Budget 2022-23 (Committees’ Pre-budget Scrutiny)

– in the Scottish Parliament on 26th January 2022.

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Photo of Liam McArthur Liam McArthur Liberal Democrat

The next item of business is a debate on motion S6M-02901, in the name of Kenneth Gibson, on behalf of the Finance and Public Administration Committee, on committees’ budget scrutiny. As ever, I invite members who wish to participate in the debate to press their request-to-speak button now, or as soon as possible.

I call Kenneth Gibson, on behalf of the Finance and Public Administration Committee, to speak to and move the motion. You have around 10 minutes, Mr Gibson.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I am pleased to open, on behalf of the Finance and Public Administration Committee, this committee debate on pre-budget scrutiny. The debate is an important part of the full-year budget process, and it is intended to enable conveners to set out how their committees have sought to influence the budget and to give the Government an opportunity to respond.

Having greater influence in the formulation of the Scottish Government budget proposals is one of the four core objectives of the budget process, as recommended by the budget process review group back in June 2017. The others are: to improve transparency and raise public understanding and awareness of the budget; to respond effectively to new fiscal and wider policy challenges; and, to lead to better outputs and outcomes.

Due to time constraints in the budget process in recent years, this is only the second time that the Parliament has held this committee debate, so I very much look forward to listening to all the contributions from colleagues and hearing about the pre-budget scrutiny that their committees have undertaken.

However, first I wish to thank the Finance and Public Administration Committee’s clerking team: Alan Hunter, Chris Hynd, Joanne McNaughton, Sarah Robertson and Jane Williams, who work so diligently and provide such sound advice and support to me and my committee colleagues, as well as excellent briefing papers and notes. I also want to thank Ross Burnside of the Scottish Parliament information centre’s financial scrutiny unit, our committee adviser, Mairi Spowage, Eric MacLeod in media, and my six committee colleagues: Ross Greer, deputy convener Daniel Johnson, Douglas Lumsden, John Mason, Liz Smith and Michelle Thomson. All of them have worked hard and contributed significantly to our work, despite the often steep learning curve that is initially faced, particularly by members who are new to Holyrood.

The Covid-19 pandemic required public investment at an unprecedented scale and speed, and its devastating impact will be felt for years to come. That is why we in the Finance and Public Administration Committee decided to look at the impact of the pandemic on Scotland’s public finances as part of our pre-budget scrutiny. I shared some of our findings about the short-term impacts of Covid-19 during a recent committee debate on Covid recovery. Today, I want to explore some other aspects of our report and to look at the longer-term challenges ahead and some cross-cutting measures that could help to support fiscal sustainability. Our deputy convener, Daniel Johnson, will return to some of our findings on the impact of Covid-19 in his closing speech.

The pandemic has exacerbated pre-existing inequalities and moved more people into poverty and debt, and we received specific calls for funding to address those issues. Age Scotland, for example, argued that the budget should include measures to assist with pensioner poverty, citing the fact that more people than ever have been pushed into fuel poverty and loneliness during the pandemic. At the other end of the age spectrum, we heard from the Child Poverty Action Group that the top priority in this year’s budget should be the doubling of the child payment, which the Scottish Government is taking forward in the 2022-23 budget.

Public finances will be under significant pressure in the years to come, and the Scottish ministers will continue to face difficult decisions on how to prioritise spend and raise revenue. We have therefore asked that the Government explores which policy interventions would have the greatest impact on cross-cutting issues, such as addressing inequalities and poverty. Both the upcoming resource spending review and the annual medium-term financial strategy provide timely opportunities for the Scottish Government to prioritise that approach, and we look forward to hearing more about that work from the cabinet secretary in due course.

We believe that multiyear budgets are crucial in securing certainty for Scotland’s public finances, including for local government, the third sector and other key bodies. It can, of course, be more difficult to deliver that approach in situations in which the Scottish Government does not have confirmed multiyear block grant funding from the United Kingdom Government. We therefore recommend that the UK and Scottish Governments consider how multiyear budgets can be achieved more routinely as part of the upcoming review of the fiscal framework.

The fiscal framework review also presents an opportunity to consider how communication and transparency between the UK and Scottish Governments can be improved, with witnesses describing a decline in intergovernmental relations and suggesting that the tension seems to be increasing in the light of the UK Government’s spending in devolved areas.

In future years, we will seek to widen the pool of individuals and organisations that provide evidence to the committee and to expand the focus of that evidence. For example, when stakeholders give evidence on their asks, it would be helpful if they specified the extent of the additional resources that they sought, should such resources be available, and how the provision of those resources could be funded. We need to move on from witnesses simply asking for more money, which they often do with a clear idea of how such resources would be utilised, but without knowing how much money is required or suggesting from where such resources could be found in anything but the vaguest fashion.

Following Brexit, we consider that managing replacement European Union funds requires greater communication and sharing of information to enable effective public spending in areas where there may be a common interest. We look forward to exploring the evidence that we have received from local authorities on how the funds are operating with the Secretary of State for Levelling Up, Housing and Communities, Michael Gove MP, when he appears before the committee next month. A time and date have still to be finalised, despite our clerks pressing for that since last October.

When we reported back in November, concerns were raised about a lack of clarity on whether the Scottish public sector would incur additional costs as a result of the proposed increase in employer national insurance contributions under the UK Government’s health and social care levy. In its response, the Scottish Government told us that the public sector in Scotland would incur additional costs of around £150 million per annum through increased national insurance contributions. I asked a written question on that matter. The Treasury has confirmed that the Scottish Government will receive Barnett consequentials, but the exact breakdown was not available at the time of its response. It would therefore be helpful to know whether the cabinet secretary has an update on that important matter. Local government is concerned that such consequentials are not being passed on.

Before Christmas, the committee took evidence on the position 10 years on from the Christie commission and revisited the commission’s priorities of prevention, people, partnership and performance. In our report, we said that we could see economic and societal benefits from prioritising expenditure on preventative measures, whether they were to protect the environment or to protect the nation’s health in future years.

The Scottish Government’s resource spending review provides an opportunity to introduce bold preventative measures to protect funds and create a wellbeing economy for the longer term. We look forward to hearing more from the Government on how it is prioritising preventative spend and how that approach has resulted in a shift in policy direction and expenditure.

The committee felt that more efficiency could be achieved by streamlining and linking up the various strategies and plans that have an impact on growing the economy and fiscal sustainability, as we move out of the pandemic. We asked the Scottish Government to outline how it would progress that; that recommendation has not yet been addressed in the Scottish Government’s response.

The upcoming statutory review of national outcomes provides an opportunity to reposition the national performance framework at the heart of the Government, and all priorities and plans should flow from that. We have asked the Government to look at how the NPF can be more closely linked to budget planning, and we await the response to that recommendation.

When we reported back in November, we noted that the declining working-age population and the increasing number of over-65s present what we described as a

“double ‘whammy’ to fiscal sustainability”.

We argued that, in that scenario, the provision of public services and welfare payments would need to be funded from a smaller and more productive working population and that reversing those trends would require a focused and sustained approach to policy making over a number of years. We would appreciate details of how Scottish ministers will address that vital and pressing issue.

Latest forecasts from the Scottish Fiscal Commission show weaker income tax revenues in Scotland than in the rest of the UK, along with higher levels of social security spending, at a time when the fiscal resource that is available to the Scottish Government is in decline. That suggests that pressures will soon be even more acute than we warned back in November that they would be. Our report on the Scottish budget 2022-23, which was published last week, explores in more detail the trends that are behind the data. I look forward to speaking more about the issues in the stage 1 debate on the Budget (Scotland) Bill tomorrow.

In the meantime, I move,

That the Parliament notes the pre-budget scrutiny undertaken by the Finance and Public Administration Committee, and other parliamentary committees.

The Deputy Presiding Officer:

I remind members who wish to speak in the debate to press their request-to-speak button or place an R in the chat function.

Photo of Kate Forbes Kate Forbes Scottish National Party

Thank you, Presiding Officer—I think that I was one of the guilty ones who did not press their button.

