 We welcome to the eighth meeting in 2024 of the Finance and Public Administration Committee. We will consider the budget bill at stage 2 today, but before we turn to formal stage 2 proceedings, we will take evidence on the Scottish Government's response to a report on the Scottish budget 2024-25. We are joined today by Shona Robison, Deputy First Minister and Cabinet Secretary for Finance. The Cabinet Secretary is accompanied by Scottish Government officials, Dr Alison Cumming, director of budget and public spending, Ian Story, head of local government finance and Llyrion King, deputy director, tax and revenues directorate. I welcome our witness to the meeting. Members received copies of the Scottish Government response on Friday, but before we move to questions from the committee, I invite the cabinet secretary to make a short opening statement. I would like to thank the committee for its budget scrutiny report, which I have carefully considered, as I have highlighted to the committee and to Parliament. The budget has been developed amid very challenging economic and fiscal circumstances. The UK Government's autumn statement was a worst-case scenario for Scotland, and we have further significant uncertainty on the horizon with the spring statement on 6 March. Although there appears to be a briefing to some newspapers relating to tax, we are clear that the UK Government needs to use any headroom that it has to invest in services and provide consequentials for the costs of the 2023-24 NHS agenda for change pay agreements in the coming financial year, something that was totally absent in the autumn statement. Subject to what spring budget delivers, as I have already advised, local government, I am committed to passing on in full any consequentials received in response to increased teacher pension contributions and the estimated £45 million of additional funding to local government following the UK Government announcement in January, should they be confirmed as net additions to the Scottish budget. It is a fair budget for local government, but I do not underestimate that it is a challenging one and it is challenging right across the public sector. Also, if the capital funding position improves, I will also consider the funding position for our affordable housing supply programme that continues to be a key priority for me. All of this depends on the availability of additional funding from the UK Government, and this continues to be an uncertain position. While additional funding is always welcome, the funding position could worsen also negatively affecting the assumptions underpinning the Scottish budget to date. As we have just seen again, the UK Government can unexpectedly reduce our funding, and this is an on-going risk. The recent UK supplementary estimates now indicate a reduction in our financial transactions this year of £64 million. This is unexpected and will be hard to manage with it potentially impacting on key policy areas such as housing. That is why it is so important for the UK Government to use the spring budget as an opportunity to improve the capital budget position, which will be crucial for affordable housing plans and, indeed, other priorities such as NHS infrastructure projects. While I am not proposing amendments to the budget bill today, the committee will be aware of the cabinet changes announced by the First Minister on 8 February. Combining the economy net zero and energy into a new portfolio creates a strong portfolio for building Scotland's economy. Those changes now require transport as an individual portfolio, reflecting the importance and complexity of the vital delivery area. Those portfolio changes affect the Scottish budget, which is why I will be proposing to introduce a small number of technical amendments at stage 3 to reflect those portfolio changes. The committee will appreciate that there was insufficient time to prepare those amendments ahead of stage 2 lodging deadline on 9 February. I thank committee members for their ongoing engagement on the budget bill and look forward to our discussions this morning. Thank you very much for that helpful opening statement. It seems to me, given the continued reference this morning and, indeed, in the report to the spring statement on 6 March, that it would not be more helpful if the time scales that you are operating to with the budget bill would not have been more helpful if our budget would have been after 6 March. That would have given the Scottish Government a greater opportunity to reflect on what the UK is doing. Of course, given the fact that we already had scheduled our budget, would it have been more helpful if the UK Government had their spring budget before stage 3? Indeed, the difficulty is of the constrained timetable that we operate in, not least in terms of making sure that our tax position is clear and that that is notified and so on and so forth, and that the public sector is aware of the budget position well in advance of the start of the financial year. The spring budget timetable is very challenging indeed. We have made that point to the Chief Secretary of the Treasury. We have also made the point that it could severely impact, barely a week later, on our assumptions in the budget. We have made some very direct requests around the basis of our budget. At the moment, of course, it is set on the autumn statement. We have asked for flexibility on that, should the spring statement offer opportunities for us to enhance the budget, then we would want that flexibility. There is precedence for that previously, in previous years, where that flexibility was given. I think that, in the light of those circumstances, that would be helpful at the moment that we have had no confirmation from the Treasury that that flexibility will be given. I thank you for that. The main reason for this session this morning, practice stage 2, is to give through the report that we had and the responses to it. I am not going to give through all of it because I have got six colleagues who will want to come in and set in the areas, but I will touch on a number of areas, and others may wish to build on those. The first one that I want to talk about is the recommendation 41, the potential impact on business in the economy of the differential income tax policies in Scotland and the rest of the UK. Your response, you have said that the move to a five-band system alongside additional government spending has, out of the policy change, had a relatively negligible impact on the size and growth rate of the Scottish economy in the short term. I am just wondering what long-term work is being done to see whether or not that has longer-term impacts, in the positive or negative? It is important that we take that short-term and longer-term view. Clearly, the modelling done by the Scottish Fiscal Commission takes into account things like behaviour change, but we have the piece of work undertaken by HMRC that will be published later this year that is going to provide more detail. Of course, that is something that we want to continue to look at and monitor and evaluate in terms of any impact, whether that is on behaviour change or any other element of the economy. We will do that through the auspices of organisations that are trusted, independent and HMRC. The work that they are doing will be extremely valuable in this space. As soon as we have that information and that information is in the public domain, I am sure that the committee will want to take an interest in that. One of the issues that we raised at 46 was the little evidence of either government seeking to avoid or resolve the anomalies rising from away tax and national tunes policies. You have responded except at the high marginal rate of tax, of both income tax and national insurance, faced by some tax pairs between Scottish and UK higher thresholds results from incomplete devolution of tax powers. Fraser Valander said that the Scottish Government to address this issue would have to be significant increases to basic and intermediate rates. You have said that the UK has refused to substantively engage on this matter, and you continue to call on the UK Government to have regard to interactions and engagement with the devolved policy when setting national insurance contributions policy. They would argue that it is because the Scottish Government has chosen to set a higher rate of tax than the UK. One could argue that it is the Scottish Government that should change that. Is the Scottish Government going to, given the fact that the UK Government is unlikely to change its position, what will it do to minimise the marginal rates whereby people are effective paying a 52 per cent marginal rate on £43,666 a year? I would go back to the point that the marginal rate thresholds fundamentally arise because of the incomplete devolution of tax powers. We have two systems that are working, and the powers of the Scottish Government to be able to vary tax powers have been set for quite some time. The interaction with the UK Government in terms of its tax position has not been resolved properly. I think that there is a need to do so, but that has to be a two-way street. We are up for that discussion to look at how we can take those matters forward, but we have really not been able to engage in a way that is helpful or constructive. The Fraser of Allander note the significant increase to the basic and intermediate rates. I do not think that that would be appropriate, given the pressure on household budgets. The solution to that would be a tax system that is fully devolved to Scotland so that we can drive out the anomalies that arise. The marginal rates are a concern. We will continue to pay attention to that, and we will