 Good morning, and welcome to the 25th meeting in 2022 of the finance and public administration community. Before I continue, I am in the chair this morning because the interim committee member Kenneth Gibson has had a family bereavement. I am sure that I speak on behalf of the whole committee when I express our condolences at this difficult time for him and his family. The first item on our agenda is to decide whether we want to take item 3, consideration draff correspondence in private. Are members agreed? We are all agreed. The next item on our agenda is an evidence session with the Deputy First Minister and Cabinet Secretary for Covid Recovery on Scotland's public finances in 23-24 as part of our pre-budget scrutiny. Mr Sweeney is joined today by Scottish Government officials, Andrew Scott, director of tax and revenues, Gary Gillespie, chief economist and Scott Mackay, head of fiscal management and strategy. I welcome you all to the meeting and invite Mr Sweeney to make a short opening statement. Thank you, convener, and may I add my comments to your own in relation to the bereavement that Mr Gibson has experienced and some of my sympathies to his family and to him. I welcome the opportunity to meet with the committee today to discuss the pre-budget scrutiny of the 2023-24 budget and issues in relation to the public finances. The preparation for the budget takes place against a challenging and highly volatile landscape with significant implications for our fiscal approach. From the Covid pandemic, Russia's illegal war on Ukraine and rising inflation, we are now in the midst of a cost crisis that is having profound impacts on households and businesses across the country, as well as creating significant strain on the public finances. That cost crisis has now been exacerbated by the United Kingdom Government's mini-budget, involving substantial unfunded tax cuts, leading to rises in mortgage costs sparking turmoil in the economy and which has been described as the worst, unforested economic policy error in a lifetime. I wrote to the committee yesterday to share the Treasury's latest estimates of the block grant adjustment impact of the cuts to income tax and stamp duty land tax, which imply a £540 million net benefit to the Scottish budget over three years, including this financial year. I would point out that, in the space of just 10 days, that estimate has fallen from £660 million, a fall of 18 per cent. As the committee will be aware, those estimates should be treated with a significant degree of caution, as they are not informed by independent forecasts from the Office of Budget Responsibility. The estimates assume also that Scottish tax policy remains unchanged. However, the United Kingdom Government's mini-budget poses important questions for our devolved taxes policies. My judgment is that we need to take appropriate time and care to consider those implications as part of our annual budget process. As part of this work, I have established an expert panel of economists who will assess the impact on Scotland of the UK Chancellor's Fiscal Approach. It is also essential that we engage more broadly on the tax and spending choices that are before us, including our commitments, priorities and values as a Government. Therefore, alongside the review, I will publish a discussion paper to encourage public engagement on those important and difficult choices on tax and public expenditure. The committee will be aware that the Office of Budget Responsibility is now expected to publish its forecasts earlier than the 23 November that was originally proposed. The OBR forecasts are crucial to our budget planning and will allow Scotland's block grant adjustments for 2023-24 to be calculated. Those forecasts will inform our approach to setting the Scottish budget and provide information to the Scottish Fiscal Commission in order to inform their independent forecasts. It is vital that we base our budget decisions on high-quality information, and I am unreservedly committed to doing exactly that. I am keen to discuss and agree with the committee a timetable for this work on the budget, and we will do that in due course. The committee will also be aware that I am expecting to conclude the Scottish Government's emergency budget review in late October, and the purpose of which is to identify any further resources that could be deployed to assist those facing hardship in these challenging days. I look forward to addressing any questions that the committee may have. Thank you very much, Deputy First Minister. On that point, I think that one of our key reflections that we must all have is that having clarity and understanding of what will be the impact of budget statements and budget actions ahead of time is of critical importance. I do recognise that there have been some changes in recent days and weeks. I ask you to clarify what we should be expecting. My understanding is that, on the basis of the correspondence that we have had from the Government, the emergency budget response from the Scottish Government will be on 24 October. Is that still the intended timing? Will that be purely focused on changes to this year's budget? Likewise, are there any implications to the timing of the Scottish budget from the announcement just in the last day of bringing forward of the OBR forecasts for the UK budget decisions? On the issues in relation to the emergency budget review, convener, I intend to come back to Parliament in the week commencing 24 October, a particular date to be confirmed, to set out the conclusions of the emergency budget review. My view is at this stage that that will focus just on this financial year and on any measures that the Government can take to support those who are facing difficulty, but also to wrestle with the in-year financial challenges that I set out to Parliament in my statement on 7 September, which are primarily arising out of the significant pressure of inflation and the issue of paydeals that are coming in higher than we anticipated. In relation to the timescale for the Scottish Government's budget, we will be in a position—this is an emerging picture, convener, as we speak—where I understand, but it has not been—I do not think that it has been publicly confirmed yet—that the UK Government will accelerate the information that was expected to be published on 23 November. Obviously, we had been assuming, had that information been available on 23 November, we could produce a budget for the Scottish Parliament prior to the Christmas recess, and that would be the subject of dialogue with the committee about the steps that need to be taken for budget scrutiny and the timetabling of that. Obviously, if that comes forward, then that provides us with a bit more time and certainty about the ability to produce a budget before Christmas. I would point out that, under our normal protocols, we are required to give 10 weeks notice to the Scottish Fiscal Commission of our budget event. If we wanted that to be on 15 December, we would have to give that notification by this Thursday. Obviously, 8 December has gone if we are going to satisfy the 10-week period. I assume from the question that you have posed to me, convener, that you share my view that we should go through the normal sequence of events in taking the independent advice and information that we should have, which would require us to give 10 weeks notice to the Fiscal Commission. I think that the final point that I would make is just really for completeness, on what information we will have available to us. On that, I am not certain what information we will have available. Obviously, if we get OBR estimates that will get estimates of the block grant adjustment, what I do not know is what information we will have about spending information and whether the fiscal statement that we get from the United Kingdom Government at some time in the next few weeks will give us sufficient clarity on whether there is any revision to the assumptions that we would be making based on the comprehensive spending review. In all honesty, I cannot see how those comprehensive spending review numbers can be sustained given the fact that there has been £43 billion worth of tax cuts that are unfunded and there is market turmoil. If market turmoil is to be addressed and £43 billion worth of tax cuts are to be sustained, there is going to have to be some rebalancing measures taken. I fear that that will involve cuts to public expenditure, which will have an impact on the Scottish Government's budget and on the assumptions that would be in the resource spending review. Thank you very much, Deputy First Minister. In the first instance, I agree with your position that we should, as far as possible, carry on with our usual budget processes. Consistency, clarity and certainty are all vital components of prudent and responsible budget setting. Can I just ask a couple of points of clarification? Has the Government had communication or correspondence with the fiscal commission regarding the level of data that they have or expect to have and whether or not they feel equipped to carry out the budget forecast? Likewise, that is another point of clarification. You mentioned there that you were questioning whether the UK Government's fiscal plans might need revision. Are there any potential thoughts about having to revise the Scottish Government's resource spending review in light of fiscal changes? Is there a mechanism for doing that? In relation to a dialogue with the fiscal commission, I had a discussion with the chair of the Scottish Fiscal Commission quite recently. We were reflecting on those uncertainties, but not with any certainty about what information might be available to us. My officials are in regular discussion with the Scottish Fiscal Commission to make sure that we are in a position as far as possible to satisfy the full obligations that we would have in relation to the provision of information. As I said in my opening statement, I am wholly committed to ensuring that we do that exercise properly and fully as envisaged by statute and by agreement with the Fiscal Commission. Obviously, it is a bit of a moving picture as to what information we may have available to us. We will only have answers to those questions based on whatever material is published by the UK Government and what certainties it would have. I am fairly confident as things stand. This is based on conversations that are now just about two weeks old that we will not have a UK budget before we have a Scottish Government budget. I am pretty confident of that. We will be dependent on what information comes out from the further fiscal statement that is expected in the next few weeks. In