 The next item of business is a statement by Derek Mackay on the provisional outturn 2016-17. The cabinet secretary will take questions at the end of his statement and so there should be no interventions or interruptions. I call on Derek Mackay, cabinet secretary, ten minutes please. The opportunity to update Parliament on the provisional budget outturn for the 2016-17 financial year always a crowd-puller, as you can see. Before I do so, I would like to address the outcome of the recent UK general election as it relates to public finances. It will be important for us to take time to consider the opportunities and challenges that flow from this and be ready to respond. I will consequently urge my counterparts in the UK Government to end austerity given its impact on our economy, our public services and our communities. There will inevitably be budget implications for us to manage in future years from a new UK Government and not least the £3.5 billion-worth of cuts previously announced. I will now turn to the provisional outturn for 2016-17. Financial year 2016-17 represented the first year of the 2015 UK spending review settlement that saw the Scottish Government's discretionary budget continue to fall in real terms. It also represented the first year in which the Scottish Parliament became responsible for setting income tax rates and bans alongside the setting of rates for landfill tax and transaction tax. The prudent and principles-based approach that my predecessor took to taxation is one that I plan to replicate over the course of this session of Parliament. Under the current devolution settlement, the Scottish Parliament is not permitted to overspend its budget. As a consequence, we have consistently adopted a position of controlling public expenditure to ensure that we live within the budget caps that apply, but remain able to manage a limited carry-forward of some resources for a future year. That prudent strategy has proven to be the right one. Back in February, I outlined an additional funding package to be made available in 2017-18 that was subsequently approved by Parliament. At that time, I set out how that package was to be funded, including the use of an additional budget exchange. I have also made clear that, as we reach the end of the financial year, the precise figures will become more certain. I can report to Parliament today that the commitments that I made in February have been fully funded. I can report that, within our discretionary budget, the fiscal departmental expenditure limit, fiscal dell, the provisional outturn for 2016-17, is expenditure of £29.7 billion against a limit of £29.9 billion. That represents a carry-forward of £191 million into 2017-18. In total, there is a fiscal dell cash carry-over of £98 million in resource spending and £40 million in capital spending. There is also a provisional outturn carry-over of £53 million in respect of financial transactions that, through a rule set by HM Treasury, are ring-fenced for loans and equity investment outside the public sector. Overall, including financial transactions, that means that we will be carrying forward 0.6 per cent of the total 2016-17 cash budget. Those cash sums are carried forward in full, using HM Treasury's budget exchange facility, ensuring no loss of spending power in Scotland. The Scottish Government has once again demonstrated a sound grip on the public finances. Turning to the non-discretionary elements of our budget, the non-cash dell provision, which are among Parliament again, are ring-fenced for a very narrow range of purposes and cannot be used to purchase goods or deliver public services. Based on the provisional outturn position, expenditure is lower than budget by £108 million, which is consistent with previous years. As the description suggests, those resources are not cash in nature, rather they provide very specific budget cover for differences between estimated accounting adjustments and the final amounts that are calculated. The budget includes the depreciation and impairment of assets, which have no cash consequences. Finally, I turn to devolved taxes. I am pleased to inform Parliament that our tax take is up. A total of £633 million has been collected in 2016-17, which represents £61 million more income than was delivered in the previous financial year. That is 2015-16, a rise of 10 per cent, slightly lower by £38 million than original estimates in December 2015 suggested. The devolved taxes figure, alongside other figures reported today, are provisional and, as such, are subject to the final audit process. Revenue Scotland will confirm final figures when publishing its accounts and the devolved taxes accounts in September. You may recall that I announced £74 million of surplus tax receipts from 2015-16. At this time last year, I decided to take a prudent view on the deployment of those resources, recognising the impact that decisions outwith my direct control can have on property transactions and the need to manage potential volatility in future tax revenues. Since then, we have seen increased volatility brought about by Brexit and recent actions of the Westminster Government. The £74 million will therefore remain held in reserve, available for deployment in the future to address any shortfalls on tax receipts. On income tax, in accordance with our agreement with HM Treasury, that has been funded in full in line with the forecast. That represents a transitional arrangement as we move to the full devolution of income tax from 2017-18. This statement of 2016-17 provisional outturn reflects the position against HM Treasury, budgetary controls and will be followed by reporting on the final outturn against 2016-17 budget act limits in a suite of annual accounts, which together report on the total Scottish budget approved by the Scottish Parliament. The annual accounts of the Scottish Government and the individual bodies funded from the Scottish budget will report on their