 Godf honored welcome to the seventh meeting in 2023 of the Finance and Public Administration committee. The first item on our agenda today is an evidence session with the Minister for Public Finance Planning and Community Wealth on the Budget Scotland Act 2022 amendment number two regulations 2023 draft. Mr Arthur is joined today by Scottish Government officiales, Kreg Mademan and Neill Caldwell. I welcome your witnesses to the meeting and I invite Mr Arthur to make a short opening statement. Thank you, convener. Good morning to the committee and my sincere apologies for my delay in arriving and my sincere thanks to the committee for being so accommodating. The spring budget revision provides the final opportunity to formally amend the Scottish budget for 2020-23 and contains the usual four categories of changes. The funding changes increase the budget by £502.3 million. Those changes include providing £427 million to health and £200 million to Ukrainian resettlement. As usual, there are a number of technical adjustments, whitehall transfers and transfer of funds between portfolios. The supporting document to the spring budget revision and a finance update prepared by my officials provides background on the net changes. It is necessary to reflect those adjustments to ensure that the budget is consistent with the accounting requirements and with the final outturn that will be reported in our annual accounts. However, there are a number of differences between how expenditure is classified on a Scottish budget basis and HM treasury basis, which ultimately governs how we deploy our discretionary resources. The finance update provides some more detail on those differences. The finance update also details the movements in funding since the spring budget revision was laid in Parliament, along with details on the wider fiscal context in which we have to operate. That includes an axe, which details how our resource borrowing limits are calculated. On that, I will conclude and be happy to answer any questions that the committee may have. I thank the minister for the supporting documents that have been provided. They are very helpful to the committee. Obviously, the money that we are talking about in total is £713.4 million, which is not an insignificant amount of money. As he said, £502.3 million was changed to reflect deployment of available resources to portfolios. I wonder whether you can maybe talk us through one or two of those changes, because when one looks at the portfolios, there have been quite significant and substantial changes. Some of those might be effectively rebranding in one portfolio as another, but others might have more significant impacts. It is just related to talking through where possible. For example, health and social care is the first one. In terms of the funding changes, we have £422 million positive, technical changes of £263.3 million, but net transfers within the Scottish block of £89.7 million. The final sum is around £80 million less in the beginning of the financial year. I know that some of that went to local government, etc. I want you to explain the thinking behind those changes and why they have taken place during this year. There are two material health transfers where funding has been provided from the centre. Those are £135 million of resource funding and £292.5 million of indirect capital funding to support research and development expenditure. The additional funding has been provided to support the health and social care portfolio activities, including funding the Agenda for Change pay-up lift in 2022-23. Over £500 million has been provided to deliver an average 7.5 per cent pay-up lift for Agenda for Change staff. That has been funded through the £400 million of reprioritisations outlined in the emergency budget review, alongside the additional resource provided via SBR. Is the £502.3 million of additional funding coming from to enable you to put the additional funding into the overall portfolio spread? As was outlined previously in the emergency budget review, the £400 million comes from within reprioritisation within the health and social care portfolio. Of course, there have been savings made that were identified at the EBR process, money returned to the centre, which is then reallocated. I apologise. I should have asked this before and went into the portfolio spread. I am probably adding a bit of confusion to the discussion. It is just that the overall amount of money that the Scottish Government has is up by £713.4 million. It says that a deployment of available resources to portfolios is £502.3 million, not within portfolios. I take that as additional funding. Where has this additional money come from? We are talking about £0.5 billion. I should have asked that before I went into the specifics of the portfolios. I apologise for that. The additional funding that Annex say in the document, the fiscal resource funding envelope, provides at EBR, and I might be asking Neil to come in to talk it through. Yes, there is a combination of consequentials that were expected to arise at supplementary estimate. The final figure in the Annex shows the adjustment to that. There is the block grant adjustments and net tax adjustments, which is £142 million. 125 consequentials, £142 million in net changes to block grant adjustments and net tax positions. Then there is a variety of other items, including £184 million of Scotland reserve adjustments through final outturn. That includes a reclassification from capital to resource. I have Annex say sitting in front of me here. I am trying to get some of those figures on the kind of record, so to speak, because it is obviously public money and I think it is important that anybody who might be watching or indeed looking at this actually has a kind of idea about what is actually going on behind some of the figures. I am sure that the amount of money that is switching from budget to budget is quite bewildering at times, and it is very difficult to get a steer on exactly why decisions are being made the way they are. We are obviously talking about the second in-year revision, yet some of those figures are really very significant indeed. If we add them all up, we are talking about billions of pounds going from portfolio to portfolio, and it seems quite odd that such huge amounts of money are switching in-year. We know that this was an exceptional year. We know all about the challenges that the Scottish Government has faced, but it does seem quite astonishing that the amounts of money that are moving from portfolio to portfolio are no doubt within portfolios. I think that it is a fair point that you make, convener. What I would say is that we, under the fiscal framework in the devolution centre, are quite limited in our fiscal flexibilities. Ultimately, having to look at re-prioritisations and manage demand-led expenditure and identify savings within the context of what is more or less a fixed budget is our primary means of ensuring that we can meet additional demand when it arises, for example to meet public sector pay requirements. It is just a reflection of the complexity of the framework in which we operate. There is no option, for example, to go to a debt management office that the UK Government has and simply borrow more money in-year to pay for additional resource expenditure. Amongst a number of other reasons, that reflects why we see the complexity in year and the need for the budget revision process. I do not know if anyone wants to add to that, Neil. That is one of the reasons why, in the original budget, tre lines are set that there is an overestimation of what is going to be spent in some of those portfolios. For example, if we look at the NZET portfolio, there is a £68.5 million of funding that has been returned because, to reflect lower than anticipated uptake from both private sector and local authority partners. If we look at social security, there is a £62.1 million of funding reductions for those benefits that have seen forecast decrease, and then a £58.2 million reduction in housing in respect of capital grants to private sector, and then a £16.9 million release from concessionary fares and bus services because of lower than forecast uptake. Those are very significant sums of money in themselves, but certainly in total, and so it looks as if the Scottish Government has overshot itself in terms of what expects, what anticipates will be spent within those portfolios. Of