relation to any potential revisions, we have set out the resource spending review, which is an indicative direction of travel on public expenditure based on the comprehensive spending review and our assessment of appropriate block grant adjustments. Obviously, that does not translate into a budget. That is the exercise that we are now about to do for £23.24. Obviously, if there is a change to the content of the UK's spending plans for the next financial year, which, as I said in my previous answer to convener, I fear as the case because of the unfunded tax cuts and the market turmoil that is being experienced, that potentially could have an effect. The committee will be familiar that the choices made by the UK Government can have different impacts on our budget. A significant reduction in social security expenditure, for example, will not necessarily have a direct impact on the Scottish Government's budget. It certainly would have an indirect effect on the challenges that we face. However, reductions in English departmental expenditure, health, education and local government to various other expenditure of that type would have a very direct impact on public expenditure in Scotland. Obviously, as the committee will be familiar, ministers are obliged to balance the budget, so we would have to take decisions based on the appropriate balance between taxation and public expenditure in the light of the data that became apparent and in the light of the block grant adjustments that follow from that. Thank you very much. I have just asked one last question before handing over to colleagues in the committee. We have been taking a range of evidence from a broad range of different bodies and stakeholders in recent weeks. I think that one of the most significant insights, certainly to my mind, was from the Auditor General, who highlighted the fact that the total payroll for the Scottish Government across the public sector is around £22 billion, which is very crudely half the Scottish budget. We know that the head count increased by around £15,000 during Covid, and we know that the Government has set out that it intends to bring head count back to pre-Covid levels, but protecting the NHS. We have had those broad statements, but it strikes me both in terms of the pressures that managing that payroll is critically important. We also know that the MTFS essentially assumed that the payroll bill would remain static and therefore that would imply that managing the numbers is the key variable there. I just wondered if the Deputy First Minister could set out perhaps in more detail about what steps and measures may be being considered by the Scottish Government in the coming financial year. Above all else, I think that those who are working in the public sector require a level of insight and certainty regarding the security of their employment. The first point that I would make is a fairly general point, which is that the committee will be familiar with the length of involvement that I have had in the public finances. I have been a minister continuously for over 15 years, and I have been a finance minister for nine years. I have now come back into this role. I have got a fair degree of line of sight about the finances of the Scottish Government. I have never seen the financial strain of the order that I am wrestling with just now, not in the aftermath of the financial crash in 2008, not even in the years of austerity from 2010 onwards. That is of a different order. It is a product of the extreme volatility of events that I cited, Covid, which led to an increase in the public sector workforce, the enormous disruption that has been created by the unwarranted and illegal invasion of Ukraine and the impact of inflation. It has been frankly and bluntly made worse by the backwash of the mini-budget, which has been a disaster for the situation that we face. The pressures are absolutely colossal, hence why I have had to come to Parliament to announce reductions in public expenditure already this year, and I may have to do more of that in the period that remains. Therefore, the challenges that we face are very significant. I understand clearly the need for reassurance to the public sector workforce about how we intend to tackle that issue. I have already embarked on discussions with trade unions about the strategic approach to that issue, because we have to take the greatest of care in building as much confidence around those approaches as we can. We, undoubtedly, public sector headcount is going to have to reduce in the period going through the spending review period and throughout this parliamentary term. How that is done is crucial. I want to do that in a spirit of partnership with our workforce. I want to be open about the steps that we are taking to do that. We already have in place recruitment controls, which are tempering any rises in employment. Obviously, if we put recruitment controls in place, it means that vacancies are in some circumstances not being filled. That obviously reduces the public sector headcount, but it does that in a managed and careful fashion, which is the approach that I would want to take. Obviously, we have to reflect in each budgetary event that we go through how we can best address those strategic challenges. That is very much the approach that I will take through those discussions. I welcome the dialogue that we are having already with trade unions in that respect. You have a clear and legitimate interest in ensuring that the workforce is dealt with properly and with courtesy and dignity. That will be my approach through this challenge. Thank you very much, Deputy First Minister. When we were in private session, I gave my assurance to colleagues that it would be strict and fair on time allocations, so I have to give way at this point. I will hand over to Liz to be followed by John. Good morning, Deputy First Minister. I put on record that I do understand and accept that your job is much more difficult as a result of the difficulties that the Westminster Government has placed on, particularly the forecast. I absolutely understand why you preface your remarks with that. In the debate that we had at the start of this session when we were debating the Scottish Government's programme for government, you mentioned two interesting things to me in a dialogue that we had, namely that the Scottish Government is challenged with ensuring that we try to improve economic growth, particularly by increasing productivity. You also put on record that you felt that one of the great difficulties that we have is that the size of the Scottish working population in relation to total population is a major problem, I think, was your words. That is something that has obviously been focused for quite some years now by the Scottish Fiscal Commission. I ask you, Deputy First Minister, notwithstanding all the challenges that we face, a little bit about your own economic plan to try to develop those issues about growth. What is it that you will prioritise as a Scottish Government in trying to improve our economic growth and our productivity? First of all, I acknowledge the very candid comments that Liz Smith has made. I think that it helps, frankly, the quality of our discussion and the reality of the discussion. I also reflect on the exchange that Liz Smith and I had in the closing of the programme for government debate on 6 September, which one of her colleagues reflected to me, and I won't disclose who the colleague was to avoid causing any disruption to their prospects in life. It was one of the more thoughtful contributions that Parliament could do with a little bit more often. I certainly am interested in engaging in that type of discussion because I think that we have very difficult challenges ahead and there are not easy answers. I welcome the timely question that Liz Smith puts to me about economic growth, because it allows me to illustrate the Government's approach based on some conversations that I had yesterday at the convention of the Highlands and Islands in Oban, which brings together a variety of public sector leaders from across the Highlands and Islands. Fundamentally, the Government's growth agenda is based on the national strategy for economic transformation, from which I would draw out a few key themes. The first is an emphasis on innovation and creativity. The second is an emphasis on the importance of regional economic policy, and the third is the importance of activating as many levers as we can within our control to support economic opportunity. Those are three of the big themes on the national strategy that I would draw up on. If I then move into the conversation that I had yesterday with the convention of the Highlands and Islands, in one respect it was an enormously encouraging and motivating conversation because we talked through a more buoyant set of economic opportunities than I have seen in a long time in the Highlands and Islands. The Scotland developments, for example, the prospects for technological development around the Beechwood campus in Inverness, some of the related energy activity that is going on in Orkney, Shetland and the Western Isles and a variety of other economic opportunities, and the tourism sector as well. A huge range of economic opportunities. However, the challenges that were identified, I think, would be best summed up by probably four factors. Availability of workforce to deliver on those opportunities. Secondly, the availability of housing to, and not just affordable housing, housing at all levels of the market and requirements within the market. Thirdly, the importance of transport connectivity. Issues about ferry services and other issues were very much to the fore of the discussion. Finally, digital connectivity, where I think there was a recognition that we were in a much stronger place than we had been, but we've still got some distance to go. Essentially, how we realise, on the one hand, very substantial economic opportunities and prospects, but four pretty chunky policy issues, three of which I would say the Scottish Government can help to influence, one of which I think is a real shared endeavour and is a challenge, and that's about the availability of people. We're sitting just now with historically low unemployment. That might not be the case in the period ahead. We are reducing the level of economic connectivity in Scotland. It's slow, but I would expect it to be slow, because invariably trying to reduce economic connectivity takes a lot of focused activity. Fundamentally, we are short of people, skilled people, and frankly, just people who could do with developing their skills. We are short of people. That is, to me, the consequence of