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I do not think that we have ever been at the point where our NHS has been designed; it is a dynamic process and there has always been an element of redesign in our NHS.

I will give you a practical example that I had to deal with in my constituency. Falkirk and District royal infirmary and Stirling royal infirmary both had orthopaedic units, but it became increasingly apparent that, from a clinical perspective, it was not sustainable to have two separate orthopaedic departments. The clinicians said that they did not have the throughput of patients to achieve the teaching hospital status that was necessary to attract junior doctors, registrars and other staff so that the departments could be viable. We have moved from having two district royal infirmaries in the Forth Valley area to having one—Forth Valley royal hospital—which is a single site that provides that function.

It is sometimes the case that redesigns are not driven by the Government wanting to centralise things for the sake of it but are a result of clinical change and clinical demand. The reality is that we are operating in a global market for clinical skills, which means that some services need to be offered in major centres, because they are not sustainable outwith those settings.

I do not want your constituents in rural areas to experience any reduction in healthcare services but, equally, I need to think about how we achieve a balance in being able to meet patients’ clinical needs when it is not possible to get clinicians to work in those areas for the reasons that I illustrated through the practical example from my constituency. In different areas across the country, services have had to be located in a single setting. For example, in the past, we have sought to use managed clinical networks for services such as neurosurgery in Aberdeen. We provided support in Grampian—largely through support from Glasgow and, to some degree, Edinburgh—so that neurosurgical services could continue to be delivered there.

Where clinical expertise and support can be provided by some of our big urban centres to other locations in the country, we have tried to do that and to use that type of design so that we can support rural healthcare. We have used managed clinical networks in some of our Highland areas as well as our island communities for the delivery of certain healthcare services so that we can support clinical services and try to make them sustainable. We will continue to have to be innovative in the approach that we take in an effort to support and retain services in our rural areas as best we can, while acknowledging that there are challenges.

As I mentioned, ever-increasing specialisation is taking place within medicine; it is moving away from the generalist approach that we might have had 30 or 40 years ago. As a result, specialist centres have become more and more important in how clinical services are designed and delivered.

I accept the challenge that exists in your area, and I recognise and acknowledge the concern that you raise. As health secretary, I would not be thinking about redesigning services just for the sake of it and against clinical advice. However, we must recognise that, on occasion, boards have to make decisions on the basis of clinical advice to ensure safe services for patients. We have to take that into account.

We will never get to the point where we have reached a final design—it will always be a dynamic process. We must be innovative because of our large rural areas; we must try to support rural services, where we can, to reduce the need for patients to travel by delivering services as close to people as possible, alongside the increasing specialisation and the need to deliver safe services. We must try to get the balance right, but we might not always succeed and we should not be frightened to admit that—we can revisit such things if necessary. It is a competing balance and one that we have to try to manage in areas such as Tess White’s region.

There is a combination of factors. To go back to the point that I made earlier, one factor is making it attractive to relocate to the NHS in Scotland. I will bring in Stephen Lea-Ross, who can say more about the workforce, but we undertake considerable work through NHS Education for Scotland to try to ensure that NHS Scotland is an attractive employer and that we provide programmes of on-going training, education and support for our clinical staff.

It is worth bearing in mind that we are fishing for these skill sets in a global pool. We have challenges in getting oncologists, ophthalmologists and endocrinologists because there is a global shortage of people with those skills. We must do everything that we can to support and retain skilled people within NHS Scotland.

In terms of medical recruitment into the NHS, in 2022 we managed to fill 93 or 94 per cent of all junior doctor posts, which is the highest number of junior doctors recruited into NHS Scotland since records began. In the last couple of years, we have increased the number of medical places by more than 50 per cent, or 55 places. Is that right?

You seem to have a particular focus on my predecessor.

Our intention is to get there, but it will be challenging to do so in the present financial environment. We will do what we can in this parliamentary session to try to get to that 10 per cent target. I do not have the clarity right now on what budgets will look like next year or the year after that—there is a level of uncertainty about that. However, that is certainly the target that we are aiming to deliver in this parliamentary session and there is no lack of desire to try to achieve it and to ensure that that investment happens in this session.

