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We should be clear. I wrote to the committee yesterday with a revised assessment from His Majesty’s Treasury of the impact on the Scottish block grant adjustment arising from the UK Government’s policy changes on income tax and stamp duty land tax. That assessment indicates a potential positive block grant adjustment of £35 million in this financial year, assuming that we do not make any changes to land and buildings transaction tax in this financial year in light of the change to stamp duty. As I have told the committee already, I think that the disruption to the property market will make those numbers very uncertain.

The purpose of the emergency budget review, which I commenced before the fiscal event, was to explore what more the Scottish Government could do in targeting support to assist people facing financial challenge. That remains the purpose of the exercise.

I have been looking with care at the UK Government’s changes to income tax and stamp duty land tax. At this stage, given the turmoil that we are experiencing and the importance of an orderly forecasting process, I think that any tax changes should be made within the Scottish Government’s normal budget process.

I intend to come back to the Parliament in the week commencing 24 October—the particular date is to be confirmed—to set out the emergency budget review’s conclusions. My view at this stage is that the response will focus on this financial year only and on any measures that the Government can take to support those who are facing difficulty. It will also wrestle with the in-year financial challenges that I set out to the Parliament in my statement on 7 September, which have arisen primarily because of the significant inflationary pressures and the pay deals that are coming in at higher amounts than we anticipated.

The timescale for the Scottish Government’s budget is an emerging picture. As we speak, we are in a position where—this is my understanding, but I do not think that it has been publicly confirmed yet—the UK Government will accelerate the information that was expected to be published on 23 November. We have been assuming that, if that information is available on 23 November, we will be able to produce a budget for the Scottish Parliament prior to the Christmas recess. The steps that will need to be taken for budget scrutiny and the timetabling of that will be the subject of dialogue with the committee. However, if that information is published earlier, it will provide us with a bit more time and certainty about our ability to produce a budget before Christmas.

Under our normal protocols, we are required to give the Scottish Fiscal Commission 10 weeks’ notice of a budget event. If we wanted our budget to be announced on 15 December, we would have to give a notification by this Thursday. The deadline for 8 December has gone if we are to satisfy the 10-week notice period. From the question that you posed, convener, I assume that you share my view that we should go through the normal sequence of events, taking independent advice and getting the information that we should have, which will require us to give the Scottish Fiscal Commission 10 weeks’ notice.

The other point, which I make for completeness, is that I am not certain about the information that we will have available to us. If we receive OBR estimates, we will get estimates of what the block grant adjustment will be. However, I do not know what information we will have about spending or whether the fiscal statement that we will get from the United Kingdom Government sometime in the next few weeks will give us sufficient clarity on whether there will be any revision to the assumptions that we will make, based on a comprehensive spending review.

In all honesty, I cannot see how the comprehensive spending review numbers can be sustained given that there have been £43 billion in unfunded tax cuts and that there is market turmoil. If such turmoil is to be addressed and the £43 billion-worth of tax cuts are to be sustained, rebalancing measures will have to be taken. I fear that those will involve cuts to public expenditure, which will have an impact on the Scottish Government’s budget and on the assumptions that would be in the resource spending review.

I would have to reserve my position on that in relation to pandemic preparations. If I need to give the committee any specific information, I will write to the convener with it.

However, technology can play a huge role in the management of healthcare. If I can get information about my health condition on my Fitbit, simply by voluntarily giving information to allow me to monitor my health and other factors, surely we can find ways at a system-wide level of ensuring that we have the support that technology can bring us in that respect.

Yesterday, I met people from a really interesting company that places sensors in people’s homes to assess their movements, the steps they take and so on. Essentially, they monitor vulnerability. Is somebody getting up at the right time? Are they moving around the house enough? Are they putting the kettle on? Are they cooking? It is all about giving any early indication of whether there is any need for support. If we can get support to that person at the earliest presentation of vulnerability and long before they come anywhere near a care home, a GP practice or an A and E department, we will be able to deliver better outcomes for that individual as well as operate fiscal sustainability.

One of the challenges of deciding our priorities in public expenditure is assessing the most effective use of public expenditure at any given moment. We have to be open to that debate, because the world changes and life changes. We did not have a pandemic until 2020 but, in our budget in 2022-23, we are having to provide £485 million for pandemic activity. Therefore, it is important that public expenditure decisions keep pace with the needs of the time and the agenda that the Government is pursuing. However, for completeness, I have to say that that discussion is not straightforward because, if I said, “Right, we are not spending £485 million on pandemic preparations; we are, instead, going to spend £50 million”, I think that a lot of folk might say, “What on earth is Swinney doing, cutting the pandemic preparedness by £435 million?” Mr Mason has served in this Parliament and on Glasgow City Council, so he will be familiar with the debates about public expenditure. There is not a queue of people lining up to say, “Let’s stop spending money on that and start spending money on this.” Indeed, I rehearsed many of those issues with the Social Justice and Social Security Committee this morning.