the loss of free movement from EU membership. I pick up some sense that the UK Government is beginning to realise that the loss of migration is a problem, because I'm picking up elements of the dialogue within the United Kingdom Government that is recognising that the whole United Kingdom is getting short of working-age population. I hope that that opens up some recognition of some of the steps that we've got to take to address that. I hope that that gives some of the flavour of where my thinking is on these measures. That's very helpful, Deputy First Minister, and it's encouraging to hear that there is some good news amongst the gloom, notwithstanding the points that you've just made. I come back to two of the challenges that you cited there, namely about workforce and housing. In terms of trying to make Scotland a much more attractive place in which to live and work, as well as to invest, is it the Scottish Government's intention to ensure that the tax system, the levers that you do have with the Scottish Parliament, drives down the tax to ensure that we are not seen as uncompetitive when it is compared to the rest of the UK, because that is an issue that has come through a lot of forecasts. If the current fiscal arrangements from the UK stay in place, there is no question that there will be difficulties for the Scottish Government unless they can match some of these tax changes. Will you accept that? I think that we've got to proceed here with great care, because I can't accuse the United Kingdom Government of proceeding with great care on those issues. With the greatest respect, I can't accuse the Scottish Conservatives of proceeding with great care on that matter, because within the past 10 days, I have been called upon to mirror tax policies that have now been dumped by the UK Government within a matter of more than 10 days, what is it, about 12 days now, but that's no way to be undertaking tax policies. It's a total farce. I think that we've got to look carefully at these issues. Of course, the tax position in Scotland has a relevant relationship between the tax position in Scotland and the tax position in the rest of the United Kingdom, but so are the other commitments that people have access to, such as significantly lower council tax, such as free prescription charges, such as the fact that their children will get more early learning and childcare in Scotland than they will get in the rest of the UK, such that their children won't have to pay tuition fees if they go to a Scottish university and they live in Scotland. All the stuff about relative tax positions, some of the decisions of the United Kingdom Government for some people are completely incidental compared to the difference in council tax between Scotland and England on average. There's about a £500 difference in council tax between bandee council tax payers on average in Scotland compared to England, £500 lower in Scotland. There's got to be really dramatic changes in tax before you start deciding as a bandee council tax payer that you're going to uproot all your family circumstances to try to get some degree of income tax advantage when you then jettison a whole host of other benefits to which you have access. I set out that I'm going to air that debate about public expenditure and taxation because it's a rounded debate. We can't just have a compartmentalised debate about tax rates without looking at what's the whole public expenditure and tax proposition that people have in front of them because that will affect many of the choices that people make. Finally, for the record, of course I want Scotland to be an attractive place for investment and the record speaks for itself. Other than London and the South East, Scotland is the most successful location for foreign direct investment across the United Kingdom and has been so for I think the best part of the last 10 years, if not more. On the back of that, you have quite a large proportion of the Scottish business sector who, when the initial announcement came from the UK Government, was actually very supportive of a large part of the fiscal statement because of the fact that it was very focused on high growth and a low tax agenda, which was in contrast to many of the forecasts that we have in Scotland, which have seen fairly high tax, not necessarily with the benefits of good quality public services in the way that we would like, but obviously low growth. I come back to this question that the business community is asking, and some of our very senior business men and women, saying that we really do want Scotland to have the same focus as the United Kingdom when it comes to that low tax high growth agenda. What I'm keen to know is whether you feel that in the forecast that you will make for the Scottish budget that you can apply that same principle of policy so that people really do feel that Scotland is somewhere not only where they want to stay, but also to which they want to come. As you rightly said in the debate when we opened the programme for government, there are serious issues about the size of our working population. Yes, there are serious issues about the size of our working population, which is why I thought it was absolute madness for us to give up on free movement of EU citizens. If we had to leave the European Union, why we couldn't have stayed in a single market is absolutely beyond me, totally beyond me, because, as an act of absolute self-harm, it is beyond belief. Again, I come back to the fact that I've been around here for ages. In 20 years ago, Jack McConnell's administration was obsessed—I remember it vividly—by the danger of the decline in the working age population. I take my hat off to them. They were totally obsessed about it. They did all this work on the fresh talent initiative. Jack McConnell phoned me as leader of the SNP to ask me if I would support the policy so that he could get a good cross-party agreement for going back all those days. There was a lot of rancor between my beloved party and the Labour party at the time—how things have moved on. I gave him unreserved support. It was a good idea, and it made a bit of headway. In 2004, EU expansion took its place, and free movement of citizens was enabled, and our population started rising. If I think about the community that I represent, my son has just left primary school. A third of his class were the children of EU migrants, who came here 20 years ago, started working, came here as young people, met people, made their family life here, and their kids were making up a third of my son's school class. They boosted our population. We did not have to worry about our population for 20 years. We need to worry about it now, and it is completely and utterly self-inflicted. If we can have some thawing of the attitude about migration, it would be a great benefit. I cannot magic people up out of thin air. We can work hard to try to activate people who are economically inactive. Yes, I commit to that. We are doing good work, and great pathfinders have been undertaken in Dundee and Glasgow about the activation of economic and active people. We are still shorter people. That would help. When I go on, Liz Smith puts to me that there are forecasts of growth in the United Kingdom. That is not quite what we have got yet. We have got rhetoric about growth. We have not got any forecasts. The forecasts will come from the OBR, and that is what we will all have to wait and see what that adds up to. If I look at the mini-budget statement, the only thing in there that was about growth, the one single policy initiative, was investment zones. That was it. If the chancellor believes that the OBR is going to come along and say, yes, the investment zones are going to be the absolute dynamo, and that will deliver 2.5 per cent trend growth, I will say, well, good luck with that, because I do not think that that will be the case. I do not want to foresee OBR forecasts too much, but the chancellor will have to come up with an awful lot more of growth-related initiatives to substantiate an OBR forecast that would get to 2.5 per cent on the basis of what we are experiencing just now. Actually, if the chancellor wants to repair the public finances without spending cuts, the growth assumption will have to be higher than 2.5 per cent. And then, last but not least, forgive me for the length of my answer, convener. I am not really helping you with your time management, but there is a lot of really important stuff in here. I unreservedly accept the importance of the Scottish Government having an agenda that is about realising those economic opportunities that I have talked about in one part of the country in the Highlands and Islands from my discussions yesterday. We have got to take the steps to enable that to happen. On the housing question, I accept that we have got to look at what can we do to try to help that housing question. If I look at some of the issues that are raised, housing developers in the Highlands and Islands will tell me one of the biggest impediments to them being able to build new houses is what? Availability of people, because they just cannot find them. Mr Swinney, I do not disagree with you about some aspects of the workers issue. That is true, and I think that you and I share the same views about the Brexit scenario, but it is not by any means all about that. It is about differential tax rates. You were talking about housing there. The changes in stamp duty down south will benefit somebody who is buying a house down there to the tune of something like £20,000, whereas if we were not to make similar changes on the land and buildings transaction tax, it would make it more difficult. My concern is that there are other issues at play in Scotland that do not necessarily make it particularly attractive for somebody to live and work in Scotland. It is not just about the current budget scenario, which I agree that there are many issues, particularly as you rightly cite the lack of adequate forecast. That is not a new problem. That has been going on for quite some time if you drill back on what the Scottish Fiscal Commission and other forecasters are saying. That is why I am really interested in the direction of travel that the Scottish Government is wanting to set out to address the very significant issues of growth and productivity in our economy. It is not just about a Brexit issue. On the availability of people's question, it is fundamentally affected by Brexit. There will undoubtedly be other factors, but it is undoubtedly the key factor. As I said in my earlier answers, I think that we have got to make careful judgments about tax policy because we have got to be mindful of the legitimate issues