course, what that means is that, of course, at the start of the year, other portfolios might be more stretched, one could argue, because money has gone into portfolios where the demand is significantly lower than anticipated. How is this being looked at to see that we get much more accurate projections as we go forward? You hit the nail in the head. It is the nature of demand-led budgets. It is important to recognise that the total of the various lines that you just identified is still less significantly, I think, than 1 per cent of the total Scottish Government budget. In and of itself, in absolute terms, it is a significant amount of money relative in the context of a whole Scottish budget. It is quite small. Of course, we continue to learn and to refine with each budget. The important thing to recognise is that, with many of those particular demand-led schemes, there is no change to criteria or eligibility. It does just ultimately reflect the demand that exists. Of course, the past financial year has been one that has been extraordinary, giving the macroeconomic factors at play both a combination of the legacy of the pandemic and the significant inflation that we have seen as a consequence of the Russia's invasion of Ukraine, which I know is something that we all recognise as impacting the economy, not just in Scotland but across the UK and the wider world. I know what you are saying in terms of the overall size of the Scottish budget. You might be talking about 1 per cent, but if you are looking at an actual portfolio, the changes are quite significant. For example, net zero funding changes to £230.1 million down. If you are looking at social justice housing in the local government, you are talking about £1,110.4 million of additional funding. That is a huge proportion of funding that is being moved in those portfolios. That is not like 1 per cent. That is significantly higher than that. That alone is double the total figure. If you look at it in a two-dimensional way, if you look at the budget as we started the financial year and the budget at the end of the year, it might be a 1 per cent differential. However, there are huge changes in the portfolios that I find quite difficult to comprehend given the fact that we had the autumn budget revision just a few months ago. I recognise that one of the portfolios identified their social security in the local government to very significant elements of the Scottish budget. Of course, in the broader changes that are taking place, the usual and routine transfers have taken place between one portfolio where a budget is allocated and then transferred to the portfolio where delivery takes place. Will you come in, Neil? Just one point on social security. It is within the broader social justice housing and local government portfolio. We do not do any adjustments to ABR just from a timing point of view. There are 180 million of gross adjustments to benefit expenditure, less than 60 million of reductions across different benefits. The funding of that is, in part, funded through the social security block grant adjustment following the UK budget in November and the SFC forecast in December. For timing reasons, we need to do it at the SBR, which, in effect, means that it is the first time that we are making changes to benefit expenditure since the original budget was laid. Obviously, there is a significant time lag in there. That is helpful. What you are basically saying is to an extent that the Scottish Government's decisions on this and, in fact, because of decisions made elsewhere and the way you have to react to that? Partly, but there is also a case that you could make estimates of those social security adjustments in advance at the autumn budget revision, but they would automatically be need to be adjusted again and maybe significantly and going in the other direction when you go to the SBR. The decision is made just for simplicity to make one set of changes rather than two. One of the issues is technical adjustments. It is funny how it says that technical changes are essentially budget-neutral and do not provide additional spending power or detriment to the Scottish Government. That is £130.6 million, so I am just wondering how it finds itself on the total of expenditure for the year, then, if it is kind of neutral. Can you explain that a wee bit more? What is ultimately an accounting requirement given the technical nature of it? I do not know neal if you want to unpack it. That is a cool thing, but it does not explain what it actually means to the new world. Will we have to operate within accounting standards and be able to operate within the UK fiscal framework and be consistent with that? I do not know if you can explain some more of the detail. Yes, so there is a variety of subcategories that we can group together as technical. That includes non-cash expenditure or includes annually managed expenditure, where the UK Government essentially provides the budget cover for some demand-led areas, including NHS and teachers pensions. One of the big differences in budgetary terms is that, when the underspend is reported against the accounts, it is the underspend against all of that expenditure, whereas when it comes to the HM Treasury budget and the Scotland reserve limits, the underspend against those does not matter from that perspective, so that is where the two different budgets matter. I wonder how it then forms part of the additional £713.4 million, if it does not matter, in terms of the total budget. The changes that are proposed in the spring budget revision result in an increase in the approved budget of £713.4 million to £57.698.4 million, and that includes the portfolio changes that we have discussed, and the technical changes that we have just talked about are £130.6 million, and the Whitehall transfers are £80.6 million. I want to ask about that, because I am sure that one of my colleagues will want to ask about that. If it does not really matter, I wonder why it is added to the total amount of money that is available and, effectively, being spent in the Scottish Government? It does matter from an accounting perspective to try and match the accounts, because the Scottish budget is trying to align to IFRS standards. The more accurate the technical adjustments that are put through it in the budget revisions means that the more accurate the underspend or the alignment to the accounts will be, ultimately, when the accounts are laid. Has not actually been spent on anything? Well, it is generally mostly non-cash items, but not exclusively non-cash. The difference that we tend to talk about is discretionary expenditure. It is not discretionary expenditure, so an underspent in one area cannot be deployed on discretionary expenditure elsewhere. I wonder if you can talk us through a couple of things. One is the Scottish teachers and NHS pension scheme, which is going up in the current financial year by £495.7 million, which is quite significant. Also, education skills are going down by £582.4 million. Clearly, there is a relationship there, but I wonder if you can talk us through the thinking behind that. That is a good example of what Neil was talking about in terms of non-discretionary spending, so the funding for NHS and teachers' pensions coming directly from the UK Government cannot be repurposed for anything else. It is just a reflection of the increased cost that is coming through on that. It falls into that technical adjustment sphere, where the funding cannot be repurposed. It is just a reflection of the additional costs that are being funded directly by the UK Government. It seems to me that a huge sum of money has been added in terms of the revisions as opposed to something that was anticipated. For example, you are thinking about teachers' pensions, and you want to know how many teachers will retire and how much they will be paid for part of their pensions. It seems to me that £0.5 billion is quite a differential. That is a significant sum. It reflects the fact that the budget was set back in December and the circumstances from December 2021. The fact that the circumstances have changed since then has required additional funding to be met. It is based on current valuations and forecast, so it is just a reflection of the changes that have occurred since. As a share of the overall portfolio, it is huge. I am just trying to understand why the changes are so huge within not just a year, but the second