To ask the Scottish Government whether it will provide an update on the impact of the updated fiscal framework. (S6O-03460)

The forthcoming medium-term financial strategy will provide an update on the fiscal outlook and will reflect the impact of changes agreed to the fiscal framework, including the Scottish Government’s latest borrowing and reserve policies.

The Scottish Government has postponed publication of this year’s MTFS in order to allow time for the incoming First Minister to take a view on critical policy issues and to align the fiscal strategy with the Government’s wider policy priorities. The MTFS will now be published on 20 June.

Recent analysis from the House of Commons library paints a very concerning picture, and suggests that Scotland’s block grant will consist of just 3.5 per cent of the United Kingdom’s Government spending in 2023-24 and 2024-25, according to autumn statement plans. Does the Government agree that that underscores the need for a detailed explanation of how the fiscal framework affects Scotland’s block grant and the overall fiscal autonomy of our country? Is it not time for a thorough review of the fiscal framework and the reprioritising of delivering independence to ensure that future Scottish Governments have all the fiscal levers of a normal country?

It is no secret that the Scottish Government’s preference was for a broadly scoped review that explored opportunities for further devolution. Our position on full fiscal powers and independence is there for everybody to see. However, the improvements that we made were important. The set of improvements to the fiscal framework is sensible and proportionate and provides the Scottish Government with more effective levers to manage risk and volatility. It also ensures that we are able to lock in the index per capita model, which will result in Scottish public finances being better to the tune of hundreds of millions of pounds over the next few years, compared with what they would have been.

We have a number of supplementaries. I will try to get them all in, but they will need to be brief.

The Cabinet secretary mentioned the index per capita method, which I think John Swinney, in his previous role, achieved. Will she confirm that we could be in a much worse position if we did not have the index per capita methodology?

Yes. The fiscal framework review was very limited in its scope and nature. Given that it was a negotiation, the ability to expand that was very limited. However, John Mason’s point is that the index per capita mechanism has significantly benefited the Scottish budget, because it ensures that the budget is protected from the risk of slower population growth in Scotland relative to the rest of the UK. Without the levers over aspects such as migration, it is very difficult to turn that around.

The authors of the independent report, which informed the review of the fiscal framework, estimated that, by 2026-27, the benefit for income tax alone could rise to around £500 million a year relative to the Treasury’s preferred methodology.

The Cabinet secretary was very clear at the Finance and Public Administration Committee and in the chamber that the fiscal framework has yielded a set of changes that are

“fair and pragmatic and will strengthen the financial management levers available to the Scottish Government”.

Does the cabinet secretary recognise that the fiscal framework is very valuable to Scotland and shows good joint working between the Scottish and UK Governments?

I said at the time that, given the limitations of the review, it was fair and pragmatic. Although we would have liked—and will continue to seek, particularly if there is a change of Government—a more fundamental review of the fiscal framework, the index per capita mechanism alone was very important. I mentioned to John Mason the benefit of, potentially, £500 million a year relative to the Treasury’s preferred methodology. We should all welcome that. The fiscal framework could be further improved, and we will pursue that with the new Government.

In a debate last December, the ultra-nationalist Alba party described the fiscal framework as “a trap”. Does the Cabinet secretary think that an additional £2,200 per head of public spending in Scotland is a trap, or does it help to sustain core public services?

Scottish revenues, through personal and business taxation, contribute to the whole of the United Kingdom. The idea that, somehow, Scotland is subsidised is not a proposition that I support. Scotland more than pays our share, not least when we look at the revenues from energy that have flowed to the UK Government over many years. The point of the fiscal framework was to recognise that, while we are under the current constitutional arrangements, there is a risk of slower population growth in Scotland relative to the rest of the UK. I hope that Labour will join us in furnishing the Scottish Government with the powers over population growth, such as migration. We would be keen to work with any future UK Government to have a migration system that suits the needs of the Scottish economy.

If we are going to get in all the supplementaries, the questions and responses will need to be a bit briefer.