expenditure compared to the allocation by the budget act. The annual Scottish Government consolidated accounts on a statement of total outturn for the financial year 2016-17 against the final budget for the Scottish administration as a whole will be provided to the Scottish Parliament later this year. As we work through a period of considerable sustained uncertainty for individuals and businesses, it is incumbent on the Government and Parliament to demonstrate strong leadership in managing the public finances. The continuing competence that this Government has taken to the management of public finances has once again been demonstrated in our management of the 2016-17 budget. Our prudent approach has served as well. I therefore commend today's figures to the Parliament. The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions after which we move on to the next item of business. They will be helpful if members who wish to ask a question would press their request-to-speak buttons. I thank the cabinet secretary for his statement and for advance sight of it. The cabinet secretary in his statement once again claimed that the Scottish Government's discretionary spending power, fiscal del, had been cut. However, that contrasts with the view of the highly respected and independent Fraser of Allander institute, whose own analysis shows that the total Scottish Government budget being higher now than it has ever been in the past. In relation to fiscal del, there has been no real terms cut in that aspect since the SNP came to power in 2007. In relation to the detail of the statement today, I have two specific questions for the cabinet secretary. First, in his final budget for the current financial year, in what was an unprecedented move, the cabinet secretary included a figure of £125 million in spending drawn from underspends in the last financial year. Can he confirm today that the total underspend that he is announcing in cash of £98 million in resource and £40 million in capital includes that figure of £125 million already announced and already committed? If that is the case, does that not mean that there is much less new spending money available to spend at this stage than there was in previous years? Secondly, the figure for devolved taxes collected at £633 million is some £38 million below estimates. How much of that total comes from the shortfall in lands and buildings transaction tax? Is it not now time for the cabinet secretary to start listening to all the voices that have been telling him for years that LBTT rates on domestic properties are set too high at the upper bands and he would raise more money and help to stimulate our flagging economy if he were prepared to take action and lower them? I suppose that, in response to Mr Fraser, we have had a number of disagreements about Fiscal Dell and about UK Government support. I can also cite the Fraser of Allander institute and I think that that is just a debate that we are repeatedly going to have, but I would again make the plea to UK Government that they should change course on their fiscal policy. It is something that the chancellor suggested that he would do, but already seems to have U-turned on that position over the course of a matter of hours. Something seems quite popular in the Tory party at the moment on U-turning the position. On the budget exchange that I identified over the course that I have announced today, I reiterate the budget exchange position that I outlined over the course of the previous budget negotiations and work through Parliament. The figures are, as I stated, and I build on the figures that I gave to Parliament previously. I recognise that those figures are provisional figures. On the question about devolved taxes, it is now subject to some final confirmation from Revenue Scotland that I am sure Mr Fraser would understand. On the subject of U-turning, I am interested that the Tories appear to be demanding that I collect even more tax from the taxpayers of Scotland. You want me to collect even more tax having increased the tax take that the Parliament and the Government has done through our policies. On attacking and criticising the methodology, it is not a precise exercise in the forecast, but we have been within a very accurate range. If I can give the figures, we have generated more in terms of taxation, so we were able to have £484 million in 2016-17. That is, of course, an increase in terms of what we had from the Scottish landfill tax. That was an outturn of £149 million. On the modelling, we, if you look at both years together, the aggregate forecast over two years. The forecast over two years was £919 million, and the actual outturn is £909 million. That is a variance of 1 per cent. Recognising that the equivalent tax in the UK SDLT, its variance over the two-year aggregate was some to cast assessments that we have made as the Scottish Government, where it is very reasonable indeed. To the point about market share and the upper end of the market and land-building transaction tax, I would point out that market share has been fairly consistent. When I have looked at the evidence here, I have come to the conclusion that there is not such that behavioural effect that Murdo Fraser has suggested. There is, but I will continue to monitor that issue. Of course, we will look at the Scottish Fiscal Commission forecasts as they take up that issue and their statutory functions. Kezia Dugdale. I thank the cabinet secretary for early sight of this afternoon's statement. I share his desire to see the UK Tory Government abandon its austerity project, knowing the damage that is done to our communities, our public services and our economy. What is shame therefore that we have spent the last year watching this cabinet secretary take that Tory austerity and pass it on to communities across the country? The out-turn statement shows that an £85 million underspend in the community's portfolio, whereas the Government has the capacity