that Liz Smith puts to me, but we have got to consider them in their proper perspective. That is why I cite the other issues about what are the total housing costs that are relevant. Property prices in England are higher than in Scotland, so people would have to be able to command much more substantial salaries to afford those properties if they were trying to buy them with a mortgage. You have obviously got the variety of other measures that are in place in Scotland that provide some degree of difference in the availability of public services in Scotland, whether that is about lower council tax or about the fact that you do not pay tuition fees or you get more early learning childcare or you do not pay prescription charges or whatever it happens to be. I have got to be careful consideration of all those questions. The final point is an observation on the mini-budget. The chancellor took decisions to change stamp duty on the basis of stimulating the housing market in England as a consequence. The chancellor has done enormous damage to the housing market in England because of the fiscal recklessness of the mini-budget and what it has done to interest rates. I am looking at stories in newspapers about people who were all set to buy their houses and they cannot now do it because the interest rates have gone through the roof. Those are young people full of hope about getting on with their life. With total recklessness, the chancellor has shattered all that. Forgive me for perhaps wanting to be careful about the tax decisions that I take because, on the basis of what the chancellor has done, a lot of misery has been created to people who were about to take big steps in their lives and they have just had it taken away from them. John Swinney, who will be followed by Michelle? The fact that we had a UK budget without OBR forecasts—I can say that it was a budget, whatever it was called—what is the risk of not having forecasts tied in with the budget? I think that we have seen that for the past 10 days. What have we had? We have had mortgage products having to be withdrawn from the market because they will be ffiscally unsustainable for lenders because of their expectations of where interest rates are heading. Therefore, you have market disruption. People who had a reasonable expectation of getting a mortgage at one level of interest rate perhaps now have to face double that interest rate, which has an effect on the capacity to borrow that those individuals would have. That has been followed by a perilous moment of collapse for the pensions market as a consequence of market uncertainty. The moral of the story is that the events of a week past Friday should never be repeated of essentially undertaking substantial changes in the fiscal envelope without appropriate forecasts to show how they are sustainable, because there is a direct connection between those decisions and the market chaos that the Bank of England has had to intervene to safeguard pensions. Let us just think about that for a moment. Mr Mason and I come from a political stable that has often had to set out our views on how we deliver sustainability in pensions, where the United Kingdom Government came pairlessly close to destroying the pension entitlement of thousands and thousands of people because of the recklessness. So, is your understanding that they had the forecasts that warned about those things ignored them and went head-n-away, or did they just not even look at the forecasts? I do not think that they could have had forecasts about the implications of their tax decisions. I think that what they had was forecasts of the condition of the United Kingdom economy and public finances. I understand that forecasts were made available—I understand that there is only some news reporting, I hasten to add—that some forecasts were available from the OBR when the Chancellor assumed office on 6 or 7 September. I do not think that forecasts were commissioned of the particular changes that were made by the OBR, but I am absolutely certain that forecasts would have been run within His Majesty's Treasury. His Majesty's Treasury would have told ministers the damage that would likely be done, and I can only assume that ministers decided to ignore that. It is totally irresponsible to do a budget without forecasts. Is that something that the Scottish Government would be allowed to do, or would even consider doing? Forgive me, I am not absolutely familiar with the statute as to whether we are obliged to have a—I think that we are obliged to have a—yes, we are obliged. I think that we are obliged to have that statute, and that is a good thing, and that is why we should do it. I invite Mr Mason to wonder what the outrage would have been if I stood up and said, I am not going to bother with a Scottish Fiscal Commission forecast, and I can think of some people that might have expressed outrage about that if I had done so. For the UK Government to do it—I have to be candid about this—if I was to ignore a fiscal commission forecast, it would not have quite the consequences of a UK Government ignoring a fiscal forecast or not taking a fiscal forecast or not doing the job properly, because we have now seen the damage that has been done, and our economic prospects have been set back very significantly as a consequence of that behaviour. Mr Swinney and I both spent hours and hours and hours considering the Scottish Fiscal Commission and how important it was and how its forecasts were so important, whether they should be independent or whether they should be part of government. It just absolutely amazes me that this has happened and that they did not take forecasts into account. Something else that Mr Swinney mentioned was interest rates, and I am just wondering whether you have focused on mortgages and things, but how do the interest rates going up affect the Scottish budget and what is the impact for us? The impact will essentially affect—I suppose that the best way to express it would be to say that it will affect the purchasing power of the Scottish budget in the years to come, because if we are undertaking future borrowing, if we are in any way co-investing in a proposition with other interested parties, which the Government does from time to time, that will obviously be a factor in the consideration. If we take, for example, some of the investments that our enterprise agencies might make or the Scottish National Investment Bank might make, those are invariably co-investment propositions, therefore the ability of other parties to co-invest, which we rely on so that there is a sharing of risk, might be jeopardised because of those factors. There is a variety of knock-on effects that we may face as a consequence. I had a number of housing associations in touch over the weekend, especially in relation to this week's legislation, but one of the things they said before the legislation came up was that they had already looked at cutting back capital expenditure in the sense of new houses, because, even without the rent freeze, they were only planning an increase of 5 or 6 per cent. One association told me that they were just stopping all new build, that they will only complete what they are doing, that they will do maintenance, that there will be no new build and that they are borrowing ready of 40 million for new build and that they have now cancelled that with the bank. Will that have an impact on our capital expenditure, because that is not so much us borrowing, it is trying to help other people? We are obviously contributing towards the financing of some of that new housing activity, but the fiscal model has got to be sustainable. It is an issue that the Government has got to be careful about in relation to the rent freeze questions and what implications it has. We have got to be open about any potential implications that come from that. Undoubtedly, it is an example of where there is an approach to co-investment, where we need other parties to be able to undertake ffiscally sustainable measures. If housing associations are to build less, that will be a saving on the capital budget, presumably for the Government, because they will not be wanting the grants that they could have had. I will come back to my answer to Liz Smith on the challenges that we face around realising economic opportunities. The housing challenges that we face are not just about the Highlands and Islands. The convener's constituency will face acute challenges in relation to housing availability and workforce, and the necessity to ensure that there is accommodation to contribute towards economic growth. The last thing that I want to see is any lack of constancy in the housing investment programme. It is not a capital saving that I would be particularly interested in pursuing. I mean, talking of capital expenditure, we had evidence from South Lanarkshire Council that, although we say that inflation is 10, 11 per cent, whatever it is, that in some capital projects they were facing 30 per cent inflation, for example, building a bridge because of the shortage of steel, primarily, which I believe comes from Ukraine. Do you recognise that kind of inflation figure, so it is different in different sectors? Without a doubt, yes. We have got to look with care at capital projects as to whether they can be—it is an issue that I am looking at all the time—as to what are the expectations on capital projects because of the disruption that is taking place to supply chains from Covid, exacerbated by the illegal invasion of Ukraine and all the disruption that comes from that, the impact of energy costs. All of those factors are putting pressure on capital project budgets, and we have got to be very careful in the management of those sums. Longer term, we have got a £3 billion limit, as I understand it, on borrowing for capital projects, and we are at about £2.1 billion at the moment. How do you see that moving forward, or do you think that that £3 billion limit can be revised? That would be the subject of—we would have to have necessary agreement with the Treasury about any revisions to those limits. Obviously, those are issues that we pursue with the United Kingdom Government. The final question that I was going to ask was about investment zones that have been announced. My concern about all of those things is that we lose tax for one and we have existing jobs moving from one area to another just to get those benefits. Can you say anything about those investment zones? Do we know anything about them? I have had a couple of conversations with the Secretary of State for levelling up on those questions. The United Kingdom Government is very keen that we develop a proposition in Scotland that is