 The next item of business is a statement by Tom Arthur on provisional outturn. The minister will take questions on the issues raised in this statement. Therefore, there should be no interventions or interruptions. I invite the minister for around 10 minutes. Thank you, Presiding Officer. I welcome the opportunity to update Parliament on the provisional outturn against the budget for the financial year 2022-23. The provisional outturn demonstrates once again that this Government is prudently and competently managing Scotland's finances. The financial situation faced by the Scottish Government has been the most challenging since devolution. The shocks of over a decade of austerity, a hard Brexit, the Covid pandemic, the cost of living crisis, pressure on public sector pay and the war in Ukraine combined have placed extreme inflationary pressure on the public finances. The plain fact is that the buying power of the 2022-23 budget was significantly eroded by inflation since initial spending plans were set out in the budget publication. At the same time, demand for Government support and intervention understandably increased. Ultimately, our in-year budget has been effectively fixed, but the UK Government took no action to address the in-year impact of inflation. We are constrained by UK Government spending decisions and have limited fiscal levers, in particular no ability to borrow for day-to-day spending. Our income tax powers do not allow for changes to be made during the financial year. Within those constraints, the only avenue for us to manage the pressures that we face was through reprioritisation and robust management of demand-led budgets. That is why we undertook the emergency budget review in the autumn to balance the budget whilst prioritising funding to support the cost of living challenge. That effective and prudent financial management has meant that every penny received by the Scottish Government has been channeled to where it was needed the most. In 2022-23, we invested significantly in fair public sector pay deals, committing more than £900 million more than was originally factored into spending plans, delivering higher increases in pay for lower earners in terms supporting families and individuals with the cost of living crisis, achieving more beneficial packages than UK counterparts, minimising the impact of strike action while ensuring continuity of vital public sector pay deals. We spent nearly £4.1 billion on social security benefits, including £219 million on Scottish child payment, which we more than doubled to £25 per week. We doubled the fuel insecurity fund from £10 million to £20 million to provide additional immediate support to people most impacted by the cost of living crisis, specifically by rising energy prices. We introduced new payment break options to help protect those who have agreed to repay debt through the debt arrangement scheme but face unexpected increases in the cost of living. We spent £216 million to support those displaced by the on-going war in Ukraine. We have welcomed over 24,000 people, some 20 per cent of all UK arrivals, from Ukraine since the outbreak of Russia's war against the country and are continuing to provide financial aid and medical supplies. Going forward, we will continue to press the UK Government to provide sufficient funding to meet the scale of the on-going inflationary pressures for more powers and necessary reforms to the fiscal framework through the forthcoming review. Our medium-term financial strategy, published on 25 May, made clear the scale of the anticipated future pressures on the public finances on top of those already felt over recent years and how this Government will address the challenges of sustainability of the public finances. The Scottish Government remains committed to achieving and maintaining a balanced budget while delivering against our free central missions, community prioritising our public services, opportunity, a fair, green and growing economy, and equality, tackling poverty and protecting people from harm. Sound finances are the strong foundations from which we will deliver for the people of Scotland and progress these vital missions set out by the First Minister. Turning now to the 2022-23 provisional outturn. Under the current devolution settlement, the Scottish Government is not permitted to overspend its budget. We must therefore operate within a tight margin of just over 1 per cent. The level of volatility in our overall funding envelope continues to increase. On top of that, our block grant is not finalised until February each year, and we must manage that uncertainty within the limited fiscal levers at our disposal. Despite that, the Scottish Government has a strong track record of delivering a balanced budget while continuing to provide the public of Scotland with a broad range of high-quality public services that it expects. I am pleased once again to announce to Parliament today that we have maintained this balance. I can report the provisional fiscal outturn for 2022-23 as £46.9 billion against a total fiscal budget of £47.1 billion. The remaining budget of £244 million, which represents not 0.5 per cent of our total budget, will be carried forward in full through the Scotland Reserve if confirmed at final outturn. It is made up of £180.6 million of fiscal resource, £24.7 million of capital and £39 million of financial transactions. There is no loss of spending power to the Scottish Government as a result of this carry forward. As I have said before, the management of funding across years is an essential part of our financial strategy. Every penny of this carry forward has been allocated in full in 2023-24, allowing us to implement measures at the most optimal time rather than being constrained to a single financial year. We are required to actively manage a resource underspend to cover the risk of post-year end audit adjustments that have occurred in previous years. The majority of the carry forward has already been proactively anticipated in the 2023-24 spending plans, already approved by this Parliament. We include the £39 million of financial transactions anticipated within the 2023-24 budget, published