to alleviate that austerity and a £76 million underspend in education and skills, which we are led to believe is the Government's top priority. Can we therefore explain to families struggling to make ends meet, watching their kids be taught by volunteers in our schools, why they are missing out on this much-needed help now? What the Labour Party proposed to do that the Scottish Government did not support was passing on austerity to individuals by way of a basic rate tax increase, and that is not a position that we supported. However, in relation to two very specific questions that have been raised around the budget exchange and the variance, I want to make absolutely clear first of all in the community's budget that the impression that was given around support for vulnerable communities in our social security position is not one reflected by the fact. I think that it is helpful when I am able to give detail on why there is variance. That is specifically around not necessarily the social justice and regeneration area but more around the housing lines. Within that, it is not as a lack of resource being spent on housing. There is, we are meeting our housing targets in terms of more house building, but it is in very specific areas, sometimes in demand-led areas, whether that is area-based schemes on heaps, home energy efficiency applications, and of course we want to encourage that or help for homes equity loan schemes as well or in other loan schemes where it has been made available. However, on some occasions we have been struggling to attract applicants, so of course we want to do more around that as well as, for example, the regeneration capital grant where we have made resources available, but sometimes, for example local authorities, may not be able to identify the underspend until later on in the financial year. My point is that those resources are not lost but can be carried forward, but that is certainly not a case of a lack of willing to spend to support our most vulnerable communities. I say that it is very specific lines within the housing brief rather than social security or social justice or regeneration, but, of course, we want to encourage that uptake of the on-education. Again, looking closely at the variance, it is a fraction of the overall spend on education, of course, over £2 billion spent on education. On the individual budget lines, again, some of that is demand-led, but if people do not apply, if they do not come forward for that support, then the actual spend and actual out-term will be less. There are other areas, such as in the various attainment funds that are multi-year spend. We have made a commitment around £3 quarters of £1 billion. That will be spent over the three-year period, over the course of the parliamentary period, as I should say, as set out in the programme for government. We will achieve that, but some of those schemes have taken time to establish and then deliver an out-term, but we are absolutely committed to spending those resources. I have touched on other demand-led budgets such as those within Skills Development Scotland, where the resources are made available, but it is based on those who are willing to come forward to secure that funding. Those are examples of some of the variance, while we fund the education system in Scotland as a priority. That is why we made it a priority in the budget to spend £120 million allocated to the pupil equity fund through the Scottish attainment fund. Are there a range of actions that we are taking to support education? I have 10 members wanting to ask questions. I say the usual thing. No preambles, questions please. Cabinet Secretary, it would be very helpful if you could have succinct answers, and together we might all get through 10 questions. I call Stuart McMillan, who is going to set an example, followed by Liam Kerr. Thank you very much, Presiding Officer. The Cabinet Secretary spoke in the statement about the volatility that is brought about. I set an example. That means that you start with a question. Regarding the volatility, what measures will the Scottish Government take to support economic growth and help Scotland to weather the economic shocks caused by Brexit and failing Tory policies? Cabinet Secretary? I will take a range of actions around our taxation policy, our leadership and interventions with UK Government, securing the best possible outcome for Scotland in relation to Brexit negotiations, and other funds that have been announced such as the Scottish growth scheme and continuing to support agencies such as Scottish Enterprise to support Scottish business. Liam Kerr, followed by Jackie Baillie. In relation to the shortfall in LBTT rates, what is the split of the £38 million loss between residential and commercial sales? The cabinet secretary has already downgraded the amount raised by LBTT once. Does he accept that he will be forced to do it again? Cabinet Secretary? I do not have the figures to hand on the split between commercial and residential, but Revenue Scotland will report on that later this week. I have explained that we have increased the tax take, and I have also explained here and previously that when looking at the methodology and the forecasting, it is not an exact science, but you have to take into account the economic conditions at the time. We have done that in the budget process so that we can reflect on those forecasts and make sure that we have an accurate forecast going forward, and that has certainly been a robust process. I have already given the variance, which I think compares very favourably to the UK Government, the OBRs figures, and that will of course be a matter for the SFC going forward. Jackie Baillie, followed by Patrick Hardy. Will the finance secretary confirm yes or no what he fell to clearly do to murder Fraser that the £125 million used in the budget is contained within the £191 million underspend today? Given that it is a one-off, not recurring