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As I said, if local authorities want to work with the Government on particular points in addressing any of their potential concerns, or other issues that could arise, we want that to happen.

I touched on the areas that we consulted on that we are not taking forward. We have taken a constructive approach to that with the establishment of a joint working group and the deferring of any further changes to 2027 at the earliest. That demonstrates the Government’s balanced and proportionate approach. It is very much in the spirit of constructive partnership.

For the reasons that we have set out, we believe that we have to take forward these regulations at this time, given the significant risks that could ensue if we did not do so.

If local authorities would welcome clarification on specific areas of, or any matter in, the broader regulatory environment, we would want to engage on that constructively. I ask Elanor Davies whether she has a response to any specific points in that area.

The case for the action that we are taking is underlined by the point that I made about the need to be proactive. I touched on the situation in which some local authorities in England have found themselves, and I am sure that no one at this table would want that to befall our local authorities. It is important to ensure that accounting practices are consistent with the standards that we all expect. The Scottish Government and the Scottish ministers have an important role, as stewards of the public finances, in ensuring that there is an appropriate regulatory environment to facilitate the standards that we seek.

As I touched on, the issue has been given careful consideration over a considerable period. That goes back to 2019, when some practices that caused concern became evident. In the resource spending review, we signposted our intention to take this action. We have consulted and, where valid points and concerns were raised, we have not taken forward the relevant measures in the amendment regulations.

We recognise that we have a responsibility to ensure that accounting practices are consistent with what is required to provide long-term stability and transparency in the public finances. Ultimately, that is the reason that underpins introduction of the amendment regulations.

As I touched on in my earlier remarks, there are differences between the circumstances in Scotland and those in England. I sought to be clear about that, as I did not want to suggest that there is full equivalence. However, on the specific point around the accounting practices, that is an area of concern that we can address.

We recognise that, across the public sector, public finances are creating significant challenges and pressures. We have embarked on broader process of engagement with local government through the Verity house agreement and the commitment to developing a fiscal framework. The local government budget settlement for 2024-25 represents a greater percentage of ministers’ discretionary spend than there was in previous years’ budgets.

Elanor Davies might wish to comment on the specific aspects of the health of local government finance compared with what we have seen in England.

As has been touched on, we have consulted. The regulations are published subject to parliamentary scrutiny, and we will continue to engage with local government and monitor the situation. Should any particular unanticipated issues arise, we would, of course, want to engage with local government constructively to remedy those.

I ask Elanor Davies to come in on those specific points and provide some additional information.

The regulations are a product of engagement and will help to provide clarity and certainty going forward, as well as the consistency with accounting standards that we want.

Elanor might want to provide some more detail on the process and consideration regarding potential retrospectivity.

Specific roles and responsibilities are exercised by the Accounts Commission, for example, in assessing the performance and financial management of local authorities. We recognise the challenges that local authorities are facing, but we are in a different set of circumstances than certain local authorities in England were in because of some of the decisions that were taken by individual local authorities. However, as I highlighted in my earlier remarks, a contributing factor was the particular approaches around accounting that we are discussing, and the way in which they were taken in England. The United Kingdom Government reacted to that; we are getting ahead of the situation by being proactive. We are ensuring that we are not creating a situation in which, over time, the level of risk increases and starts to present long-term sustainability challenges.

On this particular point, we are taking proactive action to align with the situation in England and Wales. Indeed, the action is prospective—to answer Mr Coffey’s question, there will be no retrospective effect.

On unallocated funds, that ultimately arises from the fact that we do not have certainty on what our final position will be this year. There can be material movements up to the end and, indeed, beyond the end of the financial year. That is just a reflection of the inherent uncertainty in how our fiscal framework operates. Do you want to come in, Scott Mackay?

Again, it is not something that impacts upon discretionary spend but is a technical aspect. I will ask Scott Mackay to comment.