If I may, I will indulge myself a bit by talking about what the creation of a budget means to me. As the former UK finance director of a very large global company, I was charged with achieving an acceptable expense to revenue ratio related to the company’s policies in the risk assessment and market framework in which we operated. During the 1992 recession, I was asked to reduce that percentage of the budget by 2 per cent, which meant a reduction of £2.2 million on revenues of £100 million, which is nothing like what the cabinet secretary is confronted with every day. We had the luxury of choice. We could either increase revenues or cut costs. This Government and the cabinet secretary do not have the luxury of increasing their income element, nor is there a lot of scope for increasing other revenue streams.
That means prioritising spending within that financial planning or market framework to secure economic progress on the back of capital asset improvement and structural and social employment changes. With all good intent, I say to the Opposition—indeed, I say it to us all—there is nothing wrong with wishing to prioritise extra spending in certain areas but we should be flexible. We have an obligation or duty to see how and where we can cut to meet the new spending policies and priorities, wherever they come from within the chamber.
The fundamentals of every budget seek to establish an economic growth pattern that embraces long-term growth while providing parallel sustainability of human and environmental development. In securing those objectives, the focus on continued infrastructure and asset investment as keys to the future efficiency of the economy is welcome, and I noted the comments on that in the Finance Committee’s report. The aggregate spending of capital in the budget, enhanced by the various supplements to capital, giving a spend of £4 billion on infrastructure, is within all the policy frameworks that we wish to achieve by creating a springboard for future employment and efficiency.
As a member of the Economy, Energy and Tourism Committee, I want to look at a few of the considerations in our review of the budget that are related to the national performance framework. There is little doubt that proper scrutiny of increased productivity and demand, under a tight discipline of, for example, public procurement supported by European directives on procurement and the unleashing of productivity and innovation via the proposed community empowerment bill, will see a greater level of economic activity. That is, of course, part of the NPF’s policy driver.
The marginal reduction as a result of the regrettable top-line Barnett cuts in the enterprise agencies and the retention of social enterprise and third sector funding provides Scotland with greater impetus to make the social and structural change to continue to find, develop and grow innovative companies that have high growth potential. Within that, we need to increase the role of women and ethnic minorities. A number of account-managed, high-growth companies will achieve their potential, as will the sustained growth of social enterprise—again, part of the wider policy framework.
I will finish by talking about a specific area that I believe is fundamental to the success of every profound and, in this case, supportable budget, and I relate it to what I consider to be a key driver in achieving our policy and financial objectives. In that regard, I return to my opening comments on the budget. We are trying to create a fairer system with a fairer pay regime in the public sector, to start to demolish the genie effect of the gap in remuneration between the lower paid in our society and those at the top of public sector pay scales, for example. I welcome our commitment to establishing a minimum basic pay increase and to starting to secure the payment of a Scottish living wage for all who deal with the public sector. I believe that that is a fundamental change, which will secure Scotland’s increased performance.
In the current environment and against a backdrop of what some of us think is a nonsensical financial relationship between controlled expenditure in this place and non-controlled income—control over which is exercised elsewhere—I applaud the Finance Committee on the thorough financial analysis in its recommendations on the budget and the wider planning framework.