funding, does that mean that, before the finance secretary does anything else, he needs to find the £125 million to plug the gap for next year simply to stand still? Cabinet Secretary? I have said that the figures that I have announced today are upon the discussions that I had around the budget. I have also pointed out previously that those figures of budget exchange are not recurring, and that is why we were fully transparent about that and setting the budget for 2017-18, so that should not come as a surprise to the chamber. Patrick Harvie, followed by Willie Rennie. Thank you. I am grateful for the advance copy of the statement. Is not it clear from taking the statement together with the research that was published by SPICE yesterday on local government finance that, while green pressure successfully resulted in a 1.5 per cent increase in local government funding in the current financial year, it is not enough to make up for the cuts that came before? Is that not a priority going forward to go from flatline or small increases to reversing the historic cuts to local government funding? Cabinet Secretary? I suspect that the debate is moving from provisional outturn into wider budget negotiations and wider budget positioning. I believe that the budget settlement for local government was a strong and fair settlement. It also gave local authorities the ability to raise taxation locally as well, so I continue to have the opinions that are strong and fair settlement for local government, as evidenced by many of the budget decisions that local authorities were able to take earlier this year. Willie Rennie, followed by Marie Todd. Does the finance secretary understand that people will be surprised by his two-faced approach on this? He described that a £67 million cut to his budget is unnecessary and damaging austerity, yet when he himself cut it by another £191 million, he calls it a sound grip on the public finances. How can £67 million be damaging yet £191 million be sound? Cabinet Secretary? I have explained that taking into context the carry-forward is reasonable. I think that putting it into context in terms of the UK Government or the Welsh Government, it is actually less than a percentage of a carry-forward that either the UK Government has or the Welsh Government has. I think that it is sound financial management. We will never get the precise figure exactly on the budget cap, but what we failed to spend in one year is carried forward to next and no resources lost to Scotland, and that was not always the case by Governments in this Parliament. However, it is the case of the SNP Government that we do not lose a single penny and it is carried forward into the next year. Marie Todd, followed by Dean Lockhart. Thank you for the sake of context. Can the cabinet secretary tell me what the current percentage underspend is under the Labour Government in Wales and the Tories in England? I have let it be a wide-ranging debate. What a timely question, Presiding Officer. What a timely question. Our figure represents 0.6 per cent in Wales. Labour-led, of course, the figure is 0.9 per cent, and for the UK-led by the Tories, the figure is 0.7 per cent. Dean Lockhart, followed by John Mason. There has been an underspend of £76 million in education and skills. Can I ask the finance secretary if the significant cuts in college places, as highlighted this week by Audit Scotland, is another reason for the underspend in the area of education and skills? Can the cabinet secretary confirm that he is not allowed to overspend and therefore he is effectively required to underspend and that many businesses, charities and other organisations would be delighted if they could come within 0.6 per cent of their budget? The point around the ability to overspend is correct. I was asking for short answers. That is getting better. James Kelly, followed by Ivan McKee. Since the cabinet secretary likes to be precise about figures, can I ask how much was the underspend in the housing budget and does he agree that such an underspend is unacceptable when we have homeless people sleeping rough on our streets? Cabinet secretary. I was trying to be helpful earlier on to Kezia Dugdale when I was able to express the overall portfolio of communities, social security and equality. Just a wee minute. I cannot hear, because there are a couple of members having a wee to do with each other. I will not name them, but I think they know who they are. Sorry, cabinet secretary, continue. Yes, Presiding Officer. I was just saying that I was trying to be helpful in addressing the variance in that particular portfolio around communities, social security and equality. We are housing rests. There was not an issue around how we are supporting our vulnerable communities. I was identifying some of the very specific housing funds, particularly around heaps, where there was an issue about take-up of some of the schemes. It is not the case, as James Kelly has been suggesting, that there is a substantial underspend in homelessness or any of those areas. I hope that I can allay your concerns that is the case, and that the variance that has been identified is in other areas. Would the cabinet secretary agree with me that I carry forward of only 0.6 per cent represents prudent financial management of the country's finances? Cabinet secretary. Yes, I am tempted to agree with that statement. It sounds as if the entire chamber agrees with that statement. If I can just make one quote, the Auditor General's report has pointed out in the past that the Government has effective management, and the Scottish Government has a good record of financial management. I agree with the Auditor General as well. Thank you very much. That concludes questions to the cabinet secretary and everyone who has questions. I thank you all for your efforts. Before we move on to the next round of business, I will suspend for a couple of minutes and let front benches take their places. Thank you.