Seòmar agus comataidhean

I apologise for being remote for yet another week. We are still dealing with omicron in my household.

I have a number of things to ask, not all of which are connected. I will start with a broad question about the approach taken in the budget. For obvious reasons, there is a huge focus on numbers and quantums of funding, but the structure of the budget and the disciplines that surround it are just as important. I would argue that they are probably more important.

If we look at the comprehensive spending review from the UK Government, we see that the block grant increases to £40.6 billion in 2022-23 but that thereafter the increases are very small. That means that they are, in effect, real-terms cuts. That is juxtaposed with the fact that we know that we are carrying significant Covid costs, which I would categorise as recovery costs. Last year, at level 2, we could see the Covid consequentials in the various budget lines, but it is different this year.

I understand the rationale that those costs are lumped in with regular costs, but, in order to manage the budget in 2023-24 and 2024-25, we will have to be able to identify the Covid-related things that we can stop doing because we have recovered or because the response is no longer required. Given that those costs are not specified at that level of detail in the budget, what is the Scottish Government doing to focus on them so that they can be switched off when that can happen and so that it can manage its money and resources in years 2 and 3 of the comprehensive spending review?

I could ask follow-up questions about that, but I want to ask about other things. There is an on-going need to identify those things and keep them under review. That is why some of Audit Scotland’s points about transparency and about being able to follow money from the budget through to consolidated accounts are hugely important.

I want to pick up on some of the convener’s points about ScotWind. There is good news about the sites being developed, but large sums of money are involved. There are two questions. First, there has been a lot of discussion about £1 billion going into the supply chain for every gigawatt generated. That is very vague. Is there more detail about what that will look like? Is that contractually locked into the leases?

Secondly, how has the Government assessed whether the price that it has obtained is of good value? If we assume a 40 per cent yield and a price of £70,000 per gigawatt hour, those companies will generate around £6 billion a year from those sites. The rent will be around £225 million. In total, therefore—I recognise that the calculations are crude—the public purse will receive just 5 per cent from what are very lucrative sites. I recognise that you will not be able to be precise, but has an assessment been made and has a net present value been identified? How has the Government assessed whether it has received good value for money for the public purse from the sale of the 10-year leases for those sites?

So, has an NPV been calculated in terms of the value for the companies that purchased the lease, and how have you benchmarked what will be received by the Scottish Government—the public purse—in comparison?

I would like to ask a follow-up question about business support funding. I think that, as of two weeks ago, £113 million had yet to be allocated. Has the funding all been allocated now? If not, could you confirm the quantum of funding that is yet to be allocated? Further, can you tell us what work is being done to assess the impact by sector? I am aware that the impact on retail was significant, but retail did not receive support in the initial announcements. I noted that the convener described many sectors as “booming”, but that is a relative term, and the importance of the Christmas trading period for retail and hospitality cannot be overstated. Has an impact assessment now been carried out of what the potential consequences of the restrictions might be in terms of business survival and business closures in the coming months?

I thank the Deputy First Minister for that answer and completely accept the sincerity with which he has given it, but I have to wonder whether this is the key tension in the process.

Ultimately, decisions on whether the ministerial code has been broken will be made by the First Minister or the Deputy First Minister, for a serving minister, but there are two or three issues with that. First, it is almost impossible for a serving First Minister to deliver a decision on one of their own ministers without the pressure or filter of political reality entering into it. Does not that make exceptionally difficult the independent decision making that the Deputy First Minister correctly identified as being important to this? I wonder whether it places too much pressure on the decision maker.

Secondly, the processes are required not only to be robust and transparent but to be seen to be so. If a First Minister is to make the final decision on one of their own ministers, is it possible for the public to see that as robust?

Thirdly, in her recommendation 10, Laura Dunlop says:

“complaints against a former Minister should be investigated and adjudicated ... independently.”

I wonder whether that final decision making on the breach of the ministerial code, which ultimately is an adjudication, is actually independent at that point, and whether that is a flaw in the process. I understand why, ultimately, you might wish for the decision to be made by the First Minister. I understand the argument in that respect—because of the democratic process, the First Minister has to be the final decision maker—but I wonder whether the procedure adequately addresses those three flaws.

I thank the Deputy First Minister for his answers.

Thank you, convener. I apologise for not being able to attend in person this morning.

I begin by asking about how the policy will be reviewed and maintained. One would hope that, by its very nature, it would be seldom used. However, such things are often left on the shelf and are sometimes, therefore, creatures of their context and time. It is imperative that the policy be proactively reviewed and renewed on an on-going basis to ensure that it is appropriate for its current time. What thought has gone into that? How will the procedure be reviewed on an on-going basis?

My second question is about the outcome of the procedure. I understand that the focus of the procedure is about establishing fact and doing so in a transparent, robust and independent way, but is it purely focused on that narrow outcome? To what extent is there also a need to establish the severity and seriousness of what is complained about? Does the process address that sufficiently?

I, too, thank the witnesses for their written submission, which is extremely interesting. In particular, I am interested in figure 3.4, which shows the impact of applying the different models to Scotland. I wonder whether the Scottish Government needs to be careful about what it wishes for. In discussions on the fiscal framework and the Welsh example, the assumption often is that indexation for separate bands would be in addition to the existing IPC model, which would of course reduce the negative consequences. However, the grey dotted line in the graph in figure 3.4 shows that applying that model but using the comparable method would actually result in our being significantly worse off.

The points that you have just discussed with John Mason also need to be added into the mix. The issue should not necessarily be seen in isolation from the Barnett formula and the block grant. In a sense, John Mason was talking about the endpoint that the Barnett formula works towards for Wales but, if we look at what the Barnett formula currently delivers for the nations, we see that, in essence, Scotland ends up being the best off from that side of the equation.

Should we be careful about what we wish for, given that, with the application of indexation of separate bands, we could end up having the comparable method? Is there a risk for Scotland in a re-examination of Barnett and how it applies to us?

I have one final question, which is about the long-term sustainability of the method. If we are basing it on tax and welfare decisions in Scotland compared to policy positions for the UK as a whole in 2016, that becomes more difficult as time passes. It is feasible, because the UK has, by and large, pursued the same overall policies on the method and size of taxation and welfare spending compared to 2016. However, if the UK Government diverged significantly from that, either by increasing or decreasing tax or welfare spending, projecting what would have happened from that 2016 position becomes more and more difficult, if not impossible. Will we have to have a far more fundamental rethink in five or 10 years’ time?