look potentially to resolve, if we can, over the longer term, but the funding to be able to do so and the implications within those constrained financial times would be very difficult. We recognise that it is far from ideal, but resolving it in the short term would just not be affordable. In the issue of not being affordable, you can use that argument in terms of not passing on the non-domestic rates consequentials, where you have said that that money is because of the very worst-case scenario, the UK Government's statement. You have said that that money has had to go into public services, for example. The NHS, although you have gone on to say that the basic rate for non-domestic properties, with a rateable value up to including £51,000, has frozen delivering the lowest such rate in the UK for the sixth year in a row. You have also talked about how for islands in some three very remote communities, the rates have been capped at £110,000 per rate pair with 100 per cent rates relief. Have you had any discussions with the UK Government regarding the VAT threshold? The VAT threshold has been stuck at £85,000 a year since 2017. Cumulative inflation since then has been 32 per cent. The federation of small businesses has said that a significant number, more than a third of their members, is reluctant to grow their business because it takes a bit of that VAT threshold. If the VAT threshold was increased, it would allow local businesses to have more money in their pockets, as opposed to having to pay 20 per cent over and above that threshold. I wonder whether that is a way in which the Scottish Government is engaging with the UK in order to try to help small businesses at the same time, not having to reduce non-domestic rates income at a time when the Scottish Government has already paid £6 million a year in release from next April and has to use money in other areas of its budget? It is an issue that we have raised. In fact, I had alongside other ministers a very constructive meeting with the hospitality sector. Do not get me wrong, of course they would have liked NDR relief to have been passed on in Scotland, but I wanted to be really clear with them that we had a difficult choice to make of either investing that money in public services or investing it in business rates tax cuts. If you think of the £310 million of consequentials, £260 million of that was for business tax cuts. I am afraid in the light of the pressures on public services I could not in all conscience do that. Once we moved, we then talked about other areas. One of the key issues that they raised was concerns about VAT. In fact, I have since seen some interviews with leaders of the hospitality sector in England who are calling for changes to the VAT threshold because of the impact that it is making on their businesses. It is a complex landscape with a number of pressures, the price and cost of goods, of power, in terms of premises, all of those things all impact. I think that you are also right to point to the package of reliefs is significant, worth an estimated £685 million for £24.25. That includes the small business bonus scheme. We have a very competitive support package for businesses and of course we have gone further in the support, the 100 per cent relief for the islands and indeed remote areas of Scotland that are essentially hard to access. We have given relief to those areas as well and what we intend to do is to monitor the impact of that to try to develop a bit of an evidence base of whether or not the reliefs are working in the way that we are intended. I suspect that I might be wrong on that but my suspicion is that they probably will not continue in England beyond this year. What we are keen to do is rather than have stop and start reliefs for the sector that we have committed and are working with the sector to look at what we can do in the long term that gives that long term sustainable support to the sector rather than potentially falling off a cliff edge at some point in the near future, which I do not think is helpful. That leads me on to something that I was not going to ask about because other colleagues will probably want to come in on it but you have talked about whether or not that will be retained in England. A lot of people have asked about the council tax freeze, whether that is going to be baselined into the local government settlements. I just wonder if you can tell us just now whether that is going to be the case. I have confirmed to local government that it will be baselined into the settlements. I confirmed that in a letter to them last couple of weeks ago. Local authorities who accept the 5 per cent council tax freeze will benefit from having money redistributed from local authorities that do not accept it. For example, say that half the councils accept it and half do not. Will those who do not accept the council tax freeze with that money, which would be £70 million if half of them did not accept it, just as an example, be given to the local authorities that have accepted the freeze? I have not made any decisions about whether I am being optimistic that all that funding will be utilised for the purpose that it is intended for. Should there be any funding remaining, we have not made any decisions about how that money will be distributed. In paragraph 95, we raised the concerns about the affordability and sustainability of the social security budget, which is growing inexorably. I am not making any comment whether that is a good or a bad thing, but just in terms of the finances. One thing did leap out at me in terms of your response. The Scottish Government will ensure that there is budget cover within the overall Scottish budget envelope to cover social security. Is that therefore the Government saying that the social security budget is sacrosanct in that, regardless of how demand grows or reduces the Scottish Government, we will meet that? I am not sure that I put in those terms. I think that what I would say is that it is a key priority, an investment for us. It has clearly been an area of growth as we introduce new benefits and we make changes to existing benefits. That has led, as you are well aware, to significant expenditure and commitment beyond the block grant adjustment from the UK Government. What I would say is that work is being undertaken that is important around that longer-term sustainability to make sure that social security funding going forward is able to continue to deliver what it needs to deliver. That will mean making sure that there is efficiency, that it is effective, that the decision-making processes are as good and effective as they can be and that there is fairness there in making sure that particularly the new benefits that are being delivered are being delivered in a way that is fair to everybody. That means that we need to scrutinise the operation of how social security is delivered and make sure that going back to that efficiency and effectiveness is there within that system. Is it an open checkbook? No, that is what you are asking me. It is a priority, but within that, clearly, we need to make sure that it is sustainable in the long term. There is a lot of work being undertaken in that respect because we recognise that the challenge that you will make to me and external organisations will make. If you look at that growth going forward, it is a key pressure on the Scottish Government, the Scottish budget, and we need to be aware of that. More colleagues will want to come in on that, but I will touch on one aspect of it. Paragraph 102 is regarding how the Scottish Government has, as intended, prioritised spending towards supporting the delivery of a fair, green and growing economy. It struck me at the bottom of page 9 of your response. What you have said is that the Scottish budget also commits to exploring future multi-annual funding for employability services in recognition of the benefits of greater certainty for those planning services and the people accessing support. We have called for multi-year funding settlements. I am well aware that the UK Government does not give multi-year settlements. In fact, we had an autumn statement in November and now we will have a spring statement in March. I realise that it is not easy to pin those things down, but it seems to me that this almost jumps out as if this is the one area of the Scottish budget where you are looking at long-term funding. Why not in other areas? What other areas, for example, because local government has been calling for long-term multi-year funding that is more efficient and allows me to plan better? I think that, if you recognise that employability is quite often delivered by third sector organisations, I have a lot of sympathy for the third sector more broadly and their call for multi-year funding. I think that there is a trade-off. In my discussions with third sector organisations, often they will say that they are more concerned about the multi-year funding than they are about the quantum. Knowing how much they will have and being able to retain staff, for example, is really important. I get that and I am sympathetic to that. We have tried to move with third sector organisations to look at whether or not we can, at the very least, when finances are tight, give that certainty over more than one year. Being able to do that for large areas of spend, like local government, would be very challenging in the light of us only having year-to-year budgets at the moment. What I would not want to do is to give a false premise for almost a third of the budget. If we assumed and made assumptions that we are then just not correct because we are basing it on speculation when we do not know, because we have only got that one-year