The debate marks a welcome return to the full Parliament scrutiny process for the Scottish budget, and I thank all the committees for their consideration of and engagement on the budget and for the inquiries and questions that they posed to me in their scrutiny sessions. Across the chamber, I am sure that we all appreciate the difficulties that the pandemic has created and the challenges that we are continuing to manage, which the Finance and Public Administration Committee’s convener helpfully set out in his opening speech.

As we consider the budget, I will highlight positive news, which is that today’s statistics illustrate that Scotland’s gross domestic product is now back above pre-pandemic levels—above those of February 2020—for the first time. That is hugely encouraging news in the light of the enormous challenges that our economy has faced in the past two years. Our economy continues to broadly track that of the UK as we recover from the pandemic’s impacts.

That is important context for next year’s Scottish budget, particularly because we know that Covid is still with us, although there is a distinct absence of future Covid funding from the UK Government, which is creating additional budget pressures and difficult choices for the budget—difficult choices that I have not shied away from. Despite that, the budget delivers on three key priorities, which are reducing inequalities, taking action to tackle climate change and investing in economic recovery.

The budget scrutiny that the Parliament’s committees undertake is a key part of the budget process. I will focus on the committees’ perspectives on the budget. The stage 1 debate on the Budget (Scotland) Bill tomorrow will allow us to air other key issues and might well involve less consensus than this afternoon’s debate.

The Constitution, Europe, External Affairs and Culture Committee focused its attention predominantly on support for the culture sector. We recognise the vital contribution that Scotland’s culture and heritage sector makes, which is why the budget proposes to spend £277 million on it next year.

The Criminal Justice Committee recognised the effects of the pandemic on the justice sector, which are well documented. We will be investing £53.2 million to continue the recover, renew, transform programme across the justice system next year. The programme is tasked with remobilising the justice system. In total, we will invest almost £3.2 billion across the justice sector, including almost £1.4 billion of support for policing.

Understandably, the Economy and Fair Work Committee focused its pre-budget scrutiny predominantly on economic recovery and support. This is a particularly crucial time to support businesses across Scotland, and I am proud that next year’s Scottish budget continues to offer a generous non-domestic rates package, with the lowest poundage in the UK for the fourth year in a row. We will also invest £635 million across the enterprise agencies, the Scottish National Investment Bank and VisitScotland, to support economic recovery and transformation. That is the highest level of investment for our enterprise agencies since 2010—and for good reason, because our economic recovery underpins our spending decisions across the public sector.

I recognise the importance of the issues that were raised by the Education, Children and Young People Committee. I am pleased to confirm that next year we will provide the first £50 million of the whole family wellbeing fund and will continue to prioritise funding for raising attainment, providing 1,140 hours per year of high-quality early learning and childcare, and supporting the further and higher education sectors. I want to reference the way in which those portfolios are trying to ensure that there is a whole-Government approach to supporting children and young people in particular, as part of our mission to tackle child poverty.

The Equalities, Human Rights and Civil Justice Committee indicated an on-going interest in how we do equality and human rights budgeting. Equality impact assessment is an essential part of the budget scrutiny process, and our analysis across the range of protected characteristics is recognised as progressive and inclusive and is a key part of our process.

I welcome the Finance and Public Administration Committee’s acknowledgement of the challenging economic outlook. In simple terms, despite being in the middle of a global pandemic and a cost of living crisis, there is less funding available for Scotland in next year’s budget compared with this year’s budget. That is not just a matter of political opinion; the Scottish Fiscal Commission has noted that the overall Scottish budget for next year is 5.2 per cent lower in real terms. That is why the new budget is particularly challenging and why it has required difficult choices, particularly around how we inflation proof our budget lines

The pandemic has demonstrated why the fiscal framework is currently inadequate for Scotland’s needs, and I continue to welcome the Finance and Public Administration Committee’s scrutiny of the issues, because there is an opportunity to build cross-party consensus on how we ensure that the review of the fiscal framework makes it easier for us to budget and to tailor our response to Scotland’s needs.

The Health, Social Care and Sport Committee offered considered comments on key areas of health spend. The health and social care budget is vital to Scotland—that has been particularly the case over the past two years, as we have all seen. Next year, the Scottish Government will deliver £18 billion of funding for health and social care. The budget provides new investment in excess of £1 billion for health and social care, and lays the groundwork for the national care service.

I turn to the Local Government, Housing and Planning Committee’s scrutiny. I am aware that there has been much debate recently on local government funding. I appreciate the important element of scrutiny of that budget line, as well as the importance of local government across Scotland. The budget will offer local government a total funding package of more than £12.5 billion, which represents an increase of £917.9 million, which is 7.9 per cent in cash terms or 5.1 per cent in real terms. That is not to shy away from some of the challenges that we have identified, particularly with regards to the significant increase in inflation.

I turn to the Rural Affairs, Islands and Natural Environment Committee. The rural affairs and islands budget is wide ranging and will provide £967 million of support across Scotland next year, including more than £630 million to provide on-going agricultural support for farmers, crofters and land managers.

The Social Justice and Social Security Committee offered a view on a range of important areas. In line with the Scottish Fiscal Commission’s forecasts, we are committing more than £3.9 billion for benefits next year, which will provide support to more than a million people in Scotland and progress our national mission to tackle child poverty, with £197 million going to the new Scottish child payment, which will double to £20 per week from April 2022.

Last but not least, I recognise the work of the Net Zero, Energy and Transport Committee. We are investing around £2 billion next year to deliver, collaboratively, a just transition to net zero. With a combined net zero, energy and transport portfolio budget of more than £4.4 billion, we will spend more than £3.4 billion on transport in Scotland.

On that note, I thank all the committees for their budget scrutiny, much of which reveals that members of this Parliament agree on more than they disagree on when it comes to Scotland’s priorities. I hope that, tomorrow, we can all back the budget.

The Deputy Presiding Officer:

I call Clare Adamson to speak on behalf of the Constitution, Europe, External Affairs and Culture Committee.

Photo of Clare Adamson Clare Adamson Scottish National Party

I am delighted to speak on behalf of the Constitution, Europe, External Affairs and Culture Committee.

I am sure that a few

“weel-swall’d kytes ... Are bent like drums” in the chamber today. Burns night is, quite simply, a global phenomenon and it is estimated that 9.5 million people take part in Burns suppers across the globe each year. We know from the report, “Robert Burns in the Scottish Economy”, by Murray Pittock of the University of Glasgow, that Burns contributes £203 million to the Scottish economy. The reach of Burns is impressive, but that is by no means all the depth, value, inspiration and excellence of all that Scotland has to offer culturally.

Culture provides insight and perspective. It challenges us. It is innate. It inspires innovation and dares us to think differently. Indeed, one of the few positive outcomes of the pandemic was cultural innovation through the digital adaptations, performances and activities that were shared with wider and more remote, sometimes international, audiences.

There is, however, a prevailing irony in our relationship with culture amid the pandemic. Culture is one of the hardest-hit sectors of our society, yet our continued reliance on it for our mental health and wellbeing is undeniable. How many of us were uplifted during lockdown by a book, a poem, a film, a television series or a favourite song—or by picking up an instrument or honing an old craft or hobby or learning a new one?

Culture and the arts are our lifeblood. Culture is a basic sustenance, even to people who might not think of it in those terms.

Icon of culture Alasdair Gray said:

“People in Scotland have a queer idea of the arts. They think you can be an artist in your spare time, though nobody expects you to be a spare-time dustman, engineer, lawyer or brain surgeon.”

As members think of their relationships with the arts, I urge them to think what lockdown would have been like without the arts and artists, many of whom are freelancers.

Our committee’s pre-budget scrutiny focused on the culture sector—its recovery and opportunities for a more strategic response. I thank the people who provided written and oral evidence, and I especially thank the community organisations who took part in our round-table sessions. Charities and social enterprises, with an army of volunteers, have done much to protect wellbeing in our communities, in uniquely difficult times.

As I said, the pandemic hit the sector hard, with an estimated 400,000 potential job losses across the United Kingdom. Since the start of the pandemic, the Scottish Government has provided £175 million to the culture, heritage, and events sector. The 2022-23 budget commits to investing £277 million in Scotland’s culture and heritage sector. It is understandable that the budget focuses on recovery.