The on-going Covid-19 spend is primarily focused on a range of measures, including the surveillance activity that is under way. That activity considers elements such as the Office for National Statistics’ survey and routine testing in general practitioner surgeries, the wider healthcare system and the care system. We fund those elements to enable us to have that intelligence.

There will also be routine approaches in other elements of intelligence gathering, such as through waste-water analyses and the ONS infections survey. There is also wider work being done on activity in the test and protect arrangements that we have in place.

That is a very live issue, on which I have to take forward dialogue with the Finance and Public Administration Committee to agree a timescale. The protocol between the Government and the Parliament requires us to negotiate that timetable. We know that there will be another UK statement of some sort on 23 November. It is unlikely to be a budget; it will more likely be an assessment of the condition of the public finances and the debt-reduction arrangements that are required. I would be surprised if there is a full budget in late November.

Accompanying that, we will get the Office for Budgetary Responsibility’s analysis of the fiscal measures that have been taken. From that, the Scottish Fiscal Commission will be able to undertake its work and we will be able to pursue a budget thereafter. That all leads me to the conclusion that it is highly likely that a Scottish Government budget will be published before the end of the calendar year.

That will obviously be a material factor within the budget. Mr Fraser is correct that the resource spending review envisages a reduction in public sector employment over the course of the spending review period. We have to live within our means, and the public sector workforce has grown during the course of the pandemic, so we now need to take steps to ensure that the level of public sector employment is sustainable within the resources that we have available to us. That will obviously be a product of the discussions that are had in relation to the budgets that are available for individual areas of public expenditure. The implications for public sector employment will flow from that.

Of course, beyond the resource spending review, there are three additional variables. The first is whether the resource spending review is sustained in the resources that we have available. Just now, it is reasonable to assume that public spending at English departmental level—which matters significantly in terms of what funding will be available to us—is likely to reduce. Given the difficulties that are currently being experienced in sustainability of the public finances, the funding that is available to us might be reduced from what we expect.

Secondly, we are dealing with much higher inherent costs as a consequence of the pay deals in this financial year, which have been much higher than we had envisaged.

Thirdly, there is real uncertainty about the period for which we will have to deal with much higher inflation. We do not yet have the answer to that question, but it is material to the financial volatility with which we are now wrestling.

In essence, without certainty over where the budget is heading in the years to come, it is impossible for me to answer that question just now. I hope that I will know the answer to that when I see the outcome of the UK Government’s statements on 23 November. It all depends on what information we get at that stage. That is genuine source of anxiety for me, because we saw a fiscal event on Friday that did not give us a complete picture of the financial information that is necessary.

If we get a repeat of that in November, I will be trying to construct a budget that will be based on a number of variables that might include significant risk for us. If I do not firmly know the expected budget of the United Kingdom Government for 2023-24, that adds significant variability and uncertainty in the budget that I have to set for that period. We will have clearer answers to that question when we get through the budget process.

Certainly. To give a complete picture, there has been growing pressure on the public finances for some years. The statement that I gave to Parliament on 7 September was not a statement that I was obliged to make; I volunteered to give it, because I wanted to be transparent with Parliament about the gravity of the public spending pressures that we face.

We operate on a fixed budget; by law, I cannot revisit tax during a financial year, and I cannot borrow for day-to-day spending. We have a fixed budget unless we benefit from any consequential funding because of changes in English departmental public spending during the year.

I announced to Parliament more than £500 million of spending reductions and changes, in order to be open with Parliament about the gravity of the difficulty that we face. That is a product of rising inflation and pay costs that are far in excess of what we expected, because of the inflation. That is where we were last Thursday.

On Friday, we had the fiscal event, which in this financial year generates a positive Barnett consequential to the Scottish Government of £35 million, which comes from changes to stamp duty in England. In subsequent years, there will be further Barnett consequentials. There are changes in tax interactions between Scotland and England, and there are plenty of voices demanding that I deliver in Scotland the tax changes that the UK Government has made.

Looking forward, we have some line of sight on the tax position, but I am not at all confident, as I sit here today, that that tax position will hold, because the market volatility has been horrific. How that will all hold is anybody’s guess, and it does not look as though the situation is getting any more stable this morning.

The Chief Secretary to the Treasury told me—

Of course. If the UK financial system is going to collapse, the UK Government will have to change its tax position. It is an absolute mess this morning—a total mess. I have never seen anything like it in my life. I have no idea how that position will prevail.

Why is that happening? It is happening because the markets do not believe that the UK Government any longer believes in fiscal sustainability. If the UK Government wants to prove to the markets that it still believes in fiscal sustainability and wants to protect the tax position that it set out last Friday, it has only one place to go—it must reduce spending. That is why Mr Fairlie heard the Chief Secretary to the Treasury on the television this morning talking about the need for departments to tighten their belts. That translates into plain English as spending cuts.

The Chief Secretary to the Treasury told me on Friday that he hoped to maintain the comprehensive spending review fiscal envelope for the remaining period, but I now hear a message about further restraint. I cannot see how that further restraint will happen without having a negative effect on the budget in Scotland. The outlook for our budget is pessimistic.