horizon ourselves and the fiscal uncertainty at the moment is huge, then I do not think that that is going to be helpful to a huge area of spend, like local government, but it is easier to do in smaller areas of spend where the margins of change can be managed more effectively. For me, the third sector is a good area to try and give that certainty to, because, as I said earlier, it struggles sometimes to hold on to staff because contracts are coming to an end and there is no certainty about funding, and I am very sympathetic to that. I feel that it would be very welcome, the sooner that that would be introduced, the better it would be. Enterprise is obviously an issue, and if one reads the response without looking at the budget, one would think that everything was pretty hunky-dory in terms of the Government prioritising enterprise, but what is being said in the response is not really reflected in the budget figures. For example, in response to that paragraph 1 and 2, you said that we have prioritised funding for the enterprise agencies to the extent possible, given the extremely challenging environment, and you said to the extent possible, but I look at a 15 per cent reduction, which is pretty harsh, given the overall settlement. The Scottish Government's budget has not been reduced by that. The committee is of the view that we need a widening tax base, which we should refer to in other areas of the report, and a growing tax base. It seems to me and colleagues that 15 per cent seems to be a pretty severe cut at such a time. We have allocated more than £307 million for the enterprise agencies in 2014-25. We have been very clear about that because of the challenging funding position that we will have to be really clear about what the priorities are, and we will have to be clear that we will need to focus on the things that are absolutely critical. We asked them to do a lot of various things. I was struck by some business leaders that I was speaking to were talking about a six-page letter that had gone to one of our enterprise agencies, asking them in terms of the things that the Scottish Government asked them to do. I think that we need to be more focused and sharper on what it is that the priorities are around particularly in the next year and to the immediate future. To be blunt, I have tried and I think that you can see this through, if you look at the budget lines for front-line services. The discussions that we are having around health, police and fire are pretty limited, and that is probably because I have focused and prioritised front-line public services in terms of where the money is going. That has meant really difficult decisions elsewhere in making the budget stack up. Is it what I would want to have done in an ideal world? No, but when money is tight, we had to prioritise front-line public spending. That has meant that we have had to constrain funding elsewhere, and it means that our enterprise agencies will have to utilise that £307 million in a very careful and targeted way in terms of aligning to the priorities. There are other elements in the budget where we have committed funding to our priorities, offshore wind and so on, where we have made some additional investments. However, it is a tough budget for our enterprise agencies. We are not getting away from that, and we have to be clear of what we are asking them to do with that money. I am going to like colleagues in, so I am not going to ask much more and wade through the whole report. You said in response to Pag 112 that we have prioritised funding for the Scottish National Investment Bank. I do not see how that statement can possibly bear up to scrutiny when there is a 28 per cent reduction in its funding. That cannot be classed as prioritisation under any measure. I would have thought that an organisation like that, which is required to lever in private funding, could get more bang for your buck. I fully appreciate the need to spend money in public services, but if you are not generating additional wealth, you are not going to be able to do that for long effectively, meaning that next year we are going to be in the same position or worse. How has the Scottish Government prioritised the Scottish National Investment Bank if the funding is for it? We have essentially given them the vast bulk of the financial transactions that we have available to us. However, if you remember, and we have had this discussion previously, that financial transactions have gone off a cliff as well in terms of the UK Government. That is unfortunate because the two areas of spend for financial transactions traditionally have been the affordable housing supply programme and SNP. We have prioritised SNP in getting the financial transactions that we have available to us. That has meant that the affordable housing supply programme has less financial transactions available to it. The supplementary estimates that are referred to earlier on with a £64 million reduction in financial transactions that we will get the flexibility to manage in 24-25 is just going to heap pressure on those areas of government that use financial transactions. We now have that additional pressure into the pot of managing that further reduction in FTs that we will have to assess once we see the full picture in the spring budget on 6 March. I make the point that FTs are a useful source of funding and we have traditionally utilised them very well in those two areas of spend. However, when they are significantly reduced, it has an impact. We are not able, because of the capital position, to supplement the reduction in FTs with traditional capital, because we have a 10 per cent reduction in capital availability. Those things have an impact, and that is the impact that they are having. If that changes in the spring budget, it is clearly something that we would want to revisit, because we recognise the importance of SNP. You have also talked about capital and how important it would be that the spring budget reverses some of the reductions in capital allocation. The issue about capital is that although many commentators managed to avoid mentioning the reduction in the Scottish Government's capital allocation, surprise, surprise, it is the percentage of reduction in the housing budget that has raised so many eyebrows at a time when there is serious pressure in terms of housing demand in Scotland. The biggest reductions are financial transactions. If you look at the capital reduction, it is about 13 per cent. As I said before, that is a priority to re-establish the capital element. It is difficult to do that for financial transactions, and it is more difficult now that we have a further reduction in financial transactions to manage within 24.25. It comes back to those areas that I know have been a priority for this committee—SNP, affordable housing supply programme. Reductions in FTs are the worst thing that could happen. I will look carefully at the position after 6 March to look at whether it is through additional capital and we have called for that. If you translate that percentage into cash, that is £1.6 billion less to spend by 27.28, about £540 million a year. That is a lot of investment in whether it is affordable housing, whether it is health infrastructure, whether it is anything else. That is a lot to absorb. We need that position to be reversed. We will also look to our own position of whether or not, once we get to the end of this financial year, what our position is and whether we will look at our borrowing position. We need to look at all that in the round. I want to come back to Parliament in the light of all that and look at whether any of those positions can be changed in the year. Flexibility is therefore very important. One of the things that my local authority has raised with me directly is inflexibility in terms of teacher numbers. We know some of the politics behind that, but in North Ayrshire they have got a thousand fewer pupils than they had four years ago and they are now at a teacher pupil ratio of one teacher to twelve children. They are saying that it is an, I quote, madness to spend additional money on new teachers when they already have more than enough teachers and they would rather spend the money on, for example, educational psychologists, sports staff, etc., which they cannot afford because they are being forced to spend the money on teachers. I know that this is an issue affecting other local authorities across Scotland and so surely, even if the money is ringfence for education, local authorities should have the flexibility to decide how they are going to spend that money as appropriate locally. Let me say a couple of things about that. Clearly Parliament has taken a lot of interest in closing the poverty related attainment gap and our firm belief is that, in order for teachers to play a crucial role in being able to do that. Of course, we are investing £1 billion in the Scottish attainment challenge over the course of this Parliament, so we recognise that teacher workforce is at the heart of that, but there are also other important supports that are provided through schools and other agencies. For me, the solution—you make a point that the position of teacher numbers is not universal across Scotland. What do we do about that? The offer to COSLA has been an education assurance board where we would like to get to what you could describe as a single point of truth of what does the teaching workforce look like and need to look like over the next few years to be able to get to the numbers that more accurately reflect the fact that there are differing positions. Some areas are growing. Overall, the people role has increased by more than 30,000 over the past decade, so it is