The committee welcomes the initiatives, including bursaries and hardship funds, that have covered gaps in the furlough scheme. We welcome the commitment to three-year funding settlements for regularly funded programmes. We would very much welcome that certainty being passed on to bodies that are funded by Creative Scotland; those bodies could also benefit from three-year funding.

One of the community contributors to our focus groups wanted a re-imagining of the traditional approach to funding, including a move away from the blue chips and bigger organisations, and from the haves to the have nots.

Creative Lives made a similar point to the committee. It told us that professional expertise can kick-start intervention, but without local buy-in and capacity building, those projects tend not to be long term, and any tangible benefits to wellbeing can be lost. Creative Lives said that as little as few hundred pounds can make things happen in a local community, and such microgrants can have a ripple effect. Therefore, we asked the Scottish Government to explore the issue with Creative Scotland and the Convention of Scottish Local Authorities, and that all work more closely with the third sector when it comes to funding the grass roots.

The mainstreaming of culture was the key theme in our scrutiny. We called for the resource spending review to address how budgetary decisions can support mainstreaming, and for an outcome-based process that is based on the health and wider social benefits of culture. We heard a plethora of evidence in that area. One example was Braw Talent, which is a social enterprise that worked with several schools to make a short film about Scottish education and how it should look in the future. It was supported by the Parliament’s own Scotland’s Futures Forum. I know that some members will have seen the film. The opening lines are:

“In 2030 the curriculum needs to be all about creativity and project work. Our film project was active and practical ... We learn best by doing things. In 2030 we should be learning every subject through the expressive arts and projects like this one.”

The committee welcomes that the Government has promised to pass on the £40 million of consequentials when they are received from the UK Government, and we welcome the Government’s cultural recovery fund, which was announced in March 2021. We also welcome the Scottish Government’s aspirations to mainstream culture in its policy making. However, we now need to move beyond the aspirations and meet the ambition of the culture strategy, which states that

“Culture must be valued first and foremost in and of itself. It is central to who we are and who we seek to be.”

Therefore, let us put culture at the heart of all Government policy making to meet the expectations of a wellbeing society.

Photo of Ariane Burgess Ariane Burgess Green

I thank the Finance and Public Administration Committee for securing the debate.

The experience of the pandemic has emphasised just how critical local authorities are to the communities that they serve. Through the dedication and hard work of council staff, and the community and third sector workers with whom they have collaborated, local authorities ensured that communities were able to access vital services throughout the pandemic, and they continue to do so as the pandemic endures.

Although our pre-budget scrutiny considered matters in relation to housing and planning, our primary focus in our follow-up session earlier this month was on what local government needs to lead recovery from the pandemic, which is what I will focus on today.

For there to be meaningful and transformative recovery from the pandemic, local government needs to take a leading role in the process. Simply returning to the status quo is not good enough. A recovery from the pandemic must involve tackling the inequalities that have been exacerbated by the pandemic, which can only be achieved with the full involvement of local government. However, to do that, local government needs to have the finances, workforce and tools to deliver a transformative recovery.

In the rest of my contribution, I will talk about what needs to be in place for local government to be capable of playing that role. First, local government needs sufficient resources and funding. The intention of any local government funding settlement is to allow local government to deliver vital services. As with every year, different views were presented to the committee on whether local government funding has or has not gone down in this year’s budget. Irrespective of a person’s view on whether local government funding has or has not gone down, funding is not keeping pace with the ever-increasing demands on local government, and that needs to be recognised.

We hope that the forthcoming conversations between the Scottish Government and local authorities can be productive. We note that there are no new plans to review funding methodology, but we hope that those conversations might begin to explore the issue. Careful consideration should be given to how funding can be better targeted to tackle inequalities.

For local government to continue to deliver those vital services and play a leading role in the recovery, not only does it need to be sufficiently resourced, it needs more long-term certainty about resources. COSLA stressed how important multiyear funding settlements from the Scottish Government are to local authorities. Not only has the absence of multiyear funding frustrated the ambitions of local authorities in preventing them from developing long-term plans, it also impacts on their partners in that, without certainty about their funding, local authorities are unable to make long-term commitments to their partners, which include third sector organisations.

We recognise that the Scottish Government has not to date been in a position to offer multiyear funding. However, with the announcement from the UK Government of its intention to set out three-year spending plans, that opportunity is there and we welcome the Scottish Government’s intention to produce multiyear settlements. We look forward to seeing the outcome of the spending review.

Witnesses also raised concerns with us about the extent of ring fencing and the constraints that it places on local authorities to act flexibly. It appears that the bulk of additional funding provided to local authorities during the pandemic was not ring fenced, which enabled local authorities to act flexibly to meet the greatest needs in their areas. We would all accept that there will always be some funds that it is appropriate to ring fence, but at the same time, local authorities were able to act effectively and responsively during the pandemic because of the flexibility that was afforded to them. We hope that the positive lessons from that experience are not lost.

It would be helpful to hear from the cabinet secretary about the overlap between ring-fenced funding and shared priorities. As we considered the role of local government in the recovery from the pandemic, we looked at the funding framework for local government. We will pursue that issue in the context of our consideration of the local governance review over the coming year. There appears, however, to be agreement that for local authorities to be able to act flexibly and deliver better outcomes for their communities, they need to have greater financial autonomy and certainty of funding.

We recognise that local authorities have been given greater flexibility in setting council tax, but in and of itself, that does not offer a resolution to the issue. The Scottish Government committed to developing a fiscal framework in the last parliamentary session. We recognise the delays that have arisen as a result of the pandemic, but that needs to progress with more urgency. To that end, it is welcome to hear the Scottish Government’s commitment to progressing the framework in the early part of this year.

Any recovery from the pandemic must focus on tackling inequality and building a fairer Scotland if it is to be sustainable, and to do that, local government must be supported and encouraged to play a full role.

Photo of Stephen Kerr Stephen Kerr Conservative

It is a pleasure to speak in this debate on the Scottish Government budget for 2022-23. In particular, it is a pleasure to speak for the first time in the chamber in my capacity as convener of the Education, Children and Young People Committee. I thank members of the committee for the constructive manner in which they have engaged in budget scrutiny, and I pay particular thanks in that regard to the committee’s deputy convener, Kaukab Stewart. I trust that the fact that I am speaking as the convener of the committee will result in a substantial reduction in the number of interventions that tend to accompany my contributions in the chamber.

The budget process relies on a year-round cycle of scrutiny. Inevitably, our budget scrutiny is truncated at the beginning of a parliamentary session. The Education, Children and Young People Committee’s approach was to use budget scrutiny as a means of setting out the key priorities that the committee intends to pursue over the course of the parliamentary session. The committee took evidence from the Auditor General for Scotland and the Accounts Commission and considered the key messages in Audit Scotland’s influential report, “Improving outcomes for young people through school education”.

An outcomes focus is a key principle of the Parliament’s budget process. The extent to which there is a clear line of sight from spending decisions to outcomes has been a regular feature of debate in relation to budget scrutiny since the publication of the Christie commission report in 2011. It was emphasised by the Auditor General for Scotland in his evidence to the committee that that remains an issue across the Scottish public sector, including in relation to education expenditure by the Scottish Government.

The committee intends to pursue an outcomes-focused approach to its budget scrutiny. We recognise the efforts that the Scottish Government is making in that regard, for example through the national improvement framework. However, further progress is essential and we look forward to a continuing dialogue with the Cabinet Secretary for Education and Skills on the issue.

It is clear that the pandemic has had a particularly significant impact on children and young people. The learning, wellbeing and economic circumstances of children and young people—in particular, those who live in the most challenging circumstances—has been significantly affected by Covid-19. The cabinet secretary emphasised in evidence to the committee the importance of the Scottish attainment challenge as a key plank of the Scottish Government response to addressing inequality in educational outcomes. The committee agrees that addressing the poverty-related attainment gap is even more critical as a result of the pandemic. As the cabinet secretary stated to the committee, the most recent statistics on the attainment gap in Scotland are “exceptionally concerning”.