set of revisions. You have explained some of it, but I still am concerned that the changes are so huge and how they can possibly be so big in such a short period of time. I am conscious that the committee has previously taken an interest in the resource and budgeting of the student loan book, and we have provided further information to the committee with regard to the modelling it informs that. It is convenient if it is something that the committee is interested in, and there is more technical breakdown in the background around how those pension calculations and any lines are arrived at. If that is something that the committee would be interested in, I would be happy to provide you with the right to know. Any information that can be provided to the committee is obviously going to be helpful. Obviously, this is a process that we are going to be in through twice a year, so the more of A we become with it, the better it is for the committee and the relationship that we have with the Scottish Government. I am conscious that there is obviously a keen interest in where there is discretionary spend, money that the Scottish Government can spend on public services or a range of other activities, and then there are other fundings that are non-discretionary, which do not always command the same attention in our political debate. Given the interests that the committee has expressed, I will be happy to write back to the committee to provide more detail in this area. One of the things that we have, obviously apart from that, is that there is an absolutely colossal number of figures here. There are literally hundreds of different figures here. For example, we get a statement, paragraph 54, as an example. I am only going to mention it because you touched on it yourself just a moment ago. It says that there has been a £565.1 million reduction as part of the budget revision with portfolios reviewing their non-cash requirements. The last element that remains relates to the £627.1 million movement in the student loan RAB charge. That is to cover the latest estimates from economists on the impact of the current macroeconomic climate or impairment of the student loan book. What does that mean to most people? Not a lot. It would help if there was a wee bit more explanation as to what those things actually mean. They almost seem to be separate silos in terms of the explanation as to how they impact on the overall Scottish Government. What does that mean in terms of how much money we can spend on local government, on the NHS, on policing, on those impacts? It does not change it because it is non-discretionary spend. I appreciate it for the aspect of the budget that commands the most attention, which is non-discretionary spend, but in order to mirror requirements to be as transparent as possible and meet good accounting standards, we have to present those figures as well, both within the budget and the budget revision processes. However, I take the point that you make given that there is a distinction between the total managed expenditure in the Scottish budget, which is now following the SPR under £57.7 billion, and the discretionary spend that could potentially lead to the risk of confusion, which you have articulated, convener, in terms of public understanding. That is something that I am happy to take away. We obviously have to meet standards, and it is not entirely possible to simplify the accounts for the Scottish Government. However, I recognise that it is possible. My deed scenario is havarised where certain figures can be taken and deployed for political purposes, which perhaps are misleading and unconscious. That has happened in the past in Parliament. On the specific budget lines that you have identified, I am happy to write back to the committee to seek to provide more detail. Obviously, the work that we do with producing the guide to the budget revisions is on-going and keen for continuous learning to refine that to make sure that it is useful and helpful to the committee and other stakeholders as possible. However, to take away that broader point around how we present our budgets to ensure that there is as much clarity as possible and, indeed, it is as discernible as possible for the layperson who is not a practising accountant. I mean, I mean, it is a meeting drink to join there, obviously. He always gets very excited. This is a highlight of his year, you know, of course, but I mean, I think most of us in the committee do have a grasp of it, but it is just, as you said, it is about clarity so that anyone looking at these figures can actually see what the thinking is behind the decisions that the Scottish Government has actually made and what the impact may or may not be on the front-line services. I think that when you just get, I think it says, oh, we're just, it's x million pounds, but that's not going to affect anything. You know, people think what? You know, it's just Disney compute to ordinary people who are not as obey with this kind of process, if anyone else. Okay, right, I've droned on long enough. I'm going to let colleagues in from around the table. The first to ask questions will be Liz, to be followed by Daniel. Thank you. Minister, can I ask a few questions around the delay of the national care service, which, as this committee has been provided with a letter that that should be for stage one up to the 30th of June. Now, when we received the first financial memorandum, the projection was that for a five-year spend, it would be a minimum of £1.3 billion, and what was set aside for the forthcoming financial year was £95 million. But in an answer to my colleague Daniel Johnson, John Swinney seemed to imply that the £95 million was not accurate and was nearer, and I quote, between £50 million to £60 million. Could you just tell us about what that money has been, has any of that money been spent, and if so, what has it been spent upon? Is this with regard to this financial year or next financial year? I don't, I can't provide any detail on that, I'm afraid, get in the context of presenting, giving evidence on the SPR, but I'm happy to take that away and write it back. I apologise, I can't provide any detail. The reason I'm asking ministers, this is obviously crucial, in terms of freeing up some money that potentially was going to be available just now for a project that has now been delayed. I think that this committee would very strongly welcome some clarity on exactly how much money has been already spent, because the implication was, I think I'm correct in saying, that some of that money, whether it was up to £50 million or not, had already been spent. I think that the committee would like to know how much of that money has been spent, what remains, and whether that will have considerable implications for budgets that need to be planned ahead, in fact, you're planning ahead, as you've indicated already. Would it be possible for you to provide the committee with some clarity on that, because I think that we're very anxious that we get that clarity, because there is money available, clearly? I'll just simply respond. It was actually myself who asked the question of the cabinet secretary, and he said that the maximum in the financial year that was about to commence would be £50 million, but I think that what is in the rest of the committee are keen to know how much has been spent to date, and whether that will come up in, for example, the autumn budget revisions. If you have any information, you could provide the committee now, because the autumn budget revisions are someone's away, that would be very helpful. I'm not in a position to provide information just now, but I will endeavour to do so and write back to the committee. Could the minister just clarify whether there has been any discussion with John Swinney and other civil servants who are looking after budgets as to whether it is up for discussion as a major piece of money that can be deployed elsewhere? I have not had any direct discussions with ministerial colleagues or officials on any potential release of funding due to the refasing of timing with regard to the national care service. However, I am happy to explore whether that has taken place among colleagues and, if it has, to ensure that the committee is kept informed of the details. That would be very helpful, minister, because the convener has been questioning about the significant amount of money that has been transferred between different