in December 2022, and £115 million of additional funding announced at stage 3 of the budget bill on 21 February 2023 by the then Deputy First Minister to further support local government, Creative Scotland and the inter-islands ferry network. This carry forward funding is directly linked to late UK Government consequentials, finally confirmed only six weeks before the end of the financial year. The revised budget allocations will be set out later in the year as part of our autumn budget revision process and subject to the usual parliamentary scrutiny and approvals process. An element of our budget allocation from HM Treasury is non-cash, which is used for accounting adjustments, predominantly depreciation. It is not possible to use this ring-fenced non-cash budget to support any day-to-day spending. Non-cash funding does not flow to the Scotland Reserve and is not included in our headline provisional outturn results. For 2022-23, this shows an underspend of £984 million against a budget of just over £2 billion. A large proportion of this budget is consequentials for student loan impairments, which are simply not required at the same level in Scotland because of our policy of free tuition. Turning to the accounts, I must address the on-going focus on this headline accounting underspend figure. It is spend that just does not flow into the reserve. It is only the elements within HM Treasury limits for discretionary funding that are controllable and that fundamentally matter. Every year, we have a charade where this higher headline accounting underspend is quoted as if the budget has been mismanagement. This Government has never had an underspend that has fallen outside the venero limits within which we can carry forward funding. There is no loss of spending power to the Scottish Government this year, as has been the case in each and every year of an SNP-led Government. Finally, I want to emphasise that the £244 million underspend is provisional and will be finalised later in the year once the Scottish Government and its bodies complete their year-end audits. Finalised figures will be reported as usual in the annual Scottish Government consolidated accounts and a statement of final outturn for the financial year 2022-23 later this year. To conclude, the provisional outturn demonstrates once again that the Scottish Government has maintained its firm grip on Scotland's public finances. We have ensured that we have met our priorities whilst balancing the budget within the very tight margins that we have available, and I commend today's figures to Parliament. The minister will now take questions on issues raised in his statement. I intend to allow around 20 minutes, after which we will need to move on to the next item of business, as I will be grateful for any members wishing to ask a question if they press the request-to-speak buttons. I thank the minister for advance sight of his statement. I think that most of the public will be shocked that there is an underspend of nearly quarter of £1 billion last year. We have listened to the minister's statement and we are going to listen to the question similarly. Nearly quarter of £1 billion last year was underspent. It seems that, in key areas, the Government likes to announce high-spending figures in the budget but are woeful on delivery. They talk the talk but don't walk the walk. At a time that our local communities are seeing swimming pools closed, libraries closed, sports facilities closed, how can this be the case? For a Government that talks about a skills crisis, how can it be that the education and skills budget has been so massively underspent? For a Government that claims that tackling climate change is a key priority, how on earth is it that the net zero and transport budget once again has been so massively underspent? Those are serious questions, so come up with some serious answers. I don't think that the public will be shocked that in a budget of some £47.1 billion, not 0.5 per cent has been underspent. That money has been proactively announced. The majority is part of the budget process to be carried forward. £115 million at stage 3 of the budget, £39 million of FT at the budget being introduced to Parliament in December of last year. We have competently and prudently managed the public finances and that is demonstrated in these outturned figures. In every penny that I have identified in my remarks, that £244 million has been carried forward and spent against this year's priorities. I have made an appeal already that we are going to listen to the questions and we are going to listen to the answers with equal respect. Michael Maran. I thank the minister for early sight of his statement, which trumpets there alleged effective and prudent financial management. The claim comes as Scotland stares down the barrel of a £1 billion gap in public finances this year and a looming gap of £1.9 billion by 2728, with the IFS saying that this Government has given precious little sense of how to address it. Instead, the Government is a completely non-strategic approach with top-slice budgets to cut year in, year out. Today, he tells us that the current approach will deliver the vital mission set out by the First Minister, but on June 8 last year, Mr Arthur said that the Scottish Government has a purpose and a mission that is exactly what the resource spending review will deliver. And yet here we are, with Cape Forbes resource spending review, completely ditched. That strategic approach is gone and nothing replaces it. So does the minister not accept that his Government has no plan to bring the changes to this country so badly needs and in our public finances? Absolutely reject everything that Mr Marr has said and the central point of his question about the resource spending review was addressed by my colleague the Deputy First Minister yesterday. I'm sure he can look at the official report if he's forgotten already what the answer was. We have set out through our policy perspectives a clear set of missions for Scotland upon which we will deliver. We have set out in our medium-term financial strategy the approach that we will take to deliver on that fiscally and we will