Members might not often associate these words with me, but I strongly agree with the cabinet secretary. That is why the committee launched an inquiry last week into the operation of the Scottish attainment challenge. Four key but simple questions will guide our work. What has worked? What could improve? How is the impact of funding measured, and what has been the pandemic’s impact on attainment and achievement in schools?

I was struck last week by the words of Josh Kennedy, the outgoing chair of the Scottish Youth Parliament, when he delivered time for reflection. He stressed the importance of meaningful engagement with young people in decision making. Integrating the perspectives of children and young people into our work is a key principle that informs the Education, Children and Young People Committee’s work. We also intend to hold the Scottish Government to account on it.

The return to multiyear funding allocations is a long-standing demand across the Scottish public sector. It is true also of local authorities and the further and higher education sectors. The committee is supportive of the move back to multiyear funding allocations and recognises that they allow for improved planning of services by public sector partners.

The committee has written to the Finance and Public Administration Committee to set out its views on the Scottish Government’s resource spending review framework, which was published alongside the budget for 2022-23. We welcome the Finance and Public Administration Committee’s review of the content of the medium-term financial strategy. We also welcome the emphasis in the framework document on an outcomes-focused, evidence-informed and consultative approach to setting multiyear financial plans. In that regard, the committee recognises that the Scottish Government has announced multiyear funding allocations over four years for the Scottish attainment challenge.

The Scottish Government has also committed to exploring providing multiyear funding assumptions for colleges and universities. During the budget process, the committee received a joint letter from Colleges Scotland and Universities Scotland expressing significant concern at the budget settlement for the further and higher education sectors. Audit Scotland also highlighted in evidence to the committee the impact of increases in employer contributions to pension funds and additional staff costs arising from the cost-of-living pay awards and the outcome of national bargaining.

The committee recognises how critical further and higher education are to recovery from the pandemic and to providing opportunities for our young people. Therefore, it intends to undertake an inquiry into colleges and the impact of regionalisation on the sector. Scrutiny of attainment and colleges will, therefore, form key strands of the committee’s budget scrutiny in the coming financial year. As ever, the committee’s scrutiny of both issues will focus on whether Scottish Government policy is improving outcomes for children and young people.

The Deputy Presiding Officer:

Thank you, Mr Kerr—you just escaped an intervention from the Presiding Officer there.

Photo of Gillian Martin Gillian Martin Scottish National Party

I am pleased to speak on behalf of the Health, Social Care and Sport Committee on the committee’s consideration of the budget in relation to its portfolio. My contribution is divided into the themes to which the committee drew the cabinet secretary’s attention in our letter. The first theme is preventive spend, which I was pleased to hear Kenny Gibson mention in his contribution. As he said, a key recommendation of the Christie commission on the future delivery of public services was to divert more public funds towards preventative spend.

Committee witnesses highlighted the challenge of prioritising preventative spend measures while seeking to reduce pressure on acute services and backlogs in primary care, which have resulted largely from the pandemic. That is entirely understandable, as the pandemic has thrown its worst at the nation’s health and at our national health service. However, as we come out of the pandemic and move—we hope—into recovery, we need to prioritise preventative spending appropriately in the health, social care and sport sectors in Scotland.

I turn to health and social care integration and the proposed national care service. We heard evidence of particular challenges in achieving integrated finances and financial planning as part of the process of integrating health and social care. Four years on from the launch of the integration process, budgets for health and social care continue, to a large extent, to be managed and deployed independently of each other. We are keen that on-going challenges around financial integration are addressed as part of the proposed creation of a national care service.

Stakeholders in our portfolio continue to highlight issues of availability and evaluation of data. Evidence to the committee has highlighted the crucial importance of comprehensive high-quality data, to enable effective targeting of health and social care funding to areas in which it will have the greatest impact. Unfortunately, however, availability and quality of data varies significantly in different parts of the country. We welcome all efforts that the Scottish Government is making to improve quality and availability of data, but there remains a lot more work to be done in that area.

It will not surprise anyone that widening health inequalities across society are having a significant negative impact on health outcomes, which has been further exacerbated by the Covid pandemic.

Back in 2013, the Scottish Government commissioned an international policy review of health inequalities from NHS Health Scotland, which resulted in the publication of a ministerial task force report on health inequalities. We welcome the efforts that the Scottish Government has already made to implement the task force recommendations by funding a range of projects and programmes that are aimed at tackling some of the key drivers behind health inequalities, in particular those relating to child poverty and social security. It is important to ensure that, over time, the impact of those interventions is carefully monitored and evaluated so that we continue to learn lessons for the future on how best to tackle health inequalities where we can do so within our devolved powers.

I turn to the allocation of funding to NHS boards. We recognise the increased spend in the area over the pandemic but, looking to the future, we note that the Scottish Government, in responding to the committee’s pre-budget scrutiny, advised that, although it remains

“committed to undertaking a review of the” existing “NRAC formula” for allocating funding to NHS boards, that work will “take time to complete” and has—like so many other things—been delayed by the pandemic. In the meantime, we have heard evidence that there is scope for improved transparency in applying and communicating the existing formula, and we encourage the Scottish Government to consider what action it can take to address that in the short term.

With regard to budget setting, I am grateful to the Scottish Government for updating the committee on its planned timetable for bringing forward an updated medium-term financial framework for health and social care. We acknowledge the on-going uncertainty that the pandemic has created in making future cost projections and other step changes such as the forthcoming resource spending review and proposals for the transformative national care service. At the same time, we highlight the negative impact of a continuing short-term approach to budget setting on effective planning and spending in health and social care—a point that Kenny Gibson made well in relation to constraints in the current fiscal arrangements between the two Governments. However, we do not want to see the publication of an updated medium-term financial framework delayed any longer than necessary.

We cannot get away from the impact of Covid-19, including the wide range of financial impacts on the delivery of health and social care services. It is important to embed the positive innovations for the future as well as developing strategies for overcoming the negative impacts. That means building the long-term resilience of the health and social care sector.

Innovations in e-health has been a positive outcome of the crisis that our health service has faced. As we modify services to become more digital, for example, we must protect against threats such as cyberattacks. Those changes to working practices during the pandemic mean that services could be more exposed.

In that context, the committee is encouraged to see that the Scottish Government is making strenuous efforts to ensure that appropriate lessons are learned for the future and that those lessons are helping to inform the NHS recovery plan in particular.

The Deputy Presiding Officer:

I call Claire Baker to speak on behalf of the Economy and Fair Work Committee.

Photo of Claire Baker Claire Baker Labour

I am pleased to contribute to the debate on behalf of the Economy and Fair Work Committee. Our committee took evidence from the Cabinet Secretary for Finance and the Economy last week, when we raised some of the key issues that I will talk about today.

In the context of the pandemic and its impacts, we are facing particular economic challenges and we must ensure that the “Build back better” slogan can be turned into reality. We have an opportunity to rebuild and refocus in a way that will make the economy work better for us as a country and as a society.

The Economy and Fair Work Committee is clear that support that encourages investment, growth, prosperity and employment opportunities must be front and centre of the budget. We must also learn lessons from the pandemic and build resilience and protection against any future economic shocks.

We have been operating in the context of the Scottish economy not growing at the same rate as that of the UK, with our growth rate typically being two percentage points behind. The estimated GDP figures that were published today offer some shoots of growth and encouragement, but compared to pre-pandemic levels GDP, employment and earnings are recovering more slowly in Scotland than in the rest of the UK, and the Scottish Fiscal Commission’s outlook for Scotland is more subdued than the Office for Budget Responsibility’s outlook for the UK. That underlines the particular challenges that Scotland faces and the need for targeted actions to boost our recovery. The publication of the 10-year economic national strategy will be crucial, and, in parallel with annual budgets, it must be transformational for Scotland’s economy.

I will now speak on some of the key issues that were raised by the evidence session and the committee’s considerations. The committee wishes to emphasise the importance of tourism. The tourism sector is key to Scotland’s economy, but it has been hit hard by the pandemic in relation to both providers at home and those catering for overseas trips. The committee recognises that the Scottish tourism response group received £25 million for its phase 1 recovery plan, but more needs to be done to instil confidence in the sector. It is regrettable that the cabinet secretary has said that the Scottish Government is not including recovery funds for the sector in the bill.

