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I will return to Daniel Johnson’s line of questioning on productivity and wage growth. I asked the SFC, but by that point you were outside the door, so you probably missed that.

The SFC’s assumptions about increasing productivity are based on more people getting into the right jobs; in other words, more productive, higher paid jobs. The workforce will not increase, as we have just discussed, which means that either low-wage sectors need to become higher wage—so wages in sectors such as retail, hospitality and tourism need to go up—or there will be a continued exodus from those sectors into higher wage sectors.

In terms of the Government’s overall strategic priorities for the economy, what balance of those two trends would you like to see? We already have acute labour shortages in those sectors, which is usually tied to wage issues. Is it more of a priority to grow high wage sectors or try to raise wages in those existing sectors where there are shortages because of those issues?

If that is the case, would it be fair to say that the strategic priority for, say, Scottish Enterprise—which is issuing grants from a fixed budget—is far more aligned with targeting grant offers, with attached fair work conditions, at low-wage sectors, than with issuing grants to businesses that are already in a high-wage sector?

The difference of opinion is just on how to define growth; it is not—at all—on the principle of growth.

I will stick with that spirit of high-level assumptions. I have one final high-level question, which is probably just to ask you to pull together various points that have already been made. In its precursor to the spending review, the Institute for Fiscal Studies said that, in essence, the cabinet secretary had the options of “axing, taxing, and hoping”. “Hoping” would involve kicking the can down the road and hoping that more money would somehow appear later. It boils down to the choice between making difficult decisions now or just hoping that things will get easier in the future. On balance, do you think that the spending review was a successful exercise, if the measure was making difficult decisions now, or is a high level of can kicking still going on?

Taking on board what you have just said about it being difficult to predict what the impact of the pandemic would have been on various sectors, I want to press you on one element of that, but not on a specific sector. Are those assumptions based more on assumed growth in existing high-wage sectors or on an increase in the average wage in low-wage sectors such as retail and hospitality? What is the balance? Are you assuming that there will be an improvement in pay in the low-wage sectors or that people will continue to move out of them into existing high-wage areas?

Thanks. I can see the cabinet secretary at the door, so I will wind up my questions there, convener.

How do I follow that?

So much has been covered already, so I have only two questions this morning, the first of which goes back to Daniel Johnson’s theme of productivity and, specifically, the assumptions that you have made about this year’s inflection point, which is in figure 3.13, and the growth in productivity. David Ulph said that the assumption is not about getting more people into jobs, because unemployment is low, but about getting more people into the right jobs.

The highest-profile examples of labour shortages during the past year or so have not been in particularly high wage sectors. Retail and hospitality have been some of the biggest examples. Could you expand on the assumptions that you are making about that rearrangement within the labour market? From what you said previously, I take it that there will be sectoral winners and losers, because it is not about reducing unemployment, which is already quite low, but some sectors will end up with labour shortages as a result of workers moving into the sectors that will result in the kind of productivity growth that you are assuming. Could you expand a little bit on the underlying assumptions there?

I have one final question. As you pointed out, the single biggest factor affecting so many of our discussions this morning is the current rate of inflation. What discussions have you had with the Treasury about the impact of inflation on, and the potential to inflation-proof the Scottish budget?

There is a huge amount to pick up on in there. I think that you are right to highlight pay harmonisation as one of the key successes on workforce relations in the past decade. However, from my perspective, having spent most of the past six years in continuous discussion with unions and employers, the interpersonal relationships around national collective bargaining have not got better over that time. We have been in a constant cycle of negotiations breaking down and escalating to industrial action, with compromises being made as a result, followed shortly afterwards by a fresh dispute on essentially the same issue.

There is clearly a need for a reset of those relationships. Without pre-empting the lessons learned exercise, what is the best way to go about such a reset at this point? As you mention, the relationships at the local level were varied but, broadly speaking, relatively positive. How do we reset things at the national level, where the relationships have clearly broken down?

I have a couple of questions that are probably best directed first to Audrey Cumberford. I am afraid that they are a bit negative.

Acknowledging that regionalisation has had its benefits, would you characterise the fact that, in the past eight years, we have had seven years of industrial action as a failure of regionalisation? Is there a relationship between those two?