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We effectively gave a heads-up with regard to high-level spending in the “Investing in Scotland's Future: Resource Spending Review” public document that was published in May 2022 and which looked at the Scottish budget up to 2026-27.

However, we are publishing a one-year budget for 2024-25 because, although we recognise the merits of multiyear budgets, the nature of the autumn statement and the Office for Budget Responsibility forecasts make future prospects more volatile. It could in fact be misleading, and more unhelpful, if we were to suggest that there was some certainty about the position going forward.

We will revisit the multiyear outlook in the next medium-term financial strategy, which is due to be published in May 2024. However, if we were to suggest that we could promise what was coming in the future, that might not be as transparent as it might at first appear.

As Councillor Hagmann said, that was an aspiration. If we had had the fiscal framework in place by September, it would have been able to feed into the budget, which would have been good. However, it is important that we get it right. A huge amount of collaborative work between the Scottish Government and COSLA is going into the fiscal framework, and that work will continue. As was said, we want to get it ready as soon as we can, but it absolutely needs to be right.

In the meantime, we have taken a number of actions in the budget that support some of the principles that we expect to be in the fiscal framework—for example, on ring fencing, £1 billion is being baselined, which is really important. It is important to recognise that there is no simple formula. There was a suggestion previously that we should just take a percentage of the Scottish budget. Well, this time, we have given local government a higher percentage of the Scottish budget, but it still does not meet the aspirations, because of what we are all trying to do across Scotland’s public services. The framework is important, but it is important that we get it right.

A huge amount of work is going on. The timetable is not in the Scottish Government’s gift, as we are working with COSLA—there are two partners.

Ian, is there anything that we can add?

In line with the Verity house principles, this year has seen a significant increase in meaningful pre-budget engagement with local government, which is equivalent to the process that was followed to ensure that cabinet secretaries’ portfolio priorities, and the three shared priorities, were factored into the budget considerations. We did that up front prior to the budget—in fact, a lot of work was done prior to the autumn statement; that statement was clearly a surprise, and a shock to Scottish public services.

The budget invests in the Verity house agreement by baselining almost £1 billion of funding across health, education, justice, net zero and social justice. It is crucial to make the point that that baselining, which provides greater flexibility, has been provided in advance of the agreement on an accountability and assurance framework, which will sit alongside the fiscal framework that we are also working on.

We will continue to work with local government to develop the necessary accountability and assurance arrangements, because that will allow us to provide more flexibility to ensure that the priorities of the Scottish Government and of the Parliament are achieved, alongside the priorities of local government and the three shared priorities in the Verity house agreement. To be clear, in this budget, which is the most difficult budget since devolution, we have prioritised local government with a higher share of our discretionary budget.

I will ask Ian Storrie to come in, but, in general terms, I suggest that that is exactly the kind of analysis that we need to get away from, as it looks at the inputs, which does not help. We are doing things differently. Across local authorities, there is some amazing innovation in the way in which things are happening, and sometimes a piece of work can help many of the outcomes. We need to look at outcomes. I hope that the fiscal framework, with an accountability and assurance framework alongside it, will get us to the point at which, across local government and wider public services, we can focus on what is making a difference for communities in Scotland. Looking at the way that we did stuff 10 years ago, when we do not do any of it in the same way, is not a real comparison.

We all have roles to play in that. We want to look at outcomes, but often we find ourselves instead going back to the inputs, whether they be the finance or numbers of X or Y. As a Parliament, as a Government and as a society, we need to find a way of shifting our analysis on to what will make the difference. A number of on-going pilots should help us in that respect. The Government cannot do that in isolation—neither can local government or the health service. We need to work in partnership right across the system.

As Ian Storrie said, the Government is putting significant funding into supporting some big-ticket items and work that, I hope, will be preventative in the future. One huge example of that is the Scottish child payment.

We have to do that. That is why the three principles in the Verity house agreement are key to our moving forward, and why it was crucial for them to be agreed across all the parties. After all, preventative work is not for the here and now but for the long term, so we all need to buy into it.

Politically, there has been buy-in to the principles. Clearly, there are differences in views about how we will take things forward, but we all come from different parties, so there is an understanding that there will be differences in political views in certain areas. However, as far as the basic principles are concerned, there appears to be universal agreement across the Scottish political spectrum.

This year saw the least transparent process that we have ever experienced in relation to discussions with the UK Government about what was in the autumn statement. The lack of transparency was unheard of, in terms of the scale of what came to Scotland with no discussion. We know that other parts of the UK are facing those challenges, too; members will have heard comments from Welsh finance colleagues in that regard.

I will let Ian Storrie talk about the complex matter of switching from capital to revenue.

You mentioned RAAC, and it is important that we touch on that. It is slightly separate. Previously, we have set out that we will give consideration to funding for RAAC once we fully understand the scope and nature of what we are dealing with. Work to gather information across the public service is continuing. I would also point out that Scotland is not dealing with the issue in isolation; the cabinet secretary is in regular communication with her UK counterparts about it.

As for the wider capital budget, there has been a 10 per cent real-terms cut, added to which are the challenges in the construction supply chain such as shortages and high inflation. All of that makes it impossible for us to deliver on all the capital projects that we had hoped to deliver on. There was no inflation protection in the capital budget and, as I have said, we are now looking at a 10 per cent fall in real terms.

In no way could local authorities be immune from that. It will be challenging, and we will need to prioritise the things that most support our wider-term priorities, to keep us looking forward sustainably. We will need to come back to the Parliament with a refreshed multiyear capital allocation projection, focusing on the maximum impact that our capital investments can have on delivering the priorities of the Government and the Parliament. However, there is no way that we can have that kind of cut and not feel the impact.

A number of capital projects are already legally committed, so they have to go ahead, which will leave less money. Some cuts in other parts of the budget have been felt much more strongly. I am not going to pretend that there is a magic wand that I can wave to make this go away, because there is not.

The short answer is because the Parliament tells us that we have to. The agreement between the Scottish Government and the Finance and Public Administration Committee is absolutely clear that we have to compare like with like—comparing pre-budget with pre-budget and outturn with outturn. It is a matter of comparing apples with apples. We are investing record funding in local government, with £14 billion going to local authorities, including for the council tax freeze. If we compare budget with budget, as is required, that represents an increase of £795.7 million, which is equivalent to a 6 per cent cash-terms increase or 4.3 per cent in real terms. The resource budget has increased by £840.3 million since 2023-24, which is 6.8 per cent in cash terms and 5.0 per cent in real terms.

I repeat that the way that we have presented the figures, in which we compare budget with budget, is as prescribed by the Parliament in our agreement with the Finance and Public Administration Committee.