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Thank you for that. I will now open the meeting to colleagues around the table. The first to ask questions will be Liz Smith, followed by Daniel Johnson.

Good morning. In your letter to me of 29 January 2022, you said that the £120 million was:

“only possible following an update in recent days from the UK Treasury regarding our 2021-22 funding”

and that

“this £120 million is not being allocated in 2021-22”.

You also said:

“I appreciate this contingency on the UK fiscal cycle is challenging for scrutiny of the Scottish Budget, and would reiterate that it is no less challenging for the Scottish Government’s own financial and policy planning.”

Will you confirm that it is new money?

Michelle Thomson wants to come in.

I will now open out the session to colleagues.

I would be delighted by that. That is a very helpful suggestion.

Unless, of course, other lines of the budget were reduced to meet those costs. Would that be the case?

We seem to be doing this dance increasingly as the years go by, which I do not think is satisfactory for anyone concerned. It must be really difficult for you to put together a budget when you have possibles or maybes but no definites until more or less the last minute.

On 12 January, there was a joint statement from all three devolved Governments, according to which

“Finance Ministers in Scotland, Wales and Northern Ireland ... called on the Treasury to guarantee that money allocated to support Covid responses will be provided in full, following a meeting with the Chief Secretary to the Treasury.”

The statement goes on to say:

“The devolved governments are concerned they may not be granted permission to carry over into next year’s budgets any late consequential payments—despite this flexibility being provided in 2021/22.”

You have said that

“along with the other devolved administrations, the Scottish Government remains concerned that the additional funding we have received to mitigate the impact of ... Omicron ... may be subject to future deductions ... More fundamentally, the situation highlights once again that it is not tenable for funding only to be triggered by public health decisions in England.”

I also note that, in support of that, the Welsh finance minister Rebecca Evans said:

“the Treasury hesitated before providing Wales with funding to meet the challenges. When funding did come, we received no guarantee that it would not need to be returned”,

while Conor Murphy, your equivalent in Northern Ireland, said:

“the uncertainty surrounding the Covid funding provided by Treasury is unhelpful. It is ... hugely concerning that Treasury may not permit funding to be carried into next year even if additional funding is confirmed at such a late stage that it prevents it being used most effectively.”

What has been the response from the Treasury in the three weeks that have elapsed since that joint statement was issued? Do you believe—or hope—that we will be on a firmer footing in future?

What is interesting about Scotland in economic terms, though, is its disparity. Some areas are doing phenomenally well while others are clearly not. Will the national strategy for economic transformation focus specifically on levelling up—to use a phrase—areas of Scotland that are not doing as well as the best areas? After all, what we do not want in future is for certain areas of Scotland to lag significantly behind, because that will just lead to all sorts of demographic challenges in the country, with, for example, large numbers of young educated people leaving poorer areas for areas that are already under a lot of pressure with regard to housing and so on and thus causing an imbalance. Will the strategy focus on such issues?

You talked about the size of the budget. The Scottish Fiscal Commission said that there is a 5.2 per cent reduction in real terms to the Scottish budget. Am I correct in thinking that the £120 million represents about 0.2 or 0.3 per cent of the budget?

In paragraph 108 of our report, we talked about the costs of social security. In your response, you said:

“Difficult decisions will have to be made regarding any new policies, ensuring they are affordable and deliver value for money for the public purse.”

The Scottish Government has deliberately made its social security payments more generous than the UK Government’s, and it has encouraged uptake. How are the difficult decisions that are being made assessed? For example, when you look at £1 of public money, do you consider the gearing effect—how every pound that is spent will have a greater impact in the rest of the economy? How are those assessments made?