portfolios. If we are talking on a longer-term basis of £1.3 billion as a minimum, possibly more, that is a considerable amount of money. It is important to the Parliament and to the committee that we know what the plans are for how that money is going to be deployed. Should there be any delays in the process of the project, which is obviously what is happening, then that frees up some money that could be spent on other things that might address some of the constraints that we have got before us. Do you accept that that is something that perhaps we could get some more information about? Yes, I am happy. Across the entire budget, in general terms, the committee is obviously well aware that there is reprofiling. It takes place. There is a transfer that takes place and reflecting and responding to circumstances and demand-led schemes. Of course, they are reflected through the budget revision process. However, I recognise that the autumn budget revision process is some time away yet. There is a desire for information to be provided just now. I will endeavour to provide as much clarity as I can in response to the points that you have raised. That is helpful. You have made it clear that there has not been much discussion about it, certainly not with yourself and the cabinet secretary. I find that slightly strange, I have to say, because this was a flagship policy that the Scottish Government wanted to put in process. Obviously, it has fallen foul of at least four committees in this Parliament who have very serious concerns. I think that there are other three committees that are looking at it just now. There is clearly some concern about not just the general direction of the policy, but about how it would be financed. Our job here is to scrutinise the financial aspect. We were told that a second, much more detailed and hopefully more accurate financial memorandum was coming down the line fairly shortly. That was before the delay, obviously. I think that we are left in a bit of a sort of open space as to exactly what is happening here, so it would be very helpful if we could get some clarity on all of that. If I could just clarify, I have referred to discussions that I have not had. I cannot speak on behalf of colleagues or other officials. I would like to start at a pretty granular level. In terms of annex A, looking at the figures in the first table at 1.2, you are quoting the budget bill figures. I was interested in the health line, but when I looked at the budget bill, I am slightly confused as to the figure that you have quoted here as the budget that is in the first column of 18.075.2, because when I look at the budget bill as passed, that line, for example, is 18.039849. I am just trying to understand the discrepancy. What is the basis of that figure in the first column? Obviously, that is not a huge difference, but at the same time we all want to be accurate. Mr Johnson, did you make reference to annex A? Yes. I am looking at table 1.2 in the papers that we have been providing. I beg your pardon, table 1.2. Page 6. 18.075.2, whereas when I look at the lookuplegislation.gov.uk, the figure that it has passed was 18.039. I am making sure that we are using accurate figures that are obviously important. I am just trying to understand why there would be a difference. I am just going to ask Neil to come in on that point. I think that we will need to double check why that is. I will put it in the letter. Sorry, are those figures not after the autumn budget revisions that have been applied? That is true. Is that the reason for the discrepancy? It just states resources other than, as shown in the budget act. As revised by the autumn budget revision. That is a useful clarification. I misunderstood that I thought that we were using what was passed as the baseline. I understand in terms of the narrative that the latest budget revision adds £427.4 million. Again, when you look at it at the aggregate figure as passed, it is actually showing, as the convener pointed out, almost £80 million less. Now, if you look at the total addition subtractions, given that there is around some £135 million of resource being added to those budget lines, that would imply around £200 million coming out of other budget lines within health. Is that correct? What are those things? Again, in line with some of the convener's question, given the pressures, as you rightly alluded to, I think that we all understand, I think that people might be surprised that we are actually going to be spending less in this budget year on health and social care rather than more. As compared to what was originally budgeted, what is the summary level explanation for that lower-than-expected expenditure in that budget area? If I understand you correctly, Mr Johnson, I think that you would also be factoring in the transverse to local government on health expenditure as well. Are we spending less in terms of front-line health provision? That is really the fundamental question. Is that all explained by that transfer? Or are there in terms of what are the implications there, particularly for the regional health boards and other front-line provision within the health budget? That is really the fundamental question that I am asking. Are those figures in line with the budget or are they up or down? If you look at the table 1.2 that you referenced earlier, the funding changes are the large capital and resource additions that are for health expenditure more broadly. The transfers to the other portfolios are what is bringing the total budget down, but they are independent of each other. The funding going into health is not directly related to the transfer for specific budgets, for example on care and mental health that are going to local government, which are two of the largest transfers to other portfolios. That is just to reflect the fact where the delivery body is. There are a lot of numbers that the committee was pointing at. The bottom line is that people would like to know whether more money is being spent or less money is being spent. For example, in terms of the regional health boards, has the amount of money that they were budgeted gone up or down as compared to what was passed in the budget and what was in those original level 4s when we passed the budget last year? The total health spend is up with the additional allocations, but I suppose the point that you are driving at is again around presentation to understand, comparing to the budget that was presented at stage 3 at the start of the year and what was passed by Parliament and what we see now. It is a question of transparency in terms of presentation to me. The bottom line is impact. If we are having to ask those questions to get around it, I think that members of the public might have even more questions than we do. Just going through some of the gross funding changes, one that will be of particular concern to a number of people is the additional funding that is being made available to Ferguson Marine for the completion of vessels 801 and 802. There was some speculation in the press just before Christmas that the total sum that might need to be spent on those two vessels might rise to some £350 million. That was the speculation. How much money will be spent in the current budget year on those vessels and how much money has been spent to date overall across all budget years? As you will be aware, the CEO of FMPG provided an update on costings in his letter to the NSET committee in September of last year. It is advised that a further £80.6 million net of warranties would be required to complete both vessels compared to the budget of £122 million net of warranties set out to Parliament by the Cabinet Secretary for Finance and Economy on 23 March last year. That will take the total cost to build the ferris and segmented public ownership to £202.6 million, including all the £6.2 million of contingency costs. The figure of £202.6 million includes the £57.6 million of capital funding, included within the 2023-24 budget. How much money has been spent in total today? You have given me the projected figure and the figure that has been spent this year. What is the total figure that has been spent to date on those two vessels? The total cost to build a ferris and segmented public ownership will be taken to £202.6 million, including all the £6.2 million of contingency costs. Is that a projected cost to complete, or is that the spend to date? Sorry, just to clarify