Notwithstanding assurances that the cabinet secretary gave to the committee about the possibility for in-year budget allocations, the committee would ask the cabinet secretary to reflect on the need for a commitment to fund phase 2 for tourism recovery and how that can be delivered through the upcoming budget.

I appreciate that there is financial support available for tourism more generally in the budget, but many in the sector are struggling. The committee also notes the loss of income to VisitScotland as a result of the pandemic and the need for it to scale down its work. We will be taking evidence from representatives of the tourism and hospitality sectors at our meeting next week, and we look forward to hearing their views.

The role of our enterprise agencies is core to boosting investment and growth. They have an important part to play in supporting national outcomes, but we also need to measure their impact and scrutinise their budgets. There is a cash-terms increase of £30 million, and the committee welcomes that substantial investment. However, although there is a cash-terms uplift, which protects and maintains spending power, in real terms the Scottish Enterprise budget is flat and the Highlands and Islands Enterprise budget is reduced. The committee recognises the efforts that have been made to protect those budgets but notes that, given the importance of those agencies at this stage of the recovery, any opportunity to invest more in their budgets would be welcome.

We would also like to see a clear road map developed for supporting businesses—particularly smaller businesses—in their pursuit of net zero. That should be backed up with practical support and more non-loan-based funding, which could both drive and sustain the efforts that will be required. The committee is also calling for a consistent approach to conditionality for business support.

Regarding a one-stop portal for support, the committee recognises the work that was done during the pandemic in setting up the Find Business Support website, but the support environment continues to be complex and challenging to navigate. The committee expects there to be regular progress updates on how the Scottish Government is building on the Find Business Support website and on streamlining and improving joint working between agencies.

The committee has also looked at the particular impact of the pandemic on women, noting the disproportional impact that it has had on women’s employment, difficulties in accessing financial support and a lack of consistent gender-disaggregated data. We welcome the Scottish Government’s intention to look at what can be done to disaggregate data and the recognition that only by capturing and publishing more information can there be an appropriate policy response. The committee also asks that the Scottish Government prioritise its commitment to progress a women’s business centre. Although we note that proprietary work has been undertaken, the committee is disappointed that no undertaking was given to accelerate the timescale for getting it up and running, and I would encourage the cabinet secretary to look at that.

The committee’s remit on fair work and skills is another important area to consider, and we must ensure that our efforts to rebuild progress the fair work and wellbeing agenda. The cabinet secretary conceded that we can always move faster, particularly on fair work, and spoke of the role of conditionality in that area.

On employee-owned businesses, we recognise the ambition that the Scottish Government has to increase these, but we wish to see more detail of how that can be delivered and the introduction of interim targets to pick up the pace of delivery.

As I have highlighted, the committee is aware of the impact of the pandemic on the employment opportunities of women, but we also recognise the impact on young people, as well as the mismatch between vacancies and the skill sets of those who are looking for work. We ask for a clear commitment in the budget to ensure that work-ready young people have access to training and support that will equip them with the skills that match vacancies. The committee also wants to see budget support create stronger links between employers and employability services. We recognise the comments in the recent report from the Auditor General on the need for urgent action on skills alignment, and we highlight that as an area that the committee is likely to consider in the coming year.

The committee notes the budget allocations from its remit and appreciates the evidence that we have received from the cabinet secretary. We have highlighted a number of areas of particular interest, and we will explore some of those further in our work programme. We will also continue to examine areas in which additional support is needed to support Scotland’s economy to recover and ensure that everyone can benefit from our future prosperity.

The Deputy Presiding Officer:

I call Natalie Don, who is speaking on behalf of the Social Justice and Social Security Committee.

Photo of Natalie Don Natalie Don Scottish National Party

I welcome the opportunity to speak on behalf of the Social Justice and Social Security Committee in the Parliament’s first pre-budget debate of the session. I have gladly stepped in today because the former convener, Neil Gray, has been appointed Minister of Culture, Europe and International Development. I hope that the chamber will join me in wishing him well in his new role. He has led the committee with great drive and passion to ensure that we focus our efforts on addressing poverty.

Our predecessor committee’s legacy report stressed that measures to tackle poverty span several committee remits. At times, there has been a lack of clarity around which committee should take the lead in scrutinising this important policy area. My committee has used its extended social justice remit to focus its budget considerations on the cross-cutting issue of poverty and spending on social security.

During this parliamentary session, we hope to bring together committees with a shared focus on tackling poverty and social inequality. Meeting our child poverty targets is a national responsibility that is shared between Parliament and Government, and that is why the committee chose the Scottish Government’s progress in meeting the interim targets for 2023-24 as the central focus of its pre-budget scrutiny.

Our ability to meet those targets has been made much harder as families face reductions in household income, price rises and the withdrawal of Covid-19 support measures such as the £20 universal credit uplift. This year, the convener, along with UK committee chair counterparts, wrote to the Chancellor of the Exchequer and the Secretary of State for Work and Pensions to call for the £20 universal credit uplift to be made permanent and to be extended to legacy benefits, which are disproportionately claimed by disabled people. Families on the lowest incomes; those with children, and particularly single parents; black, Asian and minority ethnic families; and families in which someone is disabled are disproportionately affected by the ending of the uplift.

Modelling that was carried out by the Child Poverty Action Group suggested that as many as 22,000 children in Scotland would be pushed into poverty due to the removal of the uplift, and third sector organisations advised that the cut would result in indebtedness, rent arrears and homelessness for families. We felt that there was compelling evidence that the Scottish child payment should be doubled. We therefore welcome the fact that the budget now commits an additional £103 million, bringing investment to £197 million overall.

The committee recognises that social security will have to do the heavy lifting in the short term and that other levers that are available to the Scottish Government, such as tackling low pay and reducing housing costs, could take longer to achieve results. However, we are keen for the Scottish Government to continue to prioritise increasing access to childcare and improving employment prospects to reduce child poverty.

Poverty is gendered. While giving evidence to the committee, Satwat Rehman from One Parent Families Scotland relayed a quote from a parent that summarises the difficulties that working parents face. That parent said:

“Childcare costs are crippling—I earn what I always considered to be a reasonable salary, but it costs more than I earn to send my two children to nursery for only 3 days a week.”

We are aware that women and people with disabilities face challenges in finding good employment opportunities and suitable childcare. The committee welcomes the Scottish Government’s expansion of funded early learning to all one and two-year olds, starting with children from low-income households in this session of Parliament.

Women have withstood more caring responsibilities during the pandemic. Eilidh Dickson of Engender advised:

“Women have also experienced labour market disruption because of the distribution of care, which was removed from the state back into the household over the pandemic: care for children, care for older people and care for disabled people.”—[Official Report, Social Justice and Social Security Committee, 7 October 2021; c 12, 3.]

When scrutinising the Carer’s Allowance Supplement (Scotland) Bill, we heard that carers are looking for more assistance in relation to respite care. The committee notes that the Scottish Government’s budget includes £20.4 million to expand local carer support, including short breaks, to meet increasing demand under the Carers (Scotland) Act 2016. The committee will monitor whether that has the desired impact.

On behalf of the committee, I thank all those who contributed evidence to inform our pre-budget letter. It is evident from our deliberations that a preventative approach to spending is needed to maintain the sustainability of anti-poverty measures and the social security budget.

As I have referred to throughout my contribution, social security is an investment in people. However, the social security budget is demand led, and therein lie risks. On 23 December, Dame Susan Rice from the Scottish Fiscal Commission advised the committee that the commission forecasts that spending on devolved social security will rise by £400,000 to £4.1 billion in 2022-23 and will

“reach £5.5 billion in 2026-27, once the full costs of the adult disability payment and the Scottish child payment are included.”—[Official Report, Social Justice and Social Security Committee, 23 December 2021; c 2-3.]

The commission told us:

“by 2026-27 spending on the Scottish Government’s social security benefits will be £760 million more than the corresponding funding received” through the block grant adjustment, thereby

“reducing the funding available for other parts of the Scottish Budget.”