not true to say that the overall position is down, but there is variation across the country. Getting that board established and being able to look at what the actual workforce numbers required are would enable us to more closely align that with what is required in order to maintain teacher numbers in the right areas. That, for us, is the key missing bit, and that board needs to be established and that work is taken forward. Rather than a board that might be easier just to let local authorities do what they think is best for the area with the resources that they have, I will move on. On that, if the education secretary would be going to Parliament asking questions, no doubt, about the number of teachers and relating to the PISA results. I said that politics involved them well, but the Government has to do the right thing, as opposed to we all know that opposition politics of stand-up sales x number of teachers fewer than there was a few years ago, but the way to defend it is clearly by improved outcomes through having the right mix in schools of teachers and support staff, psychologists and everything else. If we are talking about attainment challenges, it is not just about teachers, it is about the whole structure in a school, but I will move on, because colleagues will want to come in. It is just this one, which is basically that. In Pagab 144, we requested an update when the Scottish Government will seek to schedule a parliamentary debate on financial long-term sustainability of Scotland's finances. The report responses that the Scottish Government continues to support a debate on the long-term sustainability of Scotland's finances, confirmed by the Deputy First Minister on 3 October. That is five months ago, and we still have not got a scheduled date. Let us be honest, some of the debates we have had in the chamber have not exactly been thrillers. I will allow the member a very generous six minutes, because there is no great enthusiasm. Debates that could last an hour are being extended to two hours, 20 minutes or whatever, whereas things like this, which are important, are not being scheduled. Well, I am happy to schedule that. My suggestion is that we do it alongside—well, first of all, we need to see the spring budget—that we do it alongside the medium-term financial strategy, which does take that longer-term outlook. However, I agree with you that we need to even go beyond that in looking at some of the pressures that have mentioned social security as one. I am happy to do that. I have no issues. It just needs to be scheduled in a way that is going to be helpful and that is going to look beyond the day-to-day debates that we have with each other in the Parliament about spending on this area or spending on that area. I would welcome being able to look beyond some of those day-to-day debates that we have. I am happy to commit to the time, but let us make sure that we are in full command of all of the information that we need in front of us, which we need to get beyond the spring budget. The offer is in and around MTFS time. That is helpful. Thank you very much. There is lots more to cover, but we have a full house, so I am going to open up to colleagues. The first will be Liz to be followed by Ross. Thank you. I wonder if I can ask about your response to paragraph 40 when you said in relation to looking at the impact of tax policy changes on the wider economy that you have been using, and I quote, a range of evidence, including real-time economic data, obviously. Formal evaluations—you gave one example of that as the income tax evaluation from 2018-19 reforms. Can I ask you about the statistics that you received in that evaluation, and what the other formal evaluations are about behavioural change and the impact of tax policy change? First of all, we look to make sure that the SFC, when they are giving us the advice and doing the analysis, is built into their assumptions about any impact that our tax decisions may or may not have. They have judged that they describe it as not economy moving over their five-year forecast horizon. I mentioned earlier on HMRC, which is helping us to develop the evidence base on priority areas of research interests, such as behaviour change, which includes things such as cross-border mobility, and we will publish further information on that later in the year. That will be important because they will be able to drill down more because of the information that they have available to them. If there are other areas of evaluation that come from other organisations, we always look at those as well in independent analysis and independent bodies that will make comment on this area. We draw from a range of sources. SFC is fundamental because it is able to analyse what we are intending to do and put it through that system of analysis of whether, in its view, it would have an impact on things such as behavioural change, for example. Thank you for that, cabinet secretary. It is, of course, the decision of ministers as to what changes to make to tax policy. You are very clear in the next paragraph that you are saying that there was a relatively negative impact on the size and growth rate of the economy for the short term by moving to the five-band system. I specifically ask about what long-term analysis the Scottish Government has done on the basis of the information that you have been provided by the SFC and other financial information. That is why the HMRC data is important that we look at the—well, in some ways, behavioural change will, I guess, be—will need to track whether or not this behavioural change from year to year, because you cannot foresee into five, 10 years' time what a policy intervention in terms of tax will have, because the data will only really emerge in terms of behavioural change, if that is what we are talking about, as and when it emerges, which is why the HMRC data is important. Other data will be things like the national records of Scotland in terms of migration. At the moment, we have a positive in-migration of around 7,000 a year working-age population. We are going to be keeping a very close eye on that in terms of whether or not there is a shift. The data that inevitably is not forward-looking because data by its nature is looking back on what has happened, but we will continue to look at trends, and I think that it is the trends that will be important here. If there is a change in trend that indicates that there is a different direction of travelling, clearly that is something that we would want to look at very carefully. I think that many people would want to see that the evidence provided is the basis for the decision making. If that evidence is not being compiled until after the decisions, it puts the Scottish Government in quite a difficult situation. I think that many people fail when they see the reactions from the business community, particularly when they feel that the evidence about the changes that have been made is actually not being compiled. There is a great worry that some of the behavioural changes that will happen could be very detrimental to the economy, as you have seen. That is being compiled. The SFC will obviously do an analysis on looking at what it believes the impact to be, but then we will track that through real-time data through HMRC and look at the trends to see whether in actual fact there is any impact. I guess that is the point that I am trying to make. HMRC, in all this, is really important because it has the actual data of whether or not there is behavioural change and it will be able to disaggregate that in terms of the various bans of taxpayers. Cabinet Secretary, I do not doubt that. It is just the fact that that is not going to be compiled until after the decisions that have been made. That is the issue. I come to the other part of your sentence where you say that the engagement with stakeholders, including some of those in the business community, has been very important. Can I just ask you who it was in the business community who was supportive of your income tax changes? We meet business leaders representatives of the business community on a regular basis and we talk about not just our own income tax policy but a range of policies in relation to the impact on them, including areas of tax policy relating to UK Government policy. They will express a range of views. Do businesses want to pay more tax? Probably not in the main, I would suggest, but that is a position with VAT as well. Businesses are saying that they want changes to the VAT regime for the same reason. I guess our leavers at our disposal, so Tate NDR, had a very difficult decision to make. Do you put that resource into business tax cuts that the retail hospitality and leisure sector of course would have wanted us to make that choice, but I think that they also understand certainly the hospitality sector that I met with understood that we had made a decision to invest that in public services. You cannot invest it twice, so they might not have agreed with it, but I think that they understood why we had made that decision. I will come to retail in just a minute. Were there people in the business community who were supportive of the Scottish Government's tax changes? The business community will give their view as a business community. As individuals, I am sure that there are business leaders who believe in progressive taxation. I have no doubt about that at all, but the business community will represent themselves in terms of whether they want lower taxes for their businesses. I have no doubt about that, and they will make those representations, whether it is about business taxes, whether it is about VAT, but as a Government, we have a judgment to make about