difficult to look at a pound in the budget and follow its journey into the national performance framework. It is possible to look at the national performance framework periodically and ask, “Do we think that public expenditure and policy decisions are supporting the achievement of this direction of travel and, if not, what do we need to reshape about public expenditure or policy to enable that to be more the case?” However, it is a difficult process to establish a direct connection between public and expenditure outcomes.

A fair conclusion would be to look at decisions on public expenditure and, for example, come to a conclusion on whether the Government is doing enough to support early intervention and preventative measures. If the Government spends all its time running around picking up the pieces of things and not leaping away up stream to avoid problems occurring, that is a pretty big debate for the Parliament to have.

That would probably also lead to changes in how we spend public money. There is not often a queue of people saying, “Please take money away from me because it could be better spent over there.” However, Parliament could always make that decision and agree collectively that we could do with, for example, early intervention. I am a firm believer in early intervention. That is why we invested to expand funded hours of early learning and childcare to 1,140 a year. The Cabinet came to the conclusion that we needed to take a bold decision to alter the life chances of children in our society. The same rationale effected the decision to embark on the Scottish child payment.

Therefore, we took big, bold policy decisions that have financial implications, and we have put them into the budget, in the hope that they help to narrow the attainment gap and erode child poverty. I would argue that there is real benefit in those policy decisions, but they have come at a price in terms of a cost to the budget and, obviously, Parliament is welcome to air some of those questions as we proceed.

I reassure Michelle Thomson that although, today, she is faced by a quartet of men, on any other day, if the director general of the Scottish exchequer or the chief financial officer had been with me, the panel would have looked remarkably different. We have very appropriate levels of gender balance across the Scottish Government, even if we do not have it on the panel today. Indeed, if the Cabinet Secretary for Finance and the Economy was here, it would be very different as well; that is another encouragement for her to come back to her role as quickly as possible.

To be absolutely serious, I unreservedly accept the points that Michelle Thomson made about the importance of assessing the impact of budget measures on women and on other groupings and considerations within our society.

In Scotland, we are very fortunate to have the Scottish Women’s Budget Group, which has been very much involved in the Scottish Government’s financial planning and budget work for many years, and it was actively involved when I was the finance minister. I know that the Government has good dialogue with that group. I will meet with the organisation as part of the dialogue that I will take forward on the budget, and I will listen carefully to the representation that it makes, just as I listen to a range of different organisations.

In the construction of our budget, it is important that we take adequate account of the impact that it may have on different groups in our society, particularly women. If we have to take tough decisions during a financial year, it is probably even more important that we pay particular attention to those issues to avoid getting into a situation where we create a potential negative impact during that process.

I do not think that there is a pot of money is likely to come with the investment zones, but there will be fiscal incentives through reduced national insurance contributions, which is an issue that is properly within the competence of the United Kingdom Government under the constitutional arrangements. The UK Government says that it would like the concept to be extended to Scotland but that it properly understands that there are many devolved issues.

I have no complaints about the nature and the manner of the dialogue that we are having on that question. Some of the judgments come down to some of the issues that Mr Mason has already raised with me.

We have to proceed with great care here. I cannot accuse the United Kingdom Government of proceeding with great care on the issues and, with the greatest respect, I cannot accuse the Scottish Conservatives of proceeding with great care on the matter either. Within the past 10 days, I have been called on to mirror tax policies that have now been dumped by the UK Government, just 12 days later. That is no way to undertake tax policy—it is a total farce.

We have to look at the issues carefully. There is a relevant relationship between the tax position in Scotland and the tax position in the rest of the UK. However, there are the other policy commitments that people have access to in Scotland, such as significantly lower council tax and free prescription charges, as well as the fact that children in Scotland get more early learning and childcare than children in the rest of the UK get, and the fact that children who live in Scotland do not have to pay tuition fees if they go to a Scottish university.

Despite all the talk about relative tax positions, for some people, some of those UK Government decisions are completely incidental compared to the difference in council tax between Scotland and England, which is about £500 on average for band D. It is about £500 lower in Scotland, so there have to be really dramatic changes before a band D council tax payer in Scotland will decide to uproot their family and entire circumstances to try to get a degree of income tax advantage, while jettisoning a host of other benefits to which they have access in Scotland.

That is why, as I said in my opening remarks, I am going to air that debate about public expenditure and taxation. It is a rounded debate. We cannot have a compartmentalised debate about tax rates without looking at the whole public expenditure and tax proposition, because that will affect many of the choices that people make.

Finally, for the record, of course I want Scotland to be an attractive place for investment. The record speaks for itself. Other than London and the south-east, Scotland is the most successful location for foreign direct investment across the UK and has been for the best part of the past 10 years, if not longer.