set out further details as part of the annual budget process as we always do. Keith Brown to be followed by Liz Smith. The need for additional fiscal flexibilities to allow the Scottish Government to better manage its budget is pretty clear to most of us and it's been highlighted beyond doubt by the pandemic and the challenging economic conditions which we continue to face, not least of course projected 14 per cent cut from Westminster to our capital budget over the next four years. So can the minister provide any update regarding the Scottish Government's latest engagement with the UK Government regarding the review of the fiscal framework? Can he say any more about outcomes the Scottish Government would hope to see as a result of that review? Minister. I thank Mr Brownford's question and I very much agree with the importance of the fiscal framework review and the priority that we are placing upon getting a successful outcome from that because our current boring powers are heavily restrained and that limits our ability to support the economy in the short term. Now, whilst the UK Government has previously ignored our calls for greater fiscal flexibility, we do remain in constructive discussions on the wider fiscal framework review. The Deputy First Minister will be meeting with the chief secretary to the Treasury in the coming weeks to progress these discussions. In terms of outcomes, Scottish ministers have made clear to the UK Government the need for greater budget flexibility and boring powers to enable us to manage risks and support economic recovery as well as ensuring that the block grant adjustment mechanism remains in line with the Smith principle of no detriment. The Smith to be followed by Michelle Thompson. Does the minister acknowledge that a very large part of the very difficult fiscal circumstances in which we are facing just now is in no part always to do with the UK Government but in large part due to the fact that the SNP Government is not growing the economy? I always find it fascinating that the Conservatives are keen to go and trump that Scotland has two Governments. Whenever the question of the anemic economic growth of the UK comes into question, all of a sudden the UK Government is nowhere to be found. Apparently Scotland is already independent and the UK Government has no role to play at all in Scotland's economy. The reality is that the factors that have been driving low economic growth and low productivity in the UK which is impacting on Scotland, is a decade of austerity by a Conservative Government. It is the reckless policy of Brexit and it is the chaotic approach to public finances which reaches apotheosis in the many budget which Liz Smith wanted this Government to follow. Michelle Thompson to be followed by Daniel Johnson. As just mentioned by my colleague Keith Brown, the SNP projects a real terms cut of 14 per cent to the Scottish Government's capital expenditure budget in the next five years. That restricts our ability to undertake infrastructure projects such as road building. Without proper borrowing powers as well which we do not have, this ultimately flows into limiting our productivity and therefore how much tax we can raise to fund vital public services. Does the minister think that all MSPs, particularly the ones involved in the Finance Committee, understand this point? If they did, surely they would agree that this is an example of the damage being done by not having control over the normal financial levers and leaving their future in Westminster's hands. Michelle Thompson hits the nail on the head. Hits it absolutely square on the head. We have been lectured by the Conservatives around economic growth. When we are in a position of reducing our capital spending which is so fundamental to economic growth we want to see through the fiscal framework review increased borrowing powers for this Government including on capital but ultimately we want to see as the full fiscal powers which only independence can deliver so we can really unleash Scotland's potential. Daniel Johnson, to be followed by John Mason. Thank you, Deputy Presiding Officer. Maybe we can return to the numbers. The £244 million in carry-over. First of all I would just point out that because of the time-based value of money it is worth less next year or this year than it would have been last. Can I ask when the £274 million underspend from the net zero budget was identified by the Government because I note that these figures are very close to the sums that were being talked about in terms of what it would cost to uplift social care pay. So can I ask when they knew and how much would £180 million in resource resulting in social care pay uplift? On the £180 million of resource, the £115 million of resource was announced at stage 3 of the budget. Local Government, Creative Scotland, Interil and Ferry services. As we know from the figures in front of them, the largest element by some distance on the NZ is capital. About half of that is an IFRS 16 technical adjustment on leases. It's a ring-fen sum that we don't have any discretion over on how we use. The remainder of the capital is about the largest drivers of that. We're based on re-prioritisation to support the emergency budget review process and lower than anticipated uptake of demand-led schemes. So that has been what the drivers have been of net zero. The actual capital that we've taken forward in total is just under £25 million. John Mason to be followed by Alex Cole-Hamilton. Thank you. Will the minister and the cabinet secretary accept my congratulations at least for being so close on their budget within 0.5 per cent? That is incredibly good for any organisation, business or anyone else. Can he just reiterate to Douglas Lumsden and others who are struggling to understand this that you cannot have the budget dead on? Can I thank Mr Mason for his remarks? Can I also commend the officials in the Scottish Government who have been so central in delivering this near-balance budget position? I recognise Mr Mason's professional background. It's a pity perhaps if we had more accountants in the Parliament we would have less of the questions that have been subject