comparable to what has been taken forward in England. The Secretary of State has indicated to me that he understands fully the fact that many of the characteristics, aside from the national insurance contribution benefits that are contained, are essentially on devolved questions. I have agreed to explore what those zones might look like. Mr Mason puts to me some pretty fair points about the concept of investment zones and whether they generate—I suppose that is a critical question—real new growth. Or are they essentially providing for displacement? If they are only providing for displacement and there is an erosion of the tax value, then the growth estimates that the United Kingdom Government is putting out will not be realised as a consequence. I think that there are some very sensitive judgments that we have to make about that, but we are engaging in that discussion constructively with the United Kingdom Government. Pass on to Michelle, who will be followed by Ross. Thank you and good morning everybody for coming along. Just picking up on the point around investment zones that John Mason brought forward, it is good that some initial discussions have taken place. Do you have any initial concerns that monies will be made available for them that bypass the priorities of the Scottish Government with no proper accountability or scrutiny, as we have seen with some of the other levelling up-type funds and so on, that has been highlighted as a concern? Or have you got that far in your discussions yet? I do not think that there is a tale of money likely to come with the investment zones. I do not think that there is a pot that comes with it. There will be fiscal incentives through reduced national insurance contributions, which is an issue that is properly within the competence of the United Kingdom Government on the current constitutional arrangements. The UK Government is saying to us that it would like the concept to be extended to Scotland, but it properly understands that there are many devolved issues and it wants to proceed. I have no complaint about the nature and manner of the dialogue that we are having on that question. Then some of the judgments come down to some of the issues that Mr Mason has already raised with me. You have talked eloquently about last week's pretty disastrous fiscal event, and arguably too many politics and perhaps even the media were too hasty to view the wider economic landscape through the prison of London. That often happens. That budget or fiscal event talks to a culture of risk-taking. We saw it with the defined benefit pensions where liability lies with providers. In the financial times today, it has some stats about how much of the dwindling investment of UK pensions in the domestic stock market has been said that, as recently as the mid-1990s, pension funds allocated just under half of their assets to UK equities. That is a figure that has fallen to 15 per cent. The type of schemes that were caught up in the liquidity squeeze of last week is as low as allocating 3 per cent of assets to UK equities. That is frankly not a good sign where you have long-term patient capital vehicles reluctant to invest in their home turf and the alignment of that. My question to you is that one strikes me as a business opportunity for Scotland where you are signalling a very prudent approach, aligned with the Scottish National Investment Bank with long-term patient capital. Are you able to commit that all funding towards the Scottish National Investment Bank and indeed in long-term patient investment capital, you will do all you can to protect that and arguably even increase it, because it would be good if Scotland was seen as a place for some of those defined benefit schemes to invest where they are not going to invest elsewhere? It has always struck me throughout my involvement in many of those questions about the importance of investment certainty and to attract commitment to the market. If I look, for example, at renewable energy, for example, we have given absolutely cast iron policy certainty since 2007 of our commitment to renewable energy. I think that the reason why we have made such phenomenal progress on getting to a position whereby essentially Scotland's net electricity requirements are generated in their entirety by renewable energy is because we have given that certainty to the marketplace. I accept fundamentally the argument that Michelle Thomson puts to me. In relation to the Scottish National Investment Bank, the Government has given a long-term commitment to the Scottish National Investment Bank. Although I am not at the stage of defining particular budget numbers, the committee will understand that I am not quite at that stage yet, the Government is committed to the long-term supporting of the Scottish National Investment Bank and all its purposes. In all honesty, I cannot assure Michelle Thomson that I can insulate Scotland from the damage that has been done by the Chancellor's decisions and the investment uncertainty that has been created. Fundamentally, the pension funds that she talks about will look at the United Kingdom and the decisions of the United Kingdom Government. I am not surprised that they are all anxious and nervous about it because it has been a total fiasco since a week past Friday. I cannot overstate the damage that has been done on top of an already really volatile situation by this fiscal recklessness. I fear and am really worried that, in order to go from this veering off to this extreme to that extreme to create market certainty, the casualty will be public spending and the public spending that vulnerable people in our society depend upon. That is my big fear about where we sit today. Thank you for that. You have made that very clear both here and elsewhere. One of the other reasons why the markets were spooked was not just the lack of OBR look ahead but also the fact that it was intended to borrow vast sums of money to fund tax cuts. I had commented at the time that I wondered if the same people who were running gleefully to borrow money for that would press for an increase to the Scottish Government's borrowing powers, although we would immediately agree that the Scottish Government would be so stupid as to borrow money to fund tax cuts. However, in the light of that, will you commit to an increased emphasis on further proper, flexible borrowing powers for the Scottish Government? Because, again, this situation has laid bare the lack of fiscal resources available for you in the current economic climate. There are a number of issues in there. The first is that I think that there is a legitimate and proper space for borrowing for investment in our economy. We have borrowing powers. Mr Mason asked me if the value of those should be increased, and there is always an argument for that. However, I also would say that there has also got to be fiscal sustainability. When finance ministers are setting budgets, they have got to be able to be confident that we can service the debt that we take on. Borrowing for investment in the infrastructure of the country is absolute total common sense. We do it and we do it successfully. There is then the scenario of borrowing to deal with essentially the dynamics of change and fiscal shocks. We have a small degree of borrowing capability to deal with a Scottish economic shock. We have some fiscal flexibility about how much money we can carry over from year to year to deal with a Scottish economic shock, and we are using some of that flexibility just now to the maximum. It still does not stop me from having to reduce public expenditure to redirect £560 million of public expenditure from previously expected projects to meeting the in-year costs of essentially pay demands and inflationary pressures that are much greater than anticipated when the budget was set. I am planning on the basis that I have got to find probably about £700 million in this financial year to fund paydeals more than I anticipated, hence why I am having to make the changes that I am making. There is an argument for saying that in those circumstances where you have inflation, which is currently 9.9 per cent compared to 2 per cent when the comprehensive spending review was undertaken or even 5 per cent at the start of the financial year, there is an argument for us having some resource borrowing power to avoid us having to take some of the dramatic decisions that I am having to take, but we do not have that flexibility just now. I think that it would be helpful to have those flexibilities, but again I come back to my fundamental point. Those powers have got to be exercised in a climate of fiscal responsibility and sustainability in whichever way we are exercising those powers. Thank you very much. I am on record in this place of talking about corruption and reframing the loss of those moneys in GDP terms. People tend to look at corruption as crime rather than a loss to GDP and therefore an inability to fund the vital public services that we need. I have quoted in a speech that Conservative estimates put the loss of UK GDP of around £267 billion each and every year. That is from the likes of the National Crime Agency. Again, it is a short update if there has been any further discussions around the proceeds of crime. In terms of, prior to 2016, if it was less than £30 million, as I understand it, it was folded into the Scottish budget, and then, post 2016, nothing has ever come to Scotland's budget, as I understand it, because the UK Government has a different view regarding the fact that it should be deducted from Scotland's budget, whereas the Scottish Government sees it under the no-detriment principle. Given the loosening of regulation that is being trailed, that usually has a correlation with increased criminal activity—that is what we have seen history tells us that—have there been any further, more recent discussions around proceeds of crime? In my opinion, that affects Scottish international brand. We do not want to be associated with that. If not, will you undertake to look at that more closely, given the correlation between loss to GDP, which has an impact on Scotland as well? There are two points in there. One is that I think that we have got to be pretty realistic about the fact that I think that the mini-budget, far from fueling growth, has undermined growth. If we take the housing market alone, the disruption to the housing market will be significant as a consequence of what has happened because of the fiscal recklessness, so there is plenty of evidence of impact there. On the question of recent dialogue about the proceeds of crime, I think that I will need to write to the committee about that. It is a little