the £202 million? How much has been spent or will have been spent to date at the end of this budget year? I do not have the exact figure to hand, but it was £67.6 million for 2023-24. You are looking at about 140. I can get exact figures and follow them. That would be helpful. My final question is, looking at all of these areas, I am thinking about the biggest budget concern that people have in terms of their domestic budgets will be heating bills. The reductions to the net zero budget lines are ultimately providing funding for things like insulation and retrofitting. I think that people might be surprised that there is a lack of demand for those things. I do not dispute that that is the case, but if you look at some of the programmes that there was fund, they have actually been on a decline in expenditure and demand year on year since they were launched. Are there questions being asked? If there is a lack of demand for those programmes, does that not question whether or not the programmes have been designed correctly? Surely we should be seeing increasing demand, because I know, judging by my mail bag, that my constituents are hugely concerned about how they can insulate their homes and control their heating bills in future years. Is there an issue there around delivery or design of those funds, if there is a lack of demand for them? I think that there is a recognition from ABR and SBR following the lower than anticipated demand that the points that you highlight are pertinent. That is why there has been work undertaken around project management to help ensure that there is a pipeline of projects going forward and that those schemes can be more effective at delivering the outcomes that they are seeking to do. Recognising, of course, that there are many factors that will impact upon demand, for example, as we are familiar with, around supply chains, workforce, materials, et cetera, but it is something that we are live to in those work within the relevant divisions on their way to help to address those issues. Can I just clarify one point on that? Is it that the level of applications for those funds has declined or is it that the level of approvals has fallen? On that specific point, I will come back to you again and give you a direct answer. Thank you very much. Douglas, to be followed by John. Yes, thank you, I just want to pick up on that point that Daniel Johnson was making about the net zero funds. What impact is that going to have on the climate change targets that the Government has set when there is seemingly a lack of demand for those funds and it has been cut twice in the last two updates? We are absolutely committed to our net zero targets, but the reality is that they are demand-led schemes and demand is impacted by a number of factors. Yes, we have to look at the design and delivery of the schemes, but we also recognise the prevailing economic circumstances that are impacting across a range of public policy objectives, and that is why we have been, as a Government, engaging with partners to look at how we can ensure that those schemes are more effective at delivering their stated intent. Is it people not knowing of them or surely there must be some analysis done on why the uptake is nowhere near what you expect? Yes, there is work in the relevant divisions that lead in this area, who are notwithstanding the points that have been raised, are taking forward the relevant work so that in future years we can see greater uptake of those schemes. If there is a desire for more specific information on that particular policy lead about the nature of the work that is taking place to incentivise uptake of demand, I would be happy to provide that in writing. In terms of your net zero targets, what does this lack of demand mean for those targets? Of course, there is a huge array of policy areas that will impact on net zero. We recognise that heating buildings, of course, are a hugely significant area. It is one of the big policy challenges that we face, not just in Scotland but all Governments face. We provide a range of support to assist domestic properties and non-domestic properties in ensuring that they become more energy-efficient and help to decarbonise their heat. We recognise that, on these specific budget lines, demand has not been what was anticipated and that is why we have been undertaking work to understand what the reasons are behind that within the relevant policy leads and are acting upon that to seek to incentivise demand in future years. However, I recognise as an interest that, if it is something that the committee would appreciate more written detail on the design of those particular schemes and how the experience of this financial year is informing action going forward, I would be happy to be good to know, because it seems quite handy that that uptake is not as it should be, which means that you can balance your budget, so it would be good to know about that. Going back to the Ferguson marine topic that Daniel Johnson was talking about, I think that he mentioned that £202.6 million to complete would be the total cost, but I think that he did say from when it came into public ownership, was that correct, Tor? Yes, and I said that I would be happy to come back in writing and provide more clarity around these figures. To see how much was spent before that. One part of the increase for £22.23 million was £4.6 million required for additional operating costs for Ferguson marine. Can you give us a bit more detail on what that would have been? There are two elements to that. There was additional funding for the seeking of and bidding for new commercial work from Ferguson marine. There was also resource funding required for consultancy costs, so those two elements are other reasons. Can you give us a breakdown between those two? It's £2.5 million for the new commercial work and £2.1 million for the consultancy costs. Okay, £2.5 million was up for the former head of, I can't remember what he was called, now turn-around director or was that those costs? I'm not certain on that. I don't believe so, but I'll confirm. I guess that costs is going to be costs for running the yard. That wouldn't actually be costs that we would get back for the building of that two vessels. It's separate things, isn't it? That's why they're categorised as operating costs. Yeah, because it couldn't be capitalised, but it couldn't be depreciated later. Okay, I'll move on to the next piece that I had. It was about transfers to rail franchise. Can you give us more information on what that would have been? Page 18 is the report. There's a capital budget being transferred from major public transport projects to rail infrastructure. That was the first piece. Page 18. Paragraph 65, sorry. Because there was two pieces, there was £44 million of capital being transferred from major public transport projects to rail infrastructure, and then we've also got £15.5 million of capital budget being transferred to rail franchise. I know that I'm not going to Scotch rail holdings in the year, but I'm not sure of the detail on that. I would need to follow up. Okay, we'll get that to us. That would be good. Next question that I had was around the European Social Fund, which was, I think, £15 million of write-off. Can you give us more information on what that was? Yeah, that was just a reflection that we're no longer in the European Union. Mesa figures accrued as such, but not being in the European Union. We've had to write that funding off and fund it ourselves. Why would we write that funding off? Yeah, the amounts will have been historically accrued over a period of time, on the expectation that the funding would be received. So is that anything to do with, there was obviously an issue back in 2017-2018 about how the fund was being dealt with by the Scottish Government? I'm not sure on that. Desire for more specific detail on that point beyond what I've said, I'm happy to capture that in a letter to the committee. Because I would, being a write-off, it doesn't seem like it. There was issues of how the Scottish Government was obviously handing the money to local authorities and things, so it would be good to know what that write-off actually was. Last question that I had was around the census and additional £4 million. Any more details on why that came about? Again, on that specific detail, I'm happy to cover in the follow-up letter. Okay, and I guess that won't be... In terms of the