to this afternoon. But the reality is that we do have to spend underneath our allocated budget. We are not allowed to go above it. I'm pretty sure that if I had come here saying that our provisional outturn was in the excess of treasury controls, we'd be getting a different line of questions than the Conservatives. So we have delivered an underspend here, a variance of 0.5 per cent and the majority of that was proactively anticipated through our budget process. Once again demonstrating the prudent and competent handling of the public finances of this country by the Scottish Government. Alex Cole-Hamilton, to be followed by Ivan McKee. Thank you very much, Presiding Officer. My apologies for a slightly late arrival. Presiding Officer, in the context of the health and cost of living crisis it's critical to get money to where it's needed as fast as possible to treat people quicker and ease the pressure on household budgets. Despite the long shadow of the pandemic and its visceral impact on our communities £50 million was cut from mental health over the winter and the Government is still way behind both England and Wales in its provision for those suffering along Covid. So as it rolls on this underspend will the Scottish Government finally commit to funding these priorities properly? Minister. As I already have previously indicated answers to earlier questions the money that has been set forward in the process of the provisional outturn if confirmed will be committed against pressures within this year. Indeed the majority of what is within the provisional outturn as a variance was already proactively anticipated as part of the budget process and the formal allocation from the reserve to the budget will of course take place through the budget revision process. Ivan McKee, to be followed by Ross Greer. In previous years the overspend on course Scottish Government civil service costs known as total operating costs has significantly exceeded the budgeted costs off me up to 10 per cent or more than £60 million on an approximate £600 million budget with the balance being covered by transfers from other budget lines within relevant portfolios. So can I ask the minister what the budgeted costs for Scottish Government total operating costs in the last year was and what the final outturn was? Minister. Can I thank Mr McKee for his question and recognise as well the important work he did as a minister and ensuring that we are as efficient as possible within operating costs in Government. The total budgeted costs for the Scottish Government in the last year was £706 million and the forecast outturned at £744 million. That is an overspend of 38.5 million with staff costs being a driver of this increase reflecting our wider position on investment in fair public sector pay deals supporting families and individuals with the cost of living crisis. That minimises the impact of strike action while ensuring continuity of vital public services. We also supported investment in our operating systems that ensure that the Scottish Government has been run as efficiently and effectively as possible both now and for the future. Ross Greer to be followed by Alexander Stewart. Thank you. As has been demonstrated this afternoon the Government's underspend is misrepresented every year both at provisional outturn but also when Audit Scotland publishes extra poor on the annual accounts. So can I ask the Scottish Government if officials have had any discussions with officials at Audit Scotland about how we present the underspend as part of the annual accounts and how we foster good public understanding in the face of such deliberate disinformation being spread from elsewhere? Of course we do recognise the independence and autonomy of Audit Scotland but I think we would all have a shared ambition that public finances are presented and is transparent away as possible to ensure that our debate is informed as possible. I think it is absolutely important that when consolidated accounts are published in due course that the figures are reported and the way in which those figures are used particularly by members of this Parliament is done shown that way but demonstrates responsibility. Thank you Minister. If you could address the remarks to the front that will be caught by the microphone, rather better. Alexander Stewart to be followed by Audinia. Thank you, Presiding Officer. As usual, the SNP have tried their best to shift the blame to the UK Government for the financial mess made here in Scotland by the Government of Scotland. What they have failed to point out is the tremendous investment that the UK Government has made in Scotland over the last year including £177 million in levelling up communities and £52 million for the establishment of free ports which will generate billions of pounds of investment for Scotland. Therefore, will the minister acknowledge this investment as a positive benefit of the union for the example of why working together across nations enhances all our communities? Minister. I think that what would be better for the people of Scotland is if their hard-earned taxpayers' money was administered by this Parliament rather than a Government at Westminster that we did not vote for. At some length, a narrow envelope in which to carry forward additional resource makes managing underspend a very careful balancing act. Can the minister advise how the Scottish Government's underspend compares to the underspend of other devolved nations that are also required to balance their budgets? Minister. Thank you, Audry Nickle for that question. Our underspend this year for figures for 22, 23, 244, which is just not 0.5 per cent of the budget. We do not have the figures yet for the other nations within the UK, but if we look at last year's figures for 21, 22, the figure in Wales was 2 per cent, the figure in Northern Ireland was 2.1 per cent. I do not make this as a point of comparison. It is not some competition, but it is illustrative of what is normal and what the normal tolerance levels are for underspend within budgets. Minister. That concludes this item of business. There will be a brief pause before we move on to the next item of business.