while since I have dealt with that expressly, so I think that just to make sure that I can give the committee accurate answers, I better write to the convener about that. Thank you very much. If I can just ask one brief point of clarification. You set up very clearly, there Deputy First Minister, about the role of borrowing when it comes to investment, the role of borrowing when it comes to financial shocks, but we hear dialogue from different parties, my own included, as though borrowing is some sort of infinite possibility for public expenditure. Would you agree with my view that, by and large, in broad terms, borrowing should not be used for current expenditure, that it is there to provide that flexibility around shocks and indeed investment, but prudent financial management shouldn't be using borrowing to fund either tax cuts or indeed expansion in public spending in that way? Generally, that should be the case, yes. Thank you very much. I now just hand over to Ross. Thank you, and apologies, Deputy First Minister, for missing your opening statement. Each stage of my journey in this morning was delayed by the weather. Following up on the comment that you made a moment ago around the damage to the housing market, will the Government of Revenue Scotland in the coming weeks or months be in a position to issue revised projections for LBTT receipts, given the impact on mortgages? We obviously monitor the position very carefully. The data for transactions and volumes and tax generated are published on a monthly basis. The information will be available as to what has happened in relation to numbers of transactions and revenues. Obviously, if we decide to, in any way, change LBTT rates, that will be part of the projections that are undertaken. Obviously, information in that respect will be set out to Parliament. Thanks, I think that the live data is very useful. What I was asking more about was assumptions that the Government might make. Let's say that if we assume that there's no change for the purposes of those projections, assume that there's no change to LBTT policy, projections of long-term income from that tax based on any assumptions around the effect on the housing market. I'm quite sure that this month's data and next month's data will look bad, but there's a question for the Government there of trying to make some long-term assumptions for planning purposes and for how long that effect will be there and what long-term that effect will have, because that does then affect discussions around LBTT policy. There's an immediate short-term issue that Revenue Scotland might not realise our expectations. Equally, it might exceed our expectations, but there's a substantial interruption to the housing market going on just now, so I think that it's likely that there will be an undermining of revenues as a consequence. Obviously, the forecasts that we undertake are designed to provide as much certainty as we can about the implications of policy decisions that we make, so we will be essentially mapping out what those approaches to policy will be, securing projections on the basis of those policies and taking financial decisions accordingly. However, those factors are material to the performance of the budget. I have one technical question that I should know the answer to this already. How is the interest rates set for the national loans fund? I am conscious that in recent years, I think that loans have been less than one and a half per cent, but given the expectation of the resource that the Government is going to draw from that fund over the coming years, changes to that interest rate could have a relatively significant long-term effect, but I am not clear how that interest rate is set. I think that over UK borrowing costs is usually what flows through to the NLF. I can't remember off the top of my head, but it's a very small premium that we have managed to secure through the NLF on our borrowing to date. I'm not sure what the forecast is on that. Is that issued as UK Government debt, essentially, and there's a small premium? It comes in under whatever the cost of UK Government debt is, over five, ten or whatever, the years. That will increase given the time level last week. We can perhaps—it might be helpful if we're out to the committee—just to give absolute clarity about those details. That would be useful. One wider question. You might be aware of some of the evidence that we've taken in recent weeks from various stakeholders. As you would expect, everybody believes that their sector should be prioritised for additional public spending. Very few are willing to volunteer where that money might come from. Almost no one is willing to volunteer a cut in another area. Some organisations have come to us with revenue-raising proposals, so I commend unisons to you. They are some of the most specific proposals that I've seen in quite some time. Among those organisations that simply say, well, you can fund the extra spending that we think we need from tax increases, tends to be quite vague. It tends to just be a statement of, oh well, there are more tax powers to be used than are currently being used. I certainly interpret that in part to be down to a lack of familiarity with the data that is currently available on tax and spend in Scotland. For example, a lot of those organisations probably aren't particularly familiar with the fact that the ready recogners are published each year on income tax. They would certainly struggle if they were coming up with their own proposals around reform of LBTT or council tax, et cetera. How do you think that we can improve the quality of public debate and public knowledge? Amongst key stakeholder groups, not necessarily the public at large, but around the tax side of the equation at budget time? Otherwise, we will continue to be stuck in the loop that we've been in for a long time of everybody coming and asking for more money and saying what's simply up to Parliament and Government to decide where that comes from. How do we improve the quality of debate around actually raising that revenue? I think that there's a number of things that we have to do here, because I think that the way in which Mr Greer characterises a lot of the debate is entirely accurate. I've had various discussions in the course of my limited period of return to the public finance role, where people have told me to invariably use the reserves that are all being used, borrow, can't borrow, increase tax, can't buy a law increase tax, or finally get down the back of the sofa and see what's there. Those four options do not provide answers to the challenge that I face, which is hence my statement to Parliament on 7 September. I think that some of the answers to that lies in the points exchanged with Liz Smith in the programme for government debate and in our earlier discussion, that we really have to have in Parliament a totally realistic open discussion about the relationship between tax and spending. What we're prepared to argue for in spending terms, we've got to be prepared to argue for in tax terms. I use tax as a catch-all for tax, revenue-raising, level of borrowing, whatever the income side is. Let's have that proper discussion. I'm very open to that discussion because I'm not sitting here saying that there's easy answers. There's really difficult decisions going to have to be taken and we're going to have to have that open climate. A couple of things—I'm not sure that Mr Greer heard this from my opening statement—but there are two things that I'm doing this year that I hope will help in this respect. The first is that I have invited three significant economic voices to provide some commentary into our debate dispassionally. It's for them to construct their contribution. Professor Anton Muscatelli, Professor Francis Ruane and Professor Mike Brewer. I've asked them to add a briefing session with them last week and I've invited them to reflect on the issues that we are wrestling with. I suspect that the proceedings of this committee this morning will be quite a helpful reference point for them in considering those points. They will make contributions to the debate where they will set out some of the issues that we've got to consider. The second thing is that I expect that group to make a couple of interventions in the debate, but there will be interventions not to make—I've told them that I don't want recommendations. That's up to me to decide what to do and to put to Parliament. I want them to try to help inform commentary and discussion about this to be as dispassionate as possible. The second thing that I'm going to do is to open up a consultation process on the various challenges that we face on tax and spending. I'll publish a discussion paper to encourage public engagement on those choices on tax and public expenditure, and I'd expect to do that sometime around about the timing of the emergency budget review. Just around what the Government's latest expectations are of the effect of fiscal drag this year on income tax receipts. Obviously, we're looking at all of those questions as part of assembling our judgments about the position that we have to resolve in relation to our tax proposals around the budget. We'll obviously set that out to Parliament as part of the commentary on the budget and the judgments that we think are relevant that time. Deputy First Minister, I just wanted to go back on investment zones. It sounded like you're not fundamentally against it, but you just need to see a lot more detail and description from the UK Government. Would that be fair analysis? The UK Government would like to see the idea rolled out across the whole of the United Kingdom. It can provide essentially a foundation for it in the national insurance contribution concessions that are made, but some of the detailed specific provisions that are in the English guidance document, which I've had a look at, are essentially devolved issues, and they're mostly around about some planning and environmental considerations and a variety of other questions. The UK Government is engaging us properly on the substance of those. The issues that I would have are rehearsed some of them with Mr Mason. I think that we've got to be careful about some of those questions about effective displacement, as to whether it is actually generating new economic activity and other alternative ways in which we can support that. I assure Mr Lumsden that we're engaging in that process in a constructive spirit, and the UK Government is engaging constructively with us on that as well. That's good to hear. I would imagine that there's quite a lot of similarities between the new investment zones and the free ports. Has there been