census funding, there must have been a chunk that came from UK Government, I've thought. Is it just that we've spent more than our share? Would that be... I'll respond to that point specifically in writing. Okay, thank you, John. I don't want you to take more than an hour, John. I know this is an exciting day for you. To be followed by Michelle. Well, just to clarify, despite what the convener says, a lot of this is technical. I fully accept, and I do not necessarily get very excited about it, and especially when I see words like non-cash, estimates, economists, current macroeconomic climate and impairment, I do take it with a little bit of a pinch of salt. I don't have a lot of questions, but one would be... Obviously, we have the UK budget coming up next week, and that will be focused on 23-24. Is there any risk to our current year from next week's statement? No. No, the last of it then in this fiscal year would be supplementary. So we've really got all the information. I think it suggests in the report that you've actually got better information this time from Westminster than maybe we have had in the past, and that's allowed us to be a bit more accurate. We have all of the information pertaining to the UK Government's position in the year, but, of course, we continue to have to manage the budget up until the end of the financial year, and it's still possible for changes to take place between what is reported now and what transpires the provisional outcome and when the council lodged. Do you want to add anything to that? Funding devolved taxes is the main area where there's still some scope for volatility, but everything else should be locked on the funding side of the budget, not on the spending, obviously. I mean, I know that we've had the slightly overused picture of what is it landing a jumbo on a postage stamp or something like that to balance the budget, and this year, it seems to me as the tightest probably it's ever been to try and get it. I mean, for example, in paragraph 117, it talks about a overall resource position as slightly overallocated of £10.2 million, which is tiny in the scheme of things. Are we okay for reaching the end of the year and we're going to... We're currently expecting a complete balance or maybe just a little bit of surplus? The nature of it is such that in seeking to balance the budget, I won't inevitably generate some carry forward, but the exact quantum, of course, will not emerge until I get to the end of the financial year. But we're not facing a big problem at this stage that we're aware of. No, that's great. On the slightly more technical side of things, in paragraph 138, it talks about the Scotland funds being allocated. I was just a little bit confused because it seemed that it talks about a contingency option for balancing 2022-23, but then goes on to say that if that's not needed, it would free up funding for the future. I just wondered why is there scope for moving that between years? Is it something special about the Scotland funding? I'll ask Neil Tooswell to that question if that's okay. The specific funds that are freed up in 2023-24 is the likely proceeds of interest earned on the funds that have not been used. So, when the assumptions for the 2023-24 budget were made, there wasn't a sufficient amount of certainty that additional funds would not be required in the current year, so bringing forward funding. That's one of the reasons why now that 2022-23 position is on a path to balance, as the minister was saying, that there's a sufficient level of confidence that these funds will be not required until the end of next financial year, as is the plan on resource spending review on the budget, and thereby more interest can be earned in the meantime. Right, so it's the actual sum rather than the amount of the interest. I just find it confusing because most things are fixed. It's either this year or it's next year and we don't have any flexibility to move it around, so I was just a little bit puzzled why we have flexibility in this area. There's some discretion on when Scotland funding can be deployed. It's a separate point to the interest point. That's a specific point, but there's discretion on when it can be deployed, albeit that it's all fully incorporated into the budget and resource spending review plans, so if money was to be brought forward, it would create a gap in future years, obviously. Okay, fair enough. The last issue that I was looking at was an XD resource borrowing limits technical agreement on resource borrowing limits. As I understand it, there's been further work with the UK Government about when we could borrow and when we couldn't, and I just wondered if you were able to say—some of it is quite technical, so as I understand it, within a particular tax you net off—I see the minister smiling, so I'm in a difficult area—in a particular tax we net off the pluses and minuses, but between tax and social security we don't net them off. I was just wondering—can you explain a little about that? As is a technical question, I'm going to ask you all to. Yeah, so for each devolved tax and each benefit, the net position versus the block grant adjustment were applicable and the change in that net movement from the original budget is what is considered for a borrowing limit, and where that movement is negative, that will score as a borrowing limit, subject to the overall annual limits of 300 or 600, depending on what the financial year is, if it's a Scotland-specific economic shock. There's an additional complexity. I think that the first half of the table talks about reconciliations that apply to the budget, so there's hangover reconciliations, as it were, on block grant adjustments to social security that would score on just the terms of this tenacle agreement that was completed last year. All of any negatives on those would score as well. But if there's a positive in one area, like social security and a negative in tax, it sounds like it's to our advantage that they're not netted off against each other, but is there a logic why they're not netted off against each other? It is to our advantage in the sense, but there is, I suppose, one of the logical reasons is the timing of when you might plan to borrow in the year. As it happens, borrowing tends to be delayed until the very end of the financial year when you consider the overall financial position. Okay, I'll leave it at that. Thanks, convener. Okay, John. Thank you, Michelle. I have to fess up and say that I find the thread of John's questions very interesting. I don't know whether that's good news or not. I mean, what I've been thinking about it, I'm listening to all the questions. The full sum of reports that have been provided in general are a very good thing, but I suppose that in terms of our job as scrutiny as a committee, we are trying to manage and get oversight of different things. We've got our initial kind of estimates up front, and then we've got any revisions where we're able to factor in actual spend plus the new estimates, and then we've got a final sum-up position, and then Daniel comes in and says I, but what about year to date? I suppose that my general question is that, when was the last time you thought about how you present those reports to the finance committee to be able to bring out some of those questions? I appreciate that in some of those questions we're not really comparing eggs with eggs, we're throwing in bananas as well at some point. It's actually a technical question about considering best practice on presenting those types of public accounts. When was the last time you reviewed that against what happens elsewhere, while fully accepting that there's additional complexities about the fiscal framework? I definitely understand that. Do you routinely do that and say, right, okay, are we acting from a point of view of giving maximum transparency to enable the sort of questions that have come out today? Is it a general one? I think that the most recent review is taking place right now. This is an on-going process of learning. Both the Cabinet Secretary Kate Forbes and myself as Public Finance Minister have been very strongly committed to seeking to provide as much information as possible to the finance committee and to Parliament, to assistance scrutiny and to assistance understanding, but I think that this is an iterative process. I recognise that perhaps having these twice yearly budget revision events may be