how we fund public services. If we are going to reduce taxes for business or indeed income tax, that means less money for public services, and those are the balances that Governments have to make in the decisions that we have to make. We have made a decision to invest in public services through the tax decisions that we have made, whether it is income tax or business taxes. I have to say that the business community almost universally has not been supportive of the changes. We are users of public services as well, and I think that they recognise the importance of investing in public services. Of course they are, but they are also the ones that can stimulate economic growth. Can I just come to the paper that we received from the Scottish Retail Consortium? We are absolutely flummoxed as to why retail in general and one sub-sector of retail in particular has been singled out for the potential business rate sur-tax. They see that as unfair and inequitable. I have been very clear with the retail hospitality sector when I have met organisations or indeed individual businesses that the choice of what I did with the £260 million out of the £310 million consequentials was a choice of either to invest that into public services or to invest it in business tax cuts. I could not in all conscience not invest that in public services primarily in the NHS. You will be aware, Liz Smith, that day in and day out we hear from your own backbenchers calls for additional public spending in many areas, including the NHS. I suspect that, had I given that £260 million to business tax cuts for retail hospitality and leisure, that I would have been answering questions either here or in Parliament about why there was less money for front-line public services. Ultimately, those are decisions that have to be made, but in a constrained fiscal environment where money is tight, I could not in all conscience not give that money to the NHS but rather give it in business taxes. It is for others to say if they would have made different choices what the impact would have been on public services through those different choices. I bring you back to the business rate surtax proposals, which is what I am asking about. We have a very detailed paper from the Scottish Retail Consortium that is sitting out somewhere in the region of about seven or eight very serious objections to the possible introduction of the issue, because there are two things. One, they make a bitter complaint that when it came to the discussion about the new deal for business, the Scottish Government said that there would be no surprises. I quote, that this came as a complete surprise to them, so I think that that is an announcement without a warning. In terms of the behavioural change, they set out really pretty substantial concerns. I just wondered on what basis you had modelled the potential impact of the surtax. Forgive me, I hadn't realised you were talking about public health supplement, but let me address that very directly. The commitment is to explore and look at the potential of introducing a public health supplement, something that was obviously done previously. As part of that process, we have had some very early engagement with the very business organisations that you are talking about. We have said to them very directly that we want to look at any evidence of impact that they can provide. We are engaging with them. I have met them directly, as have other ministers. We will continue to have that dialogue with them. Clearly, there will be other organisations, not least public health organisations, that will have a different view. We will look at all that in the round before making any decisions in terms of the 2526 budget position. That early engagement was one of the commitments that was made in terms of the new deal, and that early engagement is now under way. My last point, cabinet secretary, on that. The Scottish Retail Consortium is making the point that the budget document states that it is about that tax should it come in. It is about plugging the shortfall and devolved finances, but the Scottish Government is putting it across as a tax that would be hypothecated for public health. You have just mentioned the title of that just now. It is a public health supplement. Can we get it clear? Is the intention to bring in that tax on a public health agenda, or is it simply to try to plug the big black hole in the Scottish Government's finances? Of course, any gap in the public finances is due in part, and the big and large part, to decisions that are made by the UK Government in terms of our financial position. That can be addressed on the 6 March spring budget, if the UK Government so wishes. I think that it is important, and it would have a focus on public health. We are looking at specifically how we can raise additional revenues to support some of the public health challenges, but I stress that no decisions have been made to definitely take that measure forward. What we are doing is consulting at an early stage around the evidence, what it tells us and asking the business community itself to provide some of that, and that engagement will continue. Ross, you have a question on the public health levy. The retail consortium made the point that, from their perspective, it is targeting a particular sector of retail. That particular sector is supermarkets that sell alcohol and tobacco. As you have explained, this is a public health levy. Alcohol and tobacco have significant public health impact. You may not have that to hand, but do you have even a rough ballpark idea? How much does the negative health effects of alcohol and tobacco costs or public services cost the NHS every year? I do not know if I have that figure to hand, but I do remember from my health days of it being very significant indeed. In fact, there were a couple of figures that I had when I moved the minimum unit pricing regulations a couple of weeks ago about the impact. I cannot quite remember off the top of my head, but we can certainly get that for the committee if that is helpful, but it is very significant. We know that Scotland's relationship with alcohol goes very deep and is very challenging. It is not just the health impact, it is the economic impact, lost days at work and so on and so forth, so it is considerable. Is it not the case that, without a public health supplement at the moment, the difference from the minimum unit price is essentially just pocketed directly by the retailer? There is not currently a mechanism for that to be reinvested in public services and to create an additional public health benefit. Whereas we are introducing MUP, if we were to make the decision to introduce public health levy, that would ensure that what is currently just excess profit going straight into the retailer's pocket is reinvested in the services used to support those who are suffering the consequences of alcohol and tobacco. There is no mechanism, as you have pointed out, to harness any profits relating to minimum unit pricing. I think that one of the challenges is really being able to separate out what is in relation to minimum unit pricing. That is a challenge. The sector will tell you that, and that is a reasonable point. What I would want to convey today is that there are very strong arguments on both sides here, and what we want to do is to listen to all of that and make a considered judgment well in advance of 2526 around what is the right balance here to make sure that we are fair to the sector, which has no doubt had its challenges, but also that we recognise some of the public health challenges that you have just alluded to, which continue to put pressure on our health service and our economy as well. Switching back to another area, I was quite concerned about what you said in your opening statement about the cut to financial transactions in the supplementary estimates. Have you had any engagement from the UK Government, bearing in mind that that is on top of what was already a very bleak picture on FTs? Has there been any engagement from the UK Government on why this is their current direction of travel on FTs? The position for us is very difficult in terms of how our budget is constructed and the process for our budget throughout the year. I think that it just highlights and demonstrates that our fortunes or otherwise are wholly dependent on decisions being made elsewhere, and it does not make for a sensible set of arrangements for being able to set a budget. Then, take the in-year reductions that we had to make, which were very painful and very difficult. The Welsh have made this point as well, that if we knew how we were going to end up at the end of the financial year and had an indication of any in-year adjustments that were going to be made, then perhaps some of those decisions would not have to be made. Likewise, if we knew that financial transactions were going to be reduced, we would have been able, perhaps in year to have made some account of that, but what we are now left with is having to look for flexibility from the Treasury to manage that reduction in FTs next year at the very time that FTs and capital has been cut. We now have this surprise added into the mix that has come along at the last minute. I just make the point that it just highlights that the structure and the system is fundamentally a problem here, and that is what needs to be resolved rather than us trying to manage those changes solely on in the year. In a somewhat similar area, there have been reports over the past couple of days. I think that there is a question selected for this afternoon on this. It might be an FMQ later in the week around the decision to freeze additional capital spend in the health portfolio for