much work done by the Scottish Government yet on free ports and whether that will just be displacement? Will it be new growth and the cost of the Scottish Government that that having a free port model might bring? Those are some of the same and relevant issues that apply. We're still in discussions with the UK Government about the agreement that was reached before, which was for there to be two free ports in Scotland. I'll bear in mind my point about displacement. If we have too many of those things, it's just all swirling around. I think that Mr Lumsden understands the point. Absolutely. Would it also be the same argument about some of the benefits that would be devolved benefits and the impact on your budget from that? Potentially, but they flow into the level of growth that we can assume within Scotland and along with a range of other factors. The next question that I had was about air passenger duty, because that was an area that could potentially be devolved. Is that still something that the Government is looking at or is that something that you're moving away from now? The last discussions that we had on this were some time ago because of some of the challenging issues around the devolution of air passenger duty. From my knowledge, those issues have not been yet resolved? Bent it being devolved, is that correct? Last question that I had was about national care service. The Deputy First Minister said that it's really difficult financial times just now. Is that one area that you're looking at again? Is it the right time to introduce that extra layer? As a committee, we hear quite a lot of evidence from people who say that it could add an extra layer of bureaucracy and that now is not the right time to do it. Is that something that you'd consider delaying or is it definitely something that you want to push ahead with? The Government's taken forward the legislation on the national care service and we're developing those propositions. Obviously, there's a lot of consultation and dialogue going on on those points. Fundamentally, we've not really got into today's specific funding decisions about particular areas of policy, so I wouldn't want to give commitments on particular decisions that the Government is making on any aspect of policy, other than to say that what we've committed to doing, we intend to fund, but it all has to be ffiscally sustainable. That's the challenge that I'm wrestling with in this financial year because we've had a number of significantly increased costs in this year through pay deals principally and the loss of value through inflation, so we've got to make sure that all of our current delivery of the budget is ffiscally sustainable and we've got to make sure that future years are ffiscally sustainable as well. Do we have updated costs on the national care services? Is that something that will come through in the legislation that's going to be provided? That will be set out in the financial memorandum that's associated with the bill. Thank you very much. Clearly, my comments about time discipline have instilled a remarkable discipline upon the committee. I think it might even be the first time anyone has ever followed my lead, but it does mean that we have some time for some supplementary questions. I was just going to invite Liz to ask a supplementary question. I have one or two, but indeed if other committee members have any supplementary questions, we do have time in hand. Thank you, convener. I was interested in what you said in response to Mr Greer about the need for a grown-up discussion within the Parliament about what we bring in through revenue and what we spend. I don't think that there's any doubt, Mr Swinney, that increasing transparency and accountability in this Parliament was absolutely essential. I think it was two weeks ago that we had witnesses here who were very keen on that idea. In fact, a couple of the witnesses were suggesting that we should have a finance bill to try to enhance that process. I'm interested to know your views on that, because it comes on the back of the national performance framework, which is obviously centre stage to Scottish Government's delivery. We've had a lot of debates about how easy it is when you have specific policies within the national performance framework to measure the outcomes. How easy is that process? I could ask you if you are minded to be fairly favourable towards the idea of a finance bill that could help to enhance the scrutiny and openness. I don't think, convener, that at any stage in my answer to Mr Greer did I use the words grown-up? I think that I possibly argued for a more considerate discussion, but I'm all for that. I don't mean disrespect to anybody, because I'm as much a player as anybody else, but we probably need to have a bit more of a considered debate in Parliament about some of those questions. I give the committee the assurance that I'm going to endeavour to try to do that through my stewardship of this brief, hopefully for a very short period of time, if the finance secretary happens to be listening into this session. I've tried to demonstrate that by coming to Parliament with a statement on 7 September, which is not a statement that I was required to make, but I made it because I felt in the interest of openness and transparency that I should tell Parliament what I was doing to wrestle with the in-year financial pressures. Normally, that would all be done in the autumn and spring budget revision process. That doesn't attract an awful lot of attention. There are some really substantial issues that we're wrestling with, so I do think that there is a need for us to have that open, considered discussion. Whether we need more legislation to do it, I'm not persuaded. I think that going back to what we've talked about about the existing legislative framework on the Scottish Fiscal Commission, I think that that puts some pretty substantial obligations on Government to adhere to the contents of the legislation and for Parliament to be informed by the Fiscal Commission of its conclusions and its views. I'm very happy to consider any further points and references that can be relevant. The connection to the discussion about the national performance framework is an interesting one because I accept that it is difficult to look at a pound in the budget and just follow its journey into the national performance framework. It's possible to look at the national performance framework periodically and say, do we think that public expenditure and policy decisions are supporting the achievement of this direction of travel? If not, what do we need to reshape about public expenditure to enable that to be or policy to enable that to be more the case? It's a difficult process to establish a direct connection between public expenditure and outcomes. A fair conclusion would be to look at decisions on public expenditure and, for example, come to the conclusion, do we think that the Government is doing enough to support early intervention and preventative measures? If the Government is spending all its time running around picking up the pieces of things and not actually leaping away upstream and trying to avoid problems that are occurring, that's a pretty big debate for Parliament to have. That would probably lead to changes in how we spend public expenditure to go back to Mr Greer's point. There isn't often a queue of people saying, oh please take money away from me because it could be better spent over there, but Parliament could always have that decision and agree collectively, actually, we could do with let's take early intervention. I'm a firm believer in early intervention, that's why we've got the investment that we made on early learning and childcare to expand to 1,140 hours. Cabinet came to the conclusion that we needed to take a bold decision to alter the life chances of children in our society. The same rationale affected the decision to embark on the Scottish child payment, so we took big, bold policy and financial decisions with financial implications and put them into the budget in the hope that they help to narrow the attainment gap and that they help us to erode child poverty. I would argue that there's real benefit in those policy decisions but they've come at a price in terms of the cost of the budget and Parliament obviously is welcome to air some of those questions as we proceed. If I may just ask a couple of supplementary questions, one which follows on. Indeed, just offer one brief comment. You're absolutely right, Deputy First Minister, it's difficult to follow a pound from the budget through to national performance. I'd also gently submit that it's quite difficult to follow a pound through to even kind of the out turn and I know the Government has announced some changes to some of the processes but I mean I think for our grown-up and candid discussion being able to follow the pound as effectively as possible, which isn't always easy, I think, is important. More specifically on preventative spend. Some preventative spend is difficult because it takes many years to actually follow through. Some is a little bit more immediate. We had very good evidence in our evidence gathering from engender making a plea for investment in social care, both because of the gendered impact that that can have with women representing a disproportionate proportion of the social care workforce. We also know in the most recent figures in July, although I think there are more numbers out today, that there were 55,990 days spent in hospital from those people whose discharge was delayed. I was just wondering, does the Government have a view of what the cost of that is? Indeed, is it undertaking a cost benefit analysis of what the impact might be if you increased pay of social care workers and thereby reduced the number of vacancies? Is that the sort of work that will be undertaken in advance of the budget? There are a couple of really significant issues in there, convener. On the following public expenditure to outturn, I am happy to look at what further information would be helpful in that respect, but from budget proposals to budget enactment to then autumn revision and spring revision to outturn, there are quite a number of steps that are set out there. I appreciate by the time it gets to outturn, the numbers are quite high level, but inevitably there are large numbers of budgets that perform as we expect. Some go either side of our expectation and we try to display that information by the revisions that are made at autumn and spring and ultimately report on that in the outturn, but if there are changes we can make there, I am certainly happy to engage on those questions. The second point that you raise in