When a health board puts forward a business case for a capital investment project, it will go through the normal process in Government for considering proposals, but it must be set alongside all the other competing demands in the capital budget—a capital budget that, I should say again, has been cut. We have to balance it against the competing priorities in NHS Scotland and the different proposals from different boards. If the board brings forward a proposal, it will go through the normal process, but it will also have to be considered alongside all the other capital projects in NHS Scotland.

I am absolutely confident that we will do everything that we can, but I will not sit here and say that all the financial challenges in NHS Scotland or the public sector will be magicked away—that will not happen. Across the UK, we are going through a period of austerity in the public finances, which is having an impact on our budget and means that we must try to manage the finances as efficiently and effectively as possible. You can be assured that we will do everything that we can to provide financial support where possible, but that will be within the limits of what is available to us to invest in the health service and other public services.

Obviously, inflation is having an impact on the NHS across a range of areas. From procurement of food through to drugs, equipment and maintenance costs, all areas of the NHS are, by and large, impacted by inflation costs, alongside energy costs. That is placing a very significant strain on NHS budgets.

I will get Richard McCallum to say a wee bit more about PFI and the inflationary impact. Inflation is having an impact across a range of areas within health and social care, outwith PFI.

There are a couple of points to make in that respect. First, NHS Scotland has, like the rest of the NHS across the United Kingdom, used agency staff at various points. If you look at the figures, you will see that over the past 12 months there has been a bit of a spike in the number of agency staff being used. Greater use of such staff largely reflects the significant recruitment challenges that the NHS faced over the course of the pandemic. In the past month, we have applied additional restrictions on boards in order to reduce our agency spend. To put that in context, though, I point out that our agency spend is a relatively small proportion of our overall budget: I think that it is less than 2 per cent.

If there is a need for flexibility in relation to staff, we would much prefer to work with NHS bank staff who are on NHS contracts and NHS terms and conditions. We have applied some restrictions on boards to make sure that they are focusing much more on using bank staff where necessary.

We must also make sure that the NHS is an attractive place for staff to work. That is why the agenda for change settlement was critical, through taking forward measures to address issues related to pay and conditions in order to ensure that NHS Scotland is seen as an attractive place to work and to take one’s career forward.

Work was also done through, for example, the nursing and midwifery task force to improve recruitment to and retention within NHS Scotland.

Those are all areas of work that are about retaining staff within the NHS and making it an attractive place to come and work. It is also about looking at new routes into the regulated professions.

Reform around workforce, training and planning, alongside work on pay and conditions and much greater focus on use of NHS bank, rather than agency, staff are all part of the combination or package of measures that we are taking forward to reduce our dependency on locum and agency work.

Health inequalities and the illnesses that are driven by those are the result of social inequality so, very often, our health service is dealing with the symptoms of social inequality that manifest themselves in health inequalities. It is important that we take forward programmes such as reducing child poverty—through, for example, the Scottish child payment. All those will have an immediate benefit for the individuals concerned, but they will have a long-term benefit in reducing child poverty, which can result in health inequalities.

In addition, through the work that we do on tackling tobacco use, there have been reductions, and we want to continue to build on that. On alcohol misuse, a report that was published today by Public Health Scotland shows that minimum unit pricing has helped to reduce alcohol-related deaths by more than 13 per cent. All those factors play an important role in supporting us to prevent ill health, alongside our social policy actions to tackle social inequality. All that will be critical to supporting us in the preventive agenda in health.

There are broadly three reasons for companies defaulting. Alongside greater volatility, greater competition in the marketplace results in suppliers dropping out of the market. We have discussed that at committee previously. The proportionate size of the mutualisation level has also failed to keep pace with the scale of the way in which the industry has developed. There are also aspects around the way in which companies pay into the scheme. For example, as it stands, some of the default comes about because the companies pay only on an annual basis, and that is sometimes after the end of the financial year. Ofgem is looking to move that payment to a quarterly basis where the money is ring-fenced during the year and, if the company goes out of business at the end of the year, that money can be recovered.

A variety of factors therefore result in companies dropping out of the marketplace and that then contributes to the overall cost of the mutualisation process and the defaulting on mutualisation, and that is why, given the volatility and greater competition of the past five years, we have seen a significant increase in the need for mutualisation to be exercised.