the remainder of this financial year. Is that going to have any knock-on impact to capital allocations for next year's, but for the current draft budget going through? If you could just give a little bit more context as to why that decision has been made for the remaining few months of this year? So, until we know what the position is at the spring budget in relation to any changes to capital one way or the other, we really can't start projects that we might not have the money to finish. That £1.6 billion that at the moment we will not have between now and 2728 would have paid for a lot of health centres to be frank. It's the cost of a major new hospital for context, so we talk about percentages. In cash terms, £540 million a year is a lot to lose every year in the run-up to 2728. Our major call and the number one priority to Treasury has been a reversal of that capital position at the spring budget. We need to see all of that before we can really make a judgment about the infrastructure investment plan going forward. It would not be a good use of funds to start projects that we can't finish. I am hoping—and I'm eternally the optimist—that the spring budget will come. At the other side of that, I would want to be in a position to revisit that and to set out an infrastructure investment plan that is able to take some of those projects forward. At the moment, I just can't give that assurance because I don't know. One final question, if there's time, convener. Go on back again to something that's been touched on already. It was by the convener that the decisions around funding for the enterprise agencies. I understand completely that ultimately the budget needs to balance and that makes it challenging to make the most strategic decisions in each individual portfolio area. In this one, I'm particularly interested because I've been frustrated for a long time that money is given to the enterprise agencies. Scottish Enterprise, in particular, spends money on the film and TV sector, but Scottish Enterprise is not where the public sector expertise for supporting that sector sits. It's set within Screen Scotland, within Creative Scotland. In this year's budget, Creative Scotland has got an uplift, so Screen Scotland will benefit from that. Scottish Enterprise funding has gone down. You could make an argument that there's some level of strategic reallocation there. We will get better value for money from the same amount of money being deployed by Screen Scotland, where the expertise is, rather than by Scottish Enterprise. I don't get the impression that that was a strategic decision as such there. Somebody needs to take the sharp end of this for the budget to balance overall. Was there any discussion, though, about that kind of money? To take that as an example, there's loads of other examples of public bodies with overlap and responsibility for various sectors. Are those cross-portfolio discussions taking place to identify where we would actually get best value for money, out of the money that's being transferred from the public sector to the third and private sector? More so now, but I think there's still room for improvement. I think that there's been a more thorough deep dive into each portfolio, each public sector body, what they do, what they should do, where there's overlap, where there's duplication. Without a doubt, there's still scope to do more in that territory. I'm questioning around who is best placed, which public body is best placed, to take forward a particular area of policy. You've made the point about Creative Scotland. I would concede the point that we probably could do more as part of the public service reform agenda. I'm really keen to explore not just who does what, but whether or not there could be more extracted from organisations working more closely together. At the end of the day, it's all public money, and we need to make sure that organisations, including Government departments, are coming out of their silos to work more effectively together. I think that there's more that we can do in that space. Good morning, cabinet secretary. Thank you for joining us. I've got a couple of quick wee points before I moved on into my more substantive questions. One picking up on the points brought out around CAPEX. Given the significant cuts that are 20 per cent anticipated in real terms by up to 2028-2029, would you consider also scheduling a debate? For the first time, ironically, the issue was becoming alive to people outside over the issues around the treatment centres and the implications of what this CAPEX cut means. It's something that's of great interest to me, and I have probably consistently asked about it. I wonder whether the cabinet secretary would consider that. I think that that would be valuable. I'm certainly happy to consider it. I guess the question comes back to timing again. Do we do it before we know what the full picture is going to be like from the 6 March and spring budget, or do we wait until we've got that full picture? I think that's a judgment, but I'm certainly open to thinking about that. I think it's important that we have an honest debate around it because when there will no doubt be questions in Parliament about what is the implication for this project or that project, understandably so, but the truth of it is that you cannot remove £1.6 billion out of capital investment for that not to have an impact. If that's not reversed, there will be an impact, and the question is just where does it fall. I think that having that kind of discussion and fleshing out all the political parties in that could potentially be helpful, but carrying on just now, and it's off the back of some of the comments from the convener around the Scottish Fiscal Sustainability report in terms of single-year versus multi-year funding. I wonder if the Scottish Government collects any statistics as to the sunk costs of doing all this monitoring and assessment on a year-by-year basis, because it strikes me it's inefficient, but it's also extremely expensive. I just wondered whether you collect any stats, because it's in effect money lost. It's a fair point. I can't quite see what the solution would be unless we can move genuinely to multi-year funding that we know we can have some assurance that we're going to receive. Without that, it makes it very difficult to be able to work in a different way, but your point is a reasonable one, to be honest. It's not something that we're able to quantify at present, but certainly we can look at it in a qualitative way as to the extra effort and the way that it takes us away from taking that more medium-term approach, as you say. It strikes me both in the quantitative as well as a qualitative way. It would be helpful, because it exemplifies the inefficiency that plays into some of our other questions. We'll slightly take that away and consider your point. The other thing, which is something that I've asked about before, is around the Scotland funding. To be honest, I was a wee bit disappointed when I read the response from the Scottish Government to the committee, and it said in a quote, that consideration will be given to how future revenues will be deployed. That was exactly the point that I was trying to make. I don't want consideration to be given to how future revenues will be deployed. What I wanted to see was a recognition of the importance of one, setting up a sovereign wealth fund, two, potentially some consideration to cost implications process, three specifically some fiscal rules and a commitment to setting some fiscal rules. To me, saying that as a commitment going forward, even though you can't find your successors, I accept that, for this term, we will set aside 5 per cent, for example, of all moneys, because that recognises the revenue challenges that you have today, but also looks longer term and starts to get the building blocks around fiscal sustainability. I wonder if you'd like to comment on that reply, because it strikes me that it misses the point altogether. I take your point. It's not an unreasonable request, and I think that something we could give further consideration to. I think that it would have to be very modest given the fiscal position. I can envisage a scenario where we're again back in Parliament being asked questions about resources and hearing now, and we've got this pot sitting. However modest it is, it would be a focal point. I suspect of why are you not deploying that for X, Y and Z, and those are the very real debates that we have all the time around the hearing now. If we were in a different fiscal position right here and now, that would absolutely be, for me, a very wise thing to do and a very constructive way of building that resilience. It's one of the few genuinely flexible areas of funding that we have that are not constrained by all of the other machinations of the fiscal framework and so on and so forth. I guess you could make the point that I had at the net zero committee a discussion about this, about whether or not you could align the resources that are already being deployed with the £4.7 billion, for example, that are having a positive impact on our climate change goals. I think that you could. You could say, well, actually, you could cut that money however you wanted to in terms of investment into offshore wind, for example, and the commitments there or in some of our other positive action on climate change. Something I will continue to give consideration to. If we find ourselves in the short to medium term in a better financial position, something that I think has some merit, I just feel quite constrained at the moment in being able to, when public services are absolutely requiring every pound of investment, I