insufficient to progress the type of change that we would want to see in presentation as quickly as we would like. I think that perhaps it would be perhaps useful for dialogue to take place with the finance committee, perhaps outwith one of the budget review sessions, to more formally consider. I appreciate it before the committee to determine its own work programme, but if the committee has any further reflections beyond just a specific presentation of a specific spring or autumn budget revision but more generally, I would be very keen to hear that transparency and engagement are not just at the heart of our framework for tax, but in terms of how we want to go about the business of ensuring that Parliament can come to decisions based on the most accurate and easy to grasp information possible. What is a priority for me is trying to ensure that, for members of the public, that they are able to have the fullest understanding without having to wade through dozens and dozens of pages of dense technical language and a lot of numbers. It is an open invitation and I am keen to have that engagement because it is very important. I think that there are a lot of things that we have drawn out. I recognise that members can take a keen interest in very specific budget lines and it can be very difficult to give the sort of affordative answer that I would like to be able to give just given the bread for possible questions that may arise. I recognise the points that Mr Gibson, the convener, has made with regards to different aspects of budget discretionary and non-discretionary. The points that Mr Johnson has raised with regard to presentation relative to the last budget revision compared to the budget as passed by Parliament. I think that there are a number of things that we can draw just out of this one session, but I would be keen to have a more on-going dialogue about how we can improve the presentation. However, the decision that we have to take as a Government about—this might sound rather shifting, I do not mean it to—how much information we provide in a sense. We do not want to overload. We appreciate that you have many other things that you have to consider. We could go for making it 50 pages, 100 pages, 150 pages, but that becomes more challenging and it probably would raise suspicion that what is in there we might miss. I am keen to have that dialogue and to understand what would be best for the committee, what would assist you as the custodians of the Parliament's responsibility for financial scrutiny and to work collaboratively to deliver a better product for you and for Parliament for the public to utilise. Obviously, the committee can discuss that afterwards. I think that it is reasonable that this committee would expect to get more complex reports with a sum-up position that the public might find more accessible, but I think that we would probably—there is enough of us who would be comfortable looking at that. I suppose that, just off the back, in the opening question, when you were being asked about an in-year budget pop switching or realignment, if you like, and you commented about the fiscal framework, I suppose that my question would be that that also talks to the existing estimating processes that are being used. Therefore, as part of this sitting above the processes, when was the last time you made an assessment of how effective your estimating processes are, given the variance, and what weaknesses have you highlighted, if any, and how you are going to address them? It cannot just be about the fiscal framework, given the kind of realignment. It also says something about the estimating. I think that that is a comment that the convener made up front. I suppose that there are two points. There is one with the forecasts that we have to operate within, which are, as a matter for the SFC, who, of course, are directly accountable to Parliament. I think that, if I understand Ms Thomson's point that you are driving at, the processes and methodology that it informs our in-year budget monitoring on how we go about that. That, of course, is something that, particularly when there is, I suppose, a new or novel spending lines or the devolution of new taxis, we will, of course, take a period of time to get a sense of how estimates and forecasts bear out reality. That was, obviously, something for the SFC considering the devolution of new taxis, but with regard to the actual processes that are taken internally led by officials on in-year budget monitoring, I do not know if you maybe want to give us just a bit of an overview, Neil, on how continuous learning takes place. I suppose that it is for each directorate to manage their budgets. There is, obviously, a continual review of each process. From taking a kind of learning's point, I suppose, the one example would be police and fire pensions, where there has been, obviously, historically managed in-year, but there has been some extra provision made in the recent spending review and the recent budget, where it is to reflect the reality of what has happened in recent years. That is the one example that comes to my head from a financial perspective. I suppose that it is a general question that you do not answer just now, but it may be of interest to the committee how the on-going processes across directorate of how this can be as efficient as possible, because having been involved in this sort of thing in another life, habitually, it is scrambled, because there is a real deadline. The review of how effective and efficient the processes are often drops to the bottom of the pile, because that is just the way the world operates. However, I think that taking from a public expenditure and efficiency point of view, I would want to see that there were review processes built in that were overseen from a finance perspective. Is the continuous improvement and properly built in rather than something that we would like to see? You do not need to particularly answer that. It might be that the committee is not interested in that. I am glad that you have another life, because I have been stuck with this one for decades. I think that the number one question that committee members want to ask when they get these figures is why have specific changes been made, because we get the changes, but we do not really get the reasoning behind those changes. I think that that would make life a lot easier for yourself if that was laid out. As you say, it is very difficult coming as a minister, not being a minister, but coming to a committee like that, you never know what we are going to ask. There are a lot of different figures, and it is not always easy to keep them all in your head, but I think that that would make life easy for all concerned. Just to close this particular part of the session, I just want to ask a couple of more questions. It is just because we have not really touched on capital much in terms of borrowing. In paragraph 132, it says, and I quote, all reserve availability is being utilised to support the 2223 financial position. Paragraph 139 says, It is now highly probable that the full capital borrowing annual allowance will not be utilised in 2022-23, as discussed in paragraph 125, so we are jumping from 132 to 139, then we are going back to 125, which says, late underspends will be used in the first instance to reduce the current £450 million borrowing assumption in line with the Scottish Government's capital borrowing policy. So where are these late underspends envisaged, and what kind of funding are we talking about, what much are we talking about in terms of those late underspends? So one example was, there was an item in the future transport fund I think, which was included in the emergency budget review, obviously before Christmas, but because of the level of certainty at the time that the spring budget revision was finalised, it could not be included, but is now expected to. Felly, mae bachai'n gweld ei wneud yw o ar 20 miliwnlad, a'r agrigyt ac mae gyd-gredigio nutritious suche o 50 miliwn o'r petrwys o'r tuach, iawn o'r petrwys i'r petrwys, ond mae'r gwinell yn ei chawwch chi'n fawr ar y stylai. A bod yna'r petrwys o perògwyr cynghwys yma, i thatbydd bach i ddim yn 450 miliwn. Be grateful that you have mentioned £20 million. What would that possibly be in? I do not have any other... That is the largest one that I know about. There are a lot smaller ones as well. Right. Okay, fair enough. My final question is based on