The hybrid benefits system means that UK Government decisions can impact on Scottish Government policies, as we have seen with the cut to the universal credit uplift. Scotland is also reliant on UK infrastructure and data sharing to deliver benefits. It is clear from our scrutiny that we need a more joined-up approach in which the principle of devolution of social security is honoured. That is illustrated in the recent minutes from the joint ministerial working group on welfare, which highlight the Scottish Government’s concerns about infrastructure in the Department for Work and Pensions to deliver the Scottish child payment for six to 15-year-olds by the end of this year.

I take this opportunity to appeal to committees to look at ways to tackle poverty through their remits. We have called on Government departments to work together to reduce the potential long-term demands on the social security budget. We hope that, with committees, Government departments and national Governments working together, everyone can redouble their efforts to make headway in tackling poverty and social inequality once and for all.

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

I am pleased to speak about the work of the Equalities, Human Rights and Civil Justice Committee. There is much in the budget to be welcomed, such as the 39 per cent increase in the promoting equality and human rights budget line, from £32.28 million to £44.98 million. That has the potential to provide continued funding for many organisations that support some of the most vulnerable people in Scotland.

Surely everyone will welcome the Scottish Government’s commitment to tackling inequality and poverty, including the pay rise for those who work in social care and the Scottish child payment increase and expansion, which will support women and those on low incomes. In its evidence, the Joseph Rowntree Foundation welcomed the doubling of the Scottish child payment, but cautioned that it will not be sufficient on its own to eradicate child poverty.

We welcome the progress that has been made on the equality and fairer Scotland budget statement, which the chair of the equality budget advisory group said just yesterday has led to really significant improvements, has become more accessible and has developed into a tremendous resource.

What are the main areas in which the committee feels that progress is needed? First, although the increase in the promoting equality and human rights budget line will be crucial, that is just one budget line, and it accounts for about £1 in every £1,000 in the overall budget. There is a bigger picture, and a bigger prize, if we look at the effects of the overall budget on equalities and human rights and try to ensure that different budget areas do not work against one another but, instead, contribute to and complement one another.

The committee heard about the need for much more extensive equalities data, which should underpin everything that the Government does. For example, there are still many challenges in relation to gender-disaggregated data, even before we consider any additional protected characteristics. Witnesses pointed to perceived shortcomings in relation to data on learning disabilities, ethnicity and poverty. Although the Scottish Government told us about the positive work on the equality data improvement programme, data has been a recurring issue for our committee.

Yesterday, we heard that data challenges continue and, indeed, have been made worse by the pandemic. Without the right data and thorough analysis, including on how current data compares with the data that we might have relied on to analyse trends before the pandemic, it is more difficult for us to understand, for example, how the pandemic response has fared in protecting particular groups, or which groups have fared worse. The committee will continue to explore why those challenges exist and how they might be resolved.

I will provide an update on two other areas of the committee’s work. On women’s unfair responsibility for unpaid care and domestic work, our pre-budget scrutiny highlighted that pre-existing inequalities were exacerbated and brought into stark focus by the Covid-19 pandemic and the response to it. The committee heard that the burden placed on women, such as unpaid caring duties for elderly parents and children and an increase in domestic work during the pandemic, is likely to have a long-term negative impact on their future rights and economic prospects.

That led to our inquiry into women’s unfair responsibility for unpaid care and domestic work. Although we are in the early stages of the inquiry, we have heard that policy solutions need to be gender sensitive and to take account of intersectionality. Examples include gender-sensitive employment support and increased access to flexible childcare.

I highlight the committee’s work on human rights budgeting. The committee is taking a year-round, human rights-based approach to its budget scrutiny, and we encourage other committees to factor that approach into their scrutiny. It was good to hear one or two other conveners mention equality in their contributions.

Taking a human rights approach means thinking about and discussing what are new concepts for many of us in relation to budgets, such as a minimum core, a progressive realisation of rights and maximising available resources to achieve rights. Previously, we heard from Dr Alison Hosie of the Scottish Human Rights Commission that the minimum core is simply the red line below which we are not prepared to accept that our society should fall in Scotland, so that everyone can live with human dignity.

Taking a human rights approach will involve identifying specific areas on which to focus during the year. That work might be in the form of short discrete inquiries, which we hope will inform our subsequent pre-budget scrutiny later in the year.

To complement our year-round approach to budget scrutiny, the committee has agreed to a Scottish Parliament information centre fellowship in human rights budgeting. That will commence in April, and we envisage that it will include a case study that will enable us to get into the practicalities and real-life circumstances of a specific group or focused issue.

We anticipate that that work will help to inform a consultative, participatory exercise to be launched in the summer that will give us real-life examples that we can take into our pre-budget scrutiny for next year. We hope that that exercise will offer an opportunity for a range of individuals and groups to get involved and engaged in a process that can sometimes seem distant, dry and formulaic.

We look forward to receiving an update from the Scottish Government on its response to the equality budget advisory group’s recommendations. As noted in our correspondence of October 2021, that response requires some urgent consideration. We also note that the response is due in the spring and we would be grateful for a little more clarity from the minister in his closing speech about precisely when that might be.

Photo of Sharon Dowey Sharon Dowey Conservative

I am pleased to speak in the debate on behalf of the Public Audit Committee. As members will know, the committee has an important scrutiny role to play in examining whether the Scottish Government and other public bodies spend public money efficiently and effectively. Key to our work are the reports that the Auditor General for Scotland prepares, which provide us with the information that we need to maintain an overview of how public money is spent and to hold public sector leaders to account for the use of that money.

Although the committee is not directly involved in the budget scrutiny process, the debate presents an opportunity to reflect on some of the themes that are emerging from our work in session 6, which might be of interest to other committees and are also intended to help inform today’s discussion.

I start by highlighting our recent and on-going scrutiny of the Auditor General’s report, “The 2020-21 audit of the Scottish Government Consolidated Accounts”. The report sets out the challenging operating environment that the Scottish Government was working in last year, as it responded to the significant threats that the pandemic posed to lives, public safety, jobs and the economy. However, the report goes on to say that the Scottish Government now needs to be more proactive in showing where and how that money was spent, and to show a clearer line from budgets to funding announcements to actual spending.

Transparency in the Scottish Government budget is critical for all committees to be able to fulfil their budget scrutiny role effectively. The Public Audit Committee looks forward to exploring how the Scottish Government intends to improve its reporting in that area in due course.

A further theme that has been drawn to the committee’s attention is the importance of long-term funding decisions. For example, during our scrutiny of “Scotland’s colleges 2020”, Colleges Scotland stated that

“colleges make lots of short-term decisions, which are often not the best financial decisions. If the sector could be afforded a multiyear funding settlement, that would go a long way to allowing us to be much more strategic and would be better use of the public purse.” —[Official Report, Public Audit Committee, 23 September 2021; c 5.]

The committee notes the Scottish Funding Council’s call for the provision of multiyear financial settlements for colleges—a call that the Education, Children and Young People Committee supports. The Public Audit Committee waits with interest to see how the Scottish Government intends to take forward that call.

The committee also held a round-table evidence session on Audit Scotland’s most recent work on child and adolescent mental health services. We heard that it is vital that improvements be made to track whether the significant investment in that area leads to improved outcomes for children and young people who need that support.

I will mention briefly our scrutiny of the Auditor General’s recent report, “Community justice: Sustainable alternatives to custody”. The report highlights that the Scottish Government has yet to achieve its objective of ensuring that people who are convicted of criminal offences increasingly receive community-based sentences where appropriate, instead of going to prison. The Scottish Government’s reducing re-offending policy acknowledges that community sentences are more effective at preventing re-offending than prison sentences; however, community justice funding makes up less than 5 per cent of overall justice funding, and there has been little change in recent years. The committee considers that there is scope for the Scottish Government to review its budget in that area to ensure that it is sufficient to achieve its policy objectives.

The areas that I have highlighted will be of interest to other committees. The Public Audit Committee is keen to work collaboratively on issues where there is a shared interest and looks forward to doing so in order to support, help and contribute to the budget scrutiny process in the years to come.

Photo of Colin Beattie Colin Beattie Scottish National Party

I welcome the opportunity to contribute to the debate as chair of the Scottish Commission for Public Audit. The SCPA’s role is to scrutinise Audit Scotland’s budget and accounts, and we have responsibility for appointing three non-executive members to Audit Scotland’s board, choosing the chair and appointing Audit Scotland’s accountable officer. Last Friday, we published our report on Audit Scotland’s budget proposal for 2022-23 and recommended that the Parliament approve it.