found myself quite torn between the attractiveness of doing what you're suggesting and having that money available in here and now. I think that the evidence tells us that the constrained environment for public services will continue. If one had to put a wee bet on it, that's what we suggest, so to me that suggests that there's a higher need to do something like this because it's about fiscal sustainability. In terms of the social security spend, which is another area where we know there have been concerns around long-term affordability and sustainability, when I read through the response ironically enough, having raised that point about the longer-term picture, the response said deliberately referenced monitoring all areas of expenditure during the year. That is exactly not the point, because the point is about when you extrapolate the numbers, it's frankly not sustainable, particularly when it's demand-led, and therefore taking, regardless of whether it's a responsible and capable approach, only looking at it in-year is exactly the point, so I was surprised by that response. Do you recognise the very real concern, and it ties into the comments earlier about the Fiscal Commission sustainability report and so on? It can't give confidence when we get answers asking about the long-term, the answer says we'll take a responsible approach in-year, because that's the issue. Arguably, we've been taking the responsible report in-year every single year, but that's not the issue. The issue is the projection going forward that is concerned us committee so much. I accept that we need to, and I alluded to that earlier on, that we are looking at what we can do around that projection, how much of it lies in the decisions around efficiency, effectiveness, decision-making, eligibility, all of those things are being looked at, I guess, for the system that we have at the moment, but it is still a system that is projected to continue to grow because we're still in the process of finalising the shift of benefits and that journey is not complete. The point about demand-led is a fair one, but that gets us straight into some quite difficult discussions around what does the system look like in 5, 10 years in order for it to be fair to everybody. Does that mean that we need to review some of the elements of it? Those are not decisions that have been made, but it's something that inevitably Parliament will have to debate those matters going forward. Also, some of the decision-making around the supports that are available at the moment, making sure that they are not completely out of kilter with perhaps systems that have been inherited because that becomes unsustainable in terms of some of those decision-making. I would say about Social Security Scotland that they are all over some of those issues and making sure that, for example, a new, if you take adult disability payment, for example, that they're looking at things like consistency of decision-making and that there's no inconsistency arising where that would potentially lead to unfairness in the system and a position that becomes unsustainable going forward with an exponential growth of awards, particularly awards at a higher level. Those are all things that are levers that can maybe be deployed in the shorter term. It doesn't necessarily address that longer-term growth and that's something that I think that Parliament will usefully, perhaps, have a view on in terms of where does Social Security sit within. It's now a big chunk. It's one of the key pillars of our budget alongside health and local government. Where does that sit going forward? If it's going to continue to be so, and I suspect it will, that will mean decisions elsewhere. I hope that, finally, for completion, there is something about us being able to reduce demand on Social Security by some of the other levers, clearly avoiding people falling out of work into Social Security then becoming dependent on things like adult disability payment. What can we do to try and interrupt some of that happening further upstream? That's quite a challenge, but it's something that we do need to give more attention to. My last question concerns affordable housing, which I know I brought up before. I just picked up on something on the wording in the light around the commentary made about CAPEX, which I strongly agree with. It's a significant challenge. FTs, your response says, we remain focused on delivering 110,000 affordable homes. Previous language has been, we remain committed to delivering 110,000 affordable homes. Is that an indicator, given the very real challenges, significant challenges around CAPEX and FTs that we've discussed earlier? There's a lot of moving parts around this at the moment. The housing minister has been very active in looking at trying to lever in additional investment through private sector investment into affordable housing, so a mid-market rent in particular, and how we might be able to utilise some of our funding to create business models that make that more straightforward. We are looking at how we can be imaginative. I'm less precious about how and where the funding comes from in order to keep on track. The only point that I would make is that CAPEX, capital reduction, is challenging enough, but it comes hot on the heels of construction inflation, being a peak of 25 per cent at one point. That is never going to go back to what it was previously. You've got a pot of money, there's less bangs for the bucks because of all those in a higher cost basis. That is a challenge even before the challenge of capital funding availability, so we're going to have to look very closely at what can be done and what is the trajectory of delivery of that. If we can lever in those external sources of funding, then that will help us to make sure that we can deliver and keep on track, but it will be a challenge. John Finch, you're followed by Michael. Thanks, convener. We've covered a ground already, so I'll try not to be too repetitive. However, the whole question of our relationship with the UK tax and national insurance system came up earlier with the convener. It seems to me that the fundamental problem here is that the UK has two income tax systems, namely income tax and national insurance, and they do not relate to each other at all well. Have you picked up any suggestion that the UK Government is even looking at this, thinking of combining them, or anything like that? No. I picked up probably what you've picked up that we're in movable feasts here, where their speculation about further tax cuts were in an election year. Clearly, that is going to be a factor. We've got this major fiscal event on the Sixth of March, which, if you listen to press briefings alluding to further tax cuts, others say that that's not sustainable, and if you look at OBR commentary saying that it definitely is not sustainable, there's nothing that I've seen that suggests any kind of long-term strategy for looking at any of those issues. It seems very short-term at the moment. That's what I feared. I just think that it doesn't matter what we do, as long as you've got PYE, or income tax and national insurance, as they are in the UK, we've got a real problem. On another kind of tax, council tax, and you've commented on council tax reform and made the point in which we know that there's no agreement, no consensus at the moment on what should replace council tax. I just think that some of us are getting a little bit frustrated that we need to do something, and it's clearly not—nothing we do is going to have 100% support. Is the Government committed to making some kind of change fairly soon? Yes, absolutely. You could break it into two parts. One is some of the short-term reforms that we've already taken forward in relation to things like second homes, empty homes, for example, I think are helpful. The commitment is absolute around what does that longer-term reform look like, and can we land in a space that is a fundamental reform, either to the council tax system itself or a new system? That's local government committed to that. I think there's, I would hope, an element of cross-party consensus that there needs to be reforms to the system, whether we can find that consensus space. I don't know, I think it would be very helpful, because whatever we land on has to stand the test of time going forward. It has to be fair, it has to address some of the anomalies, it has to be able to raise enough revenue. All of those key elements—we've got the joint working group that is actually functioning very well that has been focused mainly on some of those short-term reforms, but without a doubt we absolutely need to set out a path to that longer-term reform. It's not going to happen overnight. It clearly will take a bit of time, but a destination point has to be agreed, and we're keen for that to happen. Even if it was just a reform of the present system and a revaluation, that in itself would be a major thing, given that the last revaluation was what, 23 years ago. It does seem to me that there's a kind of fairness and equality issue in this, because, again, if you're looking at Glasgow, it does seem that property values have gone up more in some areas than other areas, and I would suggest they've not gone up so much in poorer areas, like my constituency, and therefore they are relatively losing out every year that goes past. All of those elements would need to be taken account of in terms of any proposition for any alternative system. I think that any system of local taxation will have to have a property element. For me, that is important. Trying to reach agreement on a system that perhaps addresses some of those issues is going to be tricky, and there are lots of