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The Scottish Government balances our budget every year. There are rules about how consequentials relating to pensions operate, and those funds are transferred from the UK Government. I am not pretending that the process is easy, but the Scottish Government works on a weekly and daily basis to ensure that, when we get to the end of the year, we balance our budget, as we are required to do.

The question is how much is transferred and how that transfer co-ordinates with other work that is happening in that portfolio. Those are important considerations. As we take forward the public service reform agenda, our approach is to recognise that it is more about outcomes than it is about inputs. We recognise that getting budgets in the right place requires them to move between silos. We are breaking down those silos as we focus on, for example, where corporate costs are deployed, how we deploy digital costs across the piece and how we move towards a preventative budget. I can only see it getting more—rather than less—complicated, and we need to work together to understand how best to deal with that. Putting money into portfolio silos and leaving it there is a great way to focus on inputs, but it does not really help to co-ordinate outcomes in a way that breaks down silos.

I absolutely recognise that we want to be supporting that. As I said, when it comes to economic growth and economic activity, we can pull a number of levers. One of them is the investment that goes into the enterprise agencies, the Scottish National Investment Bank and others. I think that that funding is effective when it comes to delivery. We would, of course, like to spend more but that would be a conversation about the shape of the budget in general. There are competing pressures and it is a question of balance.

A lot of the specific underspend is to do with historical issues regarding European structural funds, which were running down.

There are a number of points in response to that. Yes, we work in an environment where there is a fixed budget, which we need to balance—and it is not even a fixed budget, because it moves in-year, depending on consequentials. Even at this point, we do not know the final position for 2025-26, nor will we for a period of time yet. We are always trying to hit a moving target, but the money with which we have to hit it is also moving. We have to balance all that, which creates complexity. If we were in an environment where we knew the multiyear position from the UK Government, we would be able to lay out multiyear spending for various parts of the system.

As I said, we are trying to hit a moving target. There are a number of dimensions to it. There is demand-led stuff, which changes; there is what you have to spend, which also changes, depending on the consequentials—

In terms of multiyear funding?

As you rightly say, a figure of £1 billion has been quoted, but that contains significant elements of non-cash items that are not relevant to day-to-day expenditure. The relevant figure is £556.7 million, which represents less than 1 per cent of the total budget of £63 billion. None of that money is lost to Scottish Government spending power. The underspend will allow us to support spending in this financial year.

That number had been increasing. Last year, the conversation was that we would receive more from LBTT. That is a prime example of where we are either higher or lower. There was perhaps an overcompensation. Historically, that number has increased significantly and, in most cases, it overshot the estimate. I will let officials talk to the extent to which the Scottish Fiscal Commission’s forecast is relevant. It was estimated that the number would continue to increase, but it did not quite increase to the expected level. Again, that is £40 million out of about £1 billion of LBTT in total, so it is within 3 or 4 per cent.

There is a lot of complexity in the housing market. The LBTT numbers, which are a function of house prices and the number of transactions, have been increasing strongly over a number of years. This year, the numbers have not quite met the target, based on previous years’ growth. House price inflation is running ahead of general inflation and there is clearly demand in the system, which is driving both the requirement to increase completions and the work that my colleague Màiri McAllan is taking forward. Reflecting on those numbers, what you are seeing is a housing market that is still active and generating returns. However, we need to consider all that in the round, because house price inflation is good in one sense but not necessarily in another. For example, if you are trying to get on to the property ladder, the market could be too hot. However, considering where we are now, we have seen growth, which, for a number of years, has been stronger than expected. That is reflected in the LBTT numbers.