I intend to spend the next few minutes highlighting the key issues in our report. Audit Scotland is seeking parliamentary approval for £11.63 million of its resource spending for 2022-23 with the rest of its funding—£19.2 million—coming from fees that it charges to those it audits. In relation to the funding for which parliamentary approval is sought, Audit Scotland seeks an additional £573,000 compared with last year’s budget. That increase arises from the costs of undertaking the national fraud initiative, the additional responsibilities arising from financial devolution, and from an increased number of public bodies whose audit work cannot be charged for.

Audit Scotland’s budget, like those of other public bodies, has been prepared in the context of significant uncertainties, such as Covid-19, the timing of last year’s UK and Scottish Government budgets, and the cost of goods and services since the UK left the European Union.

As part of its budget for 2021-22, Audit Scotland sought an additional £2.1 million to implement a strategic improvement programme and a multiyear plan for recovery from the disruption of the pandemic in 2020. That additional funding was approved by the Parliament and much of it has been subsumed into Audit Scotland’s budget bid for 2022-23 through the recruitment of 33 additional staff.

Given that, the SCPA was keen to explore with Audit Scotland how much of its additional funding for the current financial year and for 2022-23 relates to the impact of Covid-19, and how much of its expenditure will be recurring over a number of years. Responding, the Auditor General for Scotland explained that, although Audit Scotland had not attributed the percentage of roles that relate to the global health emergency or to previously agreed and committed investment

“it is clearly the case that the majority ... recruitment of auditors during 2021-22 has been related to the Covid-19 pandemic and the public audit response to that.”

Audit Scotland plays an important role in auditing the Covid-19 spend that has taken place across the public sector. The Auditor General has previously reported that greater transparency in showing where and how additional Covid money was spent will enhance reporting to the Scottish Parliament and the public, and help to strengthen accountability and scrutiny.

Therefore, although we have welcomed the quarterly updates on how the additional funding was spent in 2021-22, we have recommended that future Audit Scotland budgets also provide more detailed identification of funding related specifically to Covid-19. We have also recommended identification of the extent to which any requests for additional funding are for recurring or non-recurring expenditure, including in relation to any proposed use of the management contingency.

We also recognise that the pandemic has brought added uncertainty to Audit Scotland’s financial planning, as it seeks to manage planned development work alongside responding to the impact of the pandemic on existing work. Greater transparency in identifying what is Covid-19 spending and what is non-Covid-19 related, however, remains vital. Those are areas that the SCPA will return to when we consider Audit Scotland’s annual report and accounts and future budget proposals.

We look forward to discussing those areas further with Audit Scotland.

Photo of Tom Arthur Tom Arthur Scottish National Party

I start by thanking all members for engaging in this important debate, and by thanking all members of the committees and the committee clerks for their scrutiny. Parliament’s scrutiny is an essential part of the Scottish budget process.

The Scottish Government welcomes the contributions of all the committees. Although this might be the least contentious debate that we will have on the budget, it serves an important illustrative purpose, as well as providing scrutiny by indicating the breadth of competing demands and priorities that must be balanced in the budget process.

As we have highlighted, this is a challenging budget because of the loss of UK funding for Covid-19 in 2022-23. In simple terms, £3.7 billion of Covid-19 funding, which was included in last year’s budget bill, has now been removed from the Scottish budget.

That loss is a challenge to manage when the effects of the pandemic remain with us, which is why difficult choices have had to be made in the budget.

I appreciate that members will have their own views on what the priorities for the Scottish budget should be, and I welcome the opportunity to debate those through the budget process. In addition, it is important that the budget scrutiny process includes recommendations on where spend can be reduced, as well as on where it should be increased. Overall, I am confident that we will reach a consensus position on what is best to support the people of Scotland.

The Scottish Government is clear on its priorities. The budget delivers on three key priorities for Scotland: tackling inequalities and progressing our national mission to tackle child poverty; taking action to tackle climate change challenges and secure a just transition to net zero; and investing in our economic recovery.

To help to tackle inequalities, the budget commits more than £3.9 billion to benefit expenditure, which will provide support to more than 1 million people in Scotland. That money will go directly to the people of Scotland who need it the most.

The budget delivers on our commitment to doubling the game-changing Scottish child payment to £20 a week from April 2022, at a cost of £197 million next year. Our Scottish child payment is the most ambitious child poverty reduction measure in the UK, which has already reached around 108,000 children under the age of six with £10-a-week payments. It is essential in helping to reduce inequalities in Scotland.

In addition to funding the doubling of that payment, we will continue to deliver the child bridging payments, which are worth £520 in 2022, for every child who is in receipt of free school meals on the basis of low income, until the full roll-out of the Scottish child payment to children under the age of 16 by the end of this year.

The 2022-23 Scottish budget goes further in tackling inequalities. We will continue our action to close the education attainment gap by investing £200 million, as part of a commitment to provide £1 billion over the parliamentary session to address the poverty-related attainment gap.

To help to support people more widely, the budget delivers funding of £18 billion for the health and social care portfolio. That includes the provision of more than £1.6 billion for social care and integration, which will lay the groundwork for our national care service; in excess of £1.2 billion for mental health services, which will take forward our commitment to ensure that mental health funding increases by 25 per cent over the session; and £147.6 million to address the twin public health emergencies of drug deaths and the harms from alcohol, which includes £61 million specifically to address the national tragedy of drug deaths as part of our commitment to invest £250 million over the parliamentary session.

Photo of Stephen Kerr Stephen Kerr Conservative

A number of members have referred to the strong advice of Audit Scotland that there should be a clear line of sight from spending decisions through to outcomes. It has been a regular feature of Audit Scotland’s reports that there should be more transparency on how the Government spends money. What will the Government do in the coming financial year to ensure that it does not receive such feedback and criticism in subsequent years?

Photo of Tom Arthur Tom Arthur Scottish National Party

I thank the member for his intervention and note the comments that he made in his capacity as convener of the Education, Children and Young People Committee. I also note the comments of the convener of the Finance and Public Administration Committee, Kenneth Gibson, who rightly suggested that it was important for our desired outcomes in the national performance framework to be linked with budgeting decisions. We will continually reflect on and seek to strengthen that in our budgeting process.

The budget builds on our record level of front-line health spending in Scotland, which amounts to £111 per person. That is 3.6 per cent higher than the figure in England. That expenditure delivers significant investment in our health and social care service at a time when we have relied on it more than ever.

Of course, one of the signal challenges that we face is the generational challenge of climate change. Through this budget, we are investing around £2 billion across the Scottish Government to deliver a just transition to net zero and a climate resilient Scotland.

As the cabinet secretary noted in her opening remarks, with a combined net zero, energy and transport portfolio budget of more than £4.4 billion, we will spend more than £3.4 billion on transport across Scotland, including investing more than £414 million to support essential bus services and concessionary bus travel across Scotland, thereby delivering on our commitment to expand our concessionary bus travel scheme to young people under the age of 22.

We will spend £429 million on Scotland’s environment and forestry to protect and restore nature, including our peatlands, expand Scotland’s forests and tackle the causes of climate change and biodiversity loss.

As part of our net zero action, we will ramp up our delivery of the heat in buildings programme to make our homes and buildings warmer, greener and more energy efficient. That will include doubling the home energy Scotland scheme to £42 million and increasing warmer homes Scotland funding to £55 million to help to support the fuel poor through the heat transition.

Of course, all our ambitions have to be built on the bedrock of a solid economy, and supporting economic recovery runs through this budget. More than £1.75 billion of the finance and economy budget will support our economic response with a firm commitment to build a net zero wellbeing economy and to protect and create good quality green jobs across every region of Scotland.

Photo of Alison Johnstone Alison Johnstone Green

I ask the minister to close now, please.

Photo of Tom Arthur Tom Arthur Scottish National Party

I am very grateful for the comments and contributions of all speakers this afternoon. We will of course reflect on them carefully. I look forward to the further debates in Parliament, and to the chamber backing the budget at stage 1 tomorrow.

