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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?

One of the many good things about renewables is that the tax base should be much more predictable and reliable, given that they are not a commodity.

Your response to paragraphs 96 to 100 of our report, in which we look at productivity issues, is quite robust, saying that

“We will shortly be publishing our National Strategy for Economic Transformation”

and that

“without full control over economic policy and immigration, we do not have all the powers we need to address these demographic issues and drive growth in the economy and the tax base.”

You also say:

“On the latest data, Scotland’s GDP per capita is the 4th highest of”

the 12

“UK nations and regions; Scotland’s productivity has increased by more than any other nation or region of the UK between 2007 and 2019; and Scotland has been the top destination in the UK for foreign direct investment outside London for the past 6 years.”

I believe that that last bit of information is from the EY annual report—in fact, I had thought that we had held that position for longer than six years.

I also note your comment that

“under the Fiscal Framework ... strong earnings growth in London and the South East means that our budget is being reduced even while earnings growth in Scotland recovers strongly from the pandemic.”

That is quite a strong response, and indeed it is a lot more positive than what we have had from other witnesses. Is it not the case that, although productivity might have improved in relation to other areas and nations of the UK, it is still lagging behind other European countries?

Before I let Michelle Thomson in, I have a question. Right at the start of the stage 1 debate, £120 million was announced. Given what you have said about the spring budget estimates and review, can we expect to have an announcement at the start of the stage 3 budget debate?

That was going to be my final point. During the stage 1 debate, Jackie Baillie said, with regard to her party’s asks:

“We have done the costings and the cabinet secretary knows them. I shared them with her last year and we have shared them with her again this year.”

Those proposals have not been widely shared. I certainly have not seen them. Have they been shared? Did you see those costings?

Agenda item 2 is consideration of the Budget (Scotland) Bill at stage 2. We are joined for this item, again, by the Cabinet Secretary for Finance and the Economy. Her officials remain present for this session but are unable to participate in formal stage 2 proceedings. Members will be aware that three amendments have been lodged. They should have before them the groupings and the marshalled list, which were circulated directly by the legislation team.

Section 1 agreed to.

Schedule 1—The Scottish Administration

That ends stage 2 consideration of the bill. Again, I thank the cabinet secretary for her involvement this morning and for answering our questions earlier.