Daniel Asns' question, where he talked about the £898,7 million million pounds that were going out of health and social care. There are seven lines here, so for example that £898.7 million includes £257.2 million for integration of health and social care, £233.5 million for the funding of real living wage, £120 million for mental health transition recovery, which it had to touch on, £65 million for implementation of the carers act, £27.3 million for free person in nursing care, £22 million for increased social work capacity in adult services and £20 million for interim care funding within local authorities. That is a huge amount of money. Surely some of those could have been anticipated at the start of the financial year, and in the next financial year we are going to be in a situation whereby we see those again being transferred to local government from health and social care, or are they going to be a look to, if not in the next financial year, the one after that, to have them embedded within that portfolio? I appreciate the previous question that has raised budget revisions. As I have said at previous budget revisions, the allocation of the budget to a particular portfolio reflects the policy in time. It is money to support health. It is not money for local government, in the sense of the services that local government would routinely provide. There is a question there as well, back to this point, about transparency and clarity. Is it health spend or is it spend in another area? I think that we would all recognise that it is health spend but it is delivered within a different portfolio. I welcome the committee's considered reflections on that. If there was a desire to move in that particular direction, if there is a view of it in tandem with other potential reforms with regard to the presentation, that would aid transparency. I think that it is something that we would be happy to consider. Ultimately, in terms of allocating a budget, we are able to identify what is money being spent on health and why it would start within the health portfolio, just as money and education within the education portfolio are elsewhere. Every year, in the autumn revisions, we have money for educational training going from health to education. I pointed out that at like last year, that is under the last five or six years at least. It seems to me odd to have, if it was a one-off, I can understand it, but if it is going to be year-on-year, it seems almost dishonest to have it in one portfolio when it is always going to be spent in another. There is. We have had this particular process in place and it allows for year-on-year comparison of spending in particular areas. If we were to go and have a change of approach, that would make comparison more challenging. I recognise the point that the issue is raised between comparing where we are with spring budget revision to autumn budget revision in the document rather than spring budget revision to budget act as past. If we were passing budgets that we are seeing spend in health that is not starting off in health, I could understand that some would perhaps argue that that would be a source of confusion or could be seen as not optimal in terms of transparency. I think that there is trade-offs. I understand the point that is made is why that transfer takes place if the intention is always to be understood and past patterns of budget revision to demonstrate that the spend is going to end in a particular area, but I think that there is an advantage to having that clarity around what is the policy intent of the spend. I want to go into any further depth. I could, but if this continues on, we will have further meetings, but Liz wants to come in here. Just on that point, I think that the convener is making an extremely important point. Namely, if there is x billion pounds that will be spent on health, it is very important that we know and the public knows of that x billion how much is spent directly in the health budget and how much of the remainder is going to be spent on health in local government or whatever it might be. Just to pick up a point that the minister has just said himself, it is the why that is important. If we are really wanting to get about the clarity of what we are trying to do and measure the effectiveness of that spend, it is quite important that we understand who has spent the money and why they have been tasked with spending it. That is the clarity that we are looking for within budgets. I know that they are incredibly technical and complex, but it is just getting that extra understanding, which I think is to the benefit of everybody, including the Scottish Government, that we know where that money is being spent and by whom and why some of it is going in one channel and some of it is going in another channel. I think that that is the critical thing. I think that the convener is right to ask each question. Thank you very much. That is the first item on our agenda, concluded. We will now move on to our next item, which involves formal consideration of the motion on instrument. I invite the minister to speak to and move motion S6M-07762 that the Finance and Public Administration Committee recommends that the Budget Scotland Act 2022, amendment number 2, regulations 2023 draft, be approved. Formally moved. Do members have any further comments? There are no further comments. I now put the question on the motion and the question is that motion S6M-07762 be agreed to. Are we all agreed? Yes. We are all agreed, so I thank the minister and the officials for their evidence today. We will publish a short report to the Parliament setting our decision on the regulations in due course. I now suspend the meeting for a couple of minutes to allow for a change of officials before we move to the next agenda item. Turning to the next item on our agenda, we now take evidence from the Minister for Public Finance, Planning and Community Wealth on the Scottish landfill tax, standard rate and low rate order 2023, SSI 2023-50. For this item, Mr Ather is joined by Robert Sutter, senior tax policy adviser at the Scottish Government. I welcome Mr Sutter to the meeting and invite Mr Ather to make a short opening statement. The Scottish landfill tax, standard rate and lower rate order 2023 specifies the standard rate and lower rates for the Scottish landfill tax, which would apply from 1 April. Those are consistent with rates set out in the Scottish budget 2023-24 published in 15 December 2022. The order sets out that the standard rate will increase from £98.60 per tonne to £102.10 per tonne. The lower rate for less polluting inert material will increase from £3.15 per tonne to £3.25 per tonne. Committee members will wish to note that the matched landfill tax rates in the rest of the UK for the financial year 2023-24, as confirmed in the UK and Welsh budgets. The Scottish Government is continuing to act to avoid any potential for what is referred to as waste tourism to emerge as a result of material differences between the tax rates north and south of the border. The increased rates provide appropriate financial incentives to support delivery of ambitious waste and circular economy targets. Okay, thank you very much for that. I mean, I don't personally have any questions, so I'll just ask members of committee if anyone has anything there to ask on this particular issue. Nope, I'm sure you'll be relieved that there were no questions on this. I could have asked, well too, for the sake of it, but why would one? Okay, so I thank the minister for his evidence, so the next item on our agenda involves formal consideration of the motion on the instrument. I invite the minister to speak to and move S6M-08009, that the Finance and Public Administration Committee recommends that the Scottish landfill tax, standard rate and lower rate order 2023, SSI 2023-50, be approved. Do members have any further comments? They do not. Do you like to move the motion? Formally moved. I now put the question on the motion. The question is that motion S6M-08009 be agreed to. Are we all agreed? Yes. We are all agreed. I thank the minister and Mr Souter for the evidence today. That concludes the public part of today's meeting. The next item on our agenda that should be discussed on private is consideration of our work programme, so we'll move very briefly into private session. I'll just leave a minute for the official report on minister and the society to leave. Thank you.