The Presiding Officer:

I call Daniel Johnson to wind up for the Finance and Public Administration Committee. Mr Johnson joins us remotely.

I ask Mr Johnson to pause for a moment. We want to make sure that we can hear you, Mr Johnson, so please bear with me for a moment.

Photo of Daniel Johnson Daniel Johnson Labour

Can you hear me any better now?

The Presiding Officer:

That is lovely. If you would be good enough to begin again, Mr Johnson, I would be very grateful.

Photo of Daniel Johnson Daniel Johnson Labour

I am very sorry to disappoint members, because now they have to listen to me. However, that will perhaps be more interesting than watching my mouth move but not hearing any of my words.

I concur with Stephen Kerr that it is somewhat strange speaking in a debate wearing a different hat, as the deputy convener of the Finance and Public Administration Committee. However, although the tone of my remarks may be somewhat more subdued, I hope that the substance remains largely the same.

I begin by repeating the thanks of the committee convener to the clerks, our advisor Mairi Spowage, and Ross Burnside of SPICe. I also thank all my fellow committee members for their work on our report.

Above all else in this important debate, which forms part of the budget process, I was struck by the degree of consistency and agreement on fundamental points. I was perhaps most surprised—and, indeed, encouraged—by the number of committees that referred back to Christie, because it is a topic that our committee has reflected on and is keen to focus on as part of our on-going work. Ultimately, it is in all our interests and an overarching priority that we ensure that spending is effective and goes on things that prevent negative outcomes.

I was also struck by the number of members who spoke about the need to focus on inequality and poverty. I take great encouragement from the fact that that seems to be an overarching priority for all committees. Regardless of the party persuasion of the convener who spoke in the debate, it is clearly a priority for this Parliament. I take huge encouragement from that.

Perhaps one of the most surprising topics that I saw as a common thread was data. Whether it came from the Health and Social Care Committee or the Social Security Committee, a clear theme was that we have to understand what is going on if we are going to spend our money correctly. I reflect—again—that that is a theme that the Finance and Public Administration Committee is keen on.

I was struck by Stephen Kerr’s comments about the need to focus on outcomes. Ultimately, that is an important element of all our spending, and I quite agree with the point in relation to education. If we are going to achieve our aim of eliminating the poverty-related attainment gap, focusing on outcomes is critical. That remains true across all spending.

I will briefly highlight Claire Baker’s comments about the need to focus on growth, which I will say more about later. Ultimately, if we are going to have a successful economy and successful public services, addressing the issues that impact on long-term growth is an overarching imperative and a mission for us all.

The convener spoke about some of the broader issues that arose during our pre-budget scrutiny, including the need to prioritise policy interventions that can make the most difference to long-term issues such as inequalities and poverty, in a way that positions prevention, reform and national performance framework outcomes at the heart of Government spending plans and approaches. I look forward to looking into some of those issues in more detail in the committee’s forthcoming inquiry.

For now, I want to focus on the specific findings in our pre-budget report that relate to the impact of Covid-19 on Scotland’s public finances, which I would suggest was the core theme in all the contributions today. Unparalleled levels of public funding have been provided to our public services’ pandemic response and to support businesses that have been impacted by restrictions. At the time that we published our report, £13.6 billion had been spent on the Covid response in Scotland in the current and preceding financial years. A further £0.5 billion is expected as a consequence of the UK autumn budget. At the end of 2021, the omicron variant brought with it more restrictions and the need for more financial interventions to support businesses.

With that level of funding, it is critical that there is clarity and transparency regarding how funds have been used—a point that was raised by the convener of the Public Audit Committee and a number of other contributors. Although the Finance and Public Administration Committee accepts that there can be challenges and that it can be difficult to delineate Covid spend and day-to-day spend, that point remains important as the situation normalises. The committee therefore asked the Government to commit to providing transparent and timely information on all Covid allocations, to allow proper scrutiny of where and how effectively the money is being spent, and to allow us to learn any lessons for the future. In response, the Government said that it would continue to provide updates on Covid allocations. However, the Auditor General for Scotland has since repeated his calls for more openness and transparency in that area.

We heard that, in the early months of the pandemic, Her Majesty’s Treasury had provided a funding guarantee of in-year funding to the devolved Governments, which brought more certainty to budget planning. With no such guarantee in place in 2021-22, the Scottish Government was in the uncertain position of having to allocate spend in Scotland without knowing whether the full amounts announced by the UK Government would be spent, and therefore whether they would flow to Scotland. That, we heard, made budget management much more challenging. We therefore asked the UK Government to commit to a similar guarantee if the fiscal situation rapidly develops. In the longer term, we have called on the two Governments to look at whether funding guarantees could be a better way of managing devolved finances.

We also highlighted issues that we think should be considered as part of the upcoming review of the fiscal framework, based on the experience of the pandemic. Although the framework broadly worked as intended, we heard that areas of concern remain. The health and economic impacts were largely the same across the UK, and additional funding arrangements were made available, such as the aforementioned guarantee and extra in-year Barnett consequentials. We have called for the review to look at how the fiscal framework might be strengthened to withstand a situation where future health or economic shocks impact disproportionately on one part of the UK. The latest forecasts from the Scottish Fiscal Commission, which suggest that Scotland is lagging behind the UK on a number of indicators, might bring more urgency to the issue.

Some sectors, including the hospitality, retail, leisure and travel sectors have, as we know, been disproportionately affected by Covid, with some building up significant levels of debt in the process. We therefore asked the Scottish Government to consider how it might best support those sectors to recover, rejuvenate and grow in the wake of Covid.

We note the Scottish Government’s intention to continue some reliefs for the retail and hospitality sectors in the first three months of 2022-23.

The economic outlook is better than was forecast at the start of last year. Forecasters have revised upwards their expectations for growth over the next five years, following stronger-than-predicted growth in the first half of 2021, which was supported by the vaccine roll-out. The economy is expected to return to pre-pandemic levels by the second quarter of 2022.

However, there are worrying signs. As I said, Scotland appears to be trailing behind the rest of the UK when it comes to economic performance. In particular, the Scottish Fiscal Commission noted in its report that employment and wage growth in Scotland are lagging behind the UK average. The SFC also said that Scotland’s income tax receipts are forecast to fall behind the block grant adjustment, which will have an impact on Scotland’s fiscal sustainability.

In our pre-budget report, we asked the Scottish Government to support the Scottish Fiscal Commission in its preparatory work for the production of a fiscal sustainability report, which would be produced in each session as we look ahead to the next 30 to 50 years. Given the most recent forecasts, such a report could be essential in the identification of longer-term trends and would allow a change of direction to reverse trends, if necessary.

I support the motion in Kenneth Gibson’s name, on behalf of the Finance and Public Administration Committee.

Photo of Elizabeth Smith Elizabeth Smith Conservative

On a point of order, Presiding Officer.

I very much respect the Presiding Officer and the instructions that we receive from you, but I want to raise a serious issue. During this debate, I was provided with a note that said that I would not be permitted to speak in the debate, despite my being a member of the Finance and Public Administration Committee.

Although committee conveners are extremely important in the Parliament and have an important role to play in debates of this kind, I feel strongly that it is also the case that any committee member—indeed, any member of the Parliament—who would like to speak in a debate and has been accorded that facility by their whip’s office should be permitted to do so.

I say that because there is an important point about democracy and how this place is run when it comes to scrutiny. It is important that members should be allowed to participate. Members of the committee—I think that the views that I am expressing are shared by other members of the committee—are on the front line of seeing all the evidence that informs debates of this kind. Therefore, Presiding Officer, I ask you to consider whether, in the future, it is appropriate that only conveners speak in these debates.

The Presiding Officer:

Thank you for your point of order, Ms Smith.

At the Parliamentary Bureau this week, there was discussion about the format of this debate. Today’s conveners debate is a requirement under standing orders as part of the budget process—I can share the details with you. The point is to enable conveners to highlight the cross-party work of their committees in scrutinising the budget proposals. Tomorrow’s stage 1 debate will be an opportunity for members across the chamber to make speeches.

However, I have heard your comments and I think that it is important that we keep our practices and procedures under review.