relation to social care is a fundamental issue. The level of delayed discharge is way way too high and it is a source of enormous concern to ministers. We have taken a number of steps and have taken forward a number of discussions to try to resolve that, including a lot of dialogue with local authorities to tackle that. Fundamentally, the problem of delayed discharge is a product of at least two factors and it may be a third. Of the two I am certain is that we are not, our systems are not yet proactive enough and sufficiently preventative to support people at home to avoid them getting into a position of having to go into hospital. There are various, there's lots and lots of good work goes on around the country of low-level care packages, delivering support to people just enough to keep people in their own homes and to keep them supported and there's a whole variety of public and third sector support services that assist people in that endeavour, but I would have to accept that there's probably not enough of them resulting in some people being admitted to hospital who really we should be able to support in home to avoid them getting there in the first place. Once they get there, when part of the problem with A&E waiting times is because our hospitals are congested in general, which means that some people are coming in the front door of A&E that shouldn't be and some people are not who need to come in the front door of A&E and need to go out the back door of A&E into the hospital, can't make that journey quick enough because the hospital is congested with people who really should be out of the hospital and back home and they're not at home because we don't have sufficient capacity in care packages to support people who might need higher volume care packages to be supported at home than the people I talked about in the other category who might just need very modest amounts of social care support and what is all that about I don't think it is about the third thing which I'm debating in my mind is the availability of money because actually for once I don't think there's a shortage of money in social care the issue is shortage of people and that then comes back to a point where we have lost a lot of people from social care, if I think about my own community that I represent, a lot of people delivering social care were people that had come in from other countries and were providing that support and a lot of them have gone away and the other issue that I have to for completeness recognise is your point to make convener which I acknowledge you have made on many occasions in parallel to the debate is that social care salaries may not be high enough to attract people in making choices between different areas of economic activity and we've obviously undertaken a local government pay deal which has been designed to strengthen pay for those at the lower end of the pay levels and I hope that might help us on that journey but we've got to remain open to the legitimate issue you put us. I've got indications of supplementary from Douglas and Michelle, can I just ask just before that though a brief clarification just in terms of the response to the many budget on the 24th that you've committed to making, you alluded to the fact that there is some ambiguity around actually what the consequentials might be indeed. Spice I believe have published some analysis of what that might look like and what it certainly the indications are from that work is that in this current financial year the consequentials might be as little as 35 million but depending on what the government might do in its latter years. So first of all does the Scottish Government have a view of what the quantum might be both this and next financial year and secondly strikes me that there's a question of priorities. Does the Scottish Government could seek to reverse some of the decisions that it made early in September? It might seek to replicate decisions of the UK Government or it might seek to do targeted things with it may be limited but the additional money it may or may not have. Do you have a view of which of those three should be the priority just in terms of setting an expectation of what may or may not happen in your statement on the week commencing on the 24th of October? I think that we should be clear. I wrote to the committee yesterday with a revised assessment from Her Majesty's Treasury of the estimate of the impact on Scottish block grant adjustments arising from the UK Government's income tax and stamp duty land tax policy changes and that indicates a potential positive block grant adjustment of 35 million pounds in this financial year which assumes that we do not make any changes to land and buildings transaction tax within this financial year in relation to stamp duty. Now, as I've said to the committee already, I think that the disruption to the property market will put a great deal of uncertainty over those numbers. In relation to the emergency budget review, the purpose of the emergency budget review, which I commenced before the fiscal event, was essentially to explore what more the Scottish Government could do in targeted support to assist people who are facing financial challenge. That remains the purpose of the exercise. I've been looking with care at the UK Government's changes to income tax and stamp duty land tax. My thinking at this stage is that, given the turmoil that we're experiencing, given the importance that's attached to an orderly process of forecasting, that any tax changes should be made within the normal budget process that the Scottish Government takes forward. Thank you very much. That's very helpful. I'd like to hand over to Douglas for a supplementary question. The resource spending review mentioned quite a lot about public sector reform. When will we start seeing a flavour of what that's actually going to mean for Scotland? Obviously, there's a number of steps under way under the Covid recovery strategy, which envisage a great deal, essentially a focus on person-centred delivery of public services. That requires a great deal of alignment of activity from a range of different organisations. The work on taking forward that approach is very much a constant part of the policy agenda that we've taken forward with our local authority partners and with the National Health Service and other players. That's about reforming the way in which we deliver services so that we support people more directly rather than essentially relying on people to link up public services themselves. The second area that I would highlight is that we're looking very carefully at the functions of different organisations. Colleagues have set out to Parliament some of that work, whether that's in the field of education or skills, or the work that's under way in relation to the national care service. Lastly, we have the work that I've highlighted in the discussions that we've had at committee this morning about the public sector workforce and the range and selection of tasks that we expect to be undertaken as part of ensuring that the public sector is appropriately sized and equipped to meet the challenges that we face. It's in a case of little snippets here and there, as opposed to a big bang approach where we see a total change to the landscape. If Mr Lumsden is waiting for me to announce a reorganisation of local government boundaries, I shall save him the worry if he's worried about that, that that won't be part of what we're looking at. Once I complete this session of the committee, I'm going off to take part in a cabinet sub-committee on joint priorities with local governance, so many of those issues feature in that discussion. Indeed, I think that we've had enough of big bangs from finance ministers in recent weeks. It's not often that I get the last word in any of these sessions. I'm looking here at four men on the panel, but I'm really reminded that significant structural inequalities still remain in the economy for women. Covid's had a big impact. The cost crisis has had a disproportionate effect. I'm mindful of the fact that closed gaps suggest that, if the gap was narrowed, it could add £17 billion to the Scottish economy. I strongly agree that equality must be seen as an economic issue and not an equalities issue. If you will give a commitment today to test every element of what you bring forward for the Scottish budget as to its impact on women in terms of contribution and by reduction. I reassure Michelle Thomson that although she is faced by a quartet of men today, on any other day, if the director general, ex-checker, chief financial officer, had been with me, the panel would have looked remarkably different. To reassure Michelle Thomson that we have a very appropriate level of gender balance across the Scottish Government if we don't have it in the panel today. Indeed, if the Minister for Finance was actually here, it would be very different as well. I will give that other encouragement for her to come back to her role as quickly as possible. To be absolutely serious, I unreservedly accept the points made by Michelle Thomson about the importance of assessing the impact of budget measures on women and on a variety of different groupings and considerations within our society. We are very fortunate in Scotland of having the Scottish Women's Budget group who have been very much involved in the budget and financial planning work of the Scottish Government for many years. When I was finance minister in the past, I know that the Government has good dialogue with and I will meet the Scottish Women's Budget group as part of the dialogue that I take forward on the budget. I will listen carefully to the representations that they make as I do to arrange a different organisation. It is important that we… In the construction of our budget, it is important that we take adequate account of the impact that it may have on different groupings and particularly on women in our society. It is probably even more important that, if we have to take tough decisions during a financial year, we pay particular attention to those issues as well, because to avoid getting into the situation of creating any impact that would in any way be negative in that process. Thank you very much, Michelle. With that, I was quite pleasing for me that, as we approach 11.20, and according to my schedule here, I can report that we are on time. Certainly, while it might not be quite true to say that we are on budget, we have certainly been on the budget this morning. I thank the Deputy First Minister for his contribution this morning and, indeed, for the support of his officials with him. With that, we now move into private session. Thank you very much.