political challenges within all of that, but I'm keen that, if there is the space within Parliament, for example, to try and create a bit of consensus around these matters, then I think that that would be really helpful. The fiscal framework where local government is important to COSLA and to local government, they want to see a reformed system that gives that addresses some of the anomalies that we're all well aware of. I think that's the challenge. I'm keen, as I say, to try and create a bit of consensus in that space if possible. Okay, thanks very much. In relation to the infrastructure investment plan, you say that the next IIP will be published in due course. Is that May or is that some other time? Well, it'll be after the spring budget once we've had a chance to look at what that picture looks like and to make judgments about what does that mean for the capital availability. I just would caveat, and I guess it comes out of a health warning, that it could be a better position than we have at the moment, but it could also be a worse position than we have at the moment. That would impact very directly on the assumptions that are already made in the budget. I hope that that is not the case, but I think that it would be wise and that's why I came back, the way I did to the committee's report. If we were to do it now, pre 6 March, we would literally be revisiting it straight away because of what the 6 March is going to potentially bring us. Just following on Michelle Thomson's point about the Scotland money, I was just wondering, I accept the point that it's very hard to start a saving scheme or investment fund or whatever sovereign wealth fund when we're in real financial challenges. Would a compromise be that that money could be ring-fenced for capital expenditure, so be it not necessarily just renewables but housing, roads, railways, whatever, that we could say that money? Because that's an investment for the future, although we're not setting the money aside, we'd be saying this money is definitely going to an investment. At the moment it is supporting the spending side of the budget and without which a difficult budget would have been made even worse. I take your point and I'm not unsympathetic to the suggestions being made and I certainly don't have a closed mind to it at all, either your point or Michelle Thomson's point. I guess I'm just wrestling with the here and now and trying to wrestle with the here and now and have an eye to the future. It's a bit of a tension when I'm literally looking at pounds, shilling and pens in portfolio allocations and the difficult discussions and decisions that are having to be made around that is a challenge. As I say, I don't have a closed mind to the principle of it at all. We know that the UK is going into recession and whether it's technical or not, it is a recession and we're sometimes told that by raising tax that somehow damages growth but we're looking at the UK which is in a recession so it's not growing under a Conservative government and the UK has relatively low tax compared to other countries, 38% of GDP in tax compared to France at 50%. So how do you reflect on the fact that the UK is a low tax economy and is not growing? Well it's that. It was a resolution foundation described as stagnation nation with all of the above that you've just described and actually Scotland's position within that very difficult economic and fiscal climate is a number of key indicators that show that for example Scotland's GDP per capital has grown faster than the UK's since 2007. We have productivity grown at an annual average rate of 1% a year in Scotland compared to UK's half a percent. We're making better progress on things like the gender pay gap and of course we've got in terms of inward investment in the top performing region outside London and the southeast, third highest wages and GVA per person in the last measurement of 2021. So sometimes there is a narrative about the Scottish economy that is put forward by those who seek to portray a particular narrative but actually I'm not downplaying any of the challenges but the key economic indicators shows that there are many strengths underlying the Scottish economy that perhaps show a trend and a change over a number of years. The tax base for one is up and that is good. As I say I'm not downplaying any of the challenges but the Fraser of Allander has adopted an atmosphere of cautious optimism for 2024 which is the Fraser of Allander. It can be quite challenging at times so I think that's something that is welcome. Okay, thank you. Michael to be followed by Jamie. You gave some answers earlier on Deputy First Minister on the council tax and the money being baselined into the budget for next year. Senior councillors across Scotland are telling me that their finance officers are telling them not to believe you. Is that a problem that trust has collapsed so much that people setting their budgets are having to make those assumptions? I don't know who you've been speaking to obviously. I speak with local Government leaders regularly of all parties and I've given those assurances to be helpful. Not least, at Coesla were asking me about the baselining. I thought it was important to give certainty about that and that's the certainty that I've given alongside the £45 million being contingent on the spring budget showing that that is a positive addition rather than a negative position. The relationship with local government has been challenging through this budget process. I think that probably every budget, I can recall, is a time of tension with local government. I think that this year is no different from that. One of the ass I do recall, Coesla saying was one of their top ass, was about the share of the budget. I would just reflect that the share of local government has is an increasing share, 31% to 32% of the overall budget. That shows that despite the really challenging fiscal environment that local government has got an increasing share of what is our constrained cake, if you like. They've got a bigger slice of it. It's something that needs to be borne in mind. I will continue to discuss with local government. We've got a lot that we are working very positively on. We don't always hear about that in the public domain but there is a lot of joint work going on in a lot of areas that will be good for public services. You recognise how difficult this budget settlement is for local government at the moment? Difficult for the whole public sector? Councillor Haggeman came to Parliament on 16 January and said that there were surprises in the budget. One of the lines that we were working on was that there would be no surprises but that has not been the case. You are talking about the basis on which they had made demands but you had an agreement with them. Is it meant to be a different year, the Verity of House agreement? It's really just been ditched, isn't it? No, the Verity of House agreement is really important to Cosla I met with the presidential team just a couple of weeks ago and they were stressing, despite the difficulties of the budget and some of the disagreements, how important the Verity of House agreement was to them because, apart from anything else, it will deliver a new fiscal framework that will be helpful. It has delivered a whole range of issues and areas of progress that are perhaps not the ones that we hear about because, inevitably, the areas that get the attention in the public domain are those areas where there is disagreement rather than the areas that there is agreement on and there are a lot of areas where we are taking forward major areas of policy. Can I then give you Stephen Heddle, councillor Stephen Heddle, who said that despite the Verity of House agreement rhetoric about working together on shared priorities, it's the same outcome, a budget time for local government in reality. He doesn't really agree with you in terms of there's a big huge range of other areas. This is the core issue right now and they don't feel that they're being treated fairly and being given the truth by ministers. Stephen Heddle was at that meeting and he was one of the commentators at the meeting saying that, despite some of the difficulties—and don't get me wrong, those meetings can be robust, of course they are—he was pointing out that, despite all of that, there are areas of importance that they want to work with us on and the Verity of House agreement is really, really important for them. I can go back to many budgets around local government and they do take a bit of a pattern of local government will ask for x amount of money and there will be some difficult discussions and then we land on where we land. This year is difficult and you could say that for the whole of the public sector because there's less money. The difference this year was to be that there were to be no threats, there was to be no take this or I'm going to punish you for it, but that's exactly what you're doing now. I'll come back to the council tax in a second but I make the point that in a budget where there is less money, the size of the cake is reduced, local government literally has a bigger slice of it, so 31% to 32%. That tells me that within a difficult financial environment and settlement that local government have been treated reasonably fairly, if you're talking about the council tax fees in particular or teacher numbers, then I guess there is a judgment to make. Local government will say the £145 million for teachers should not be ring fenced and they should be able to spend that on whatever they want. I suspect that your colleagues in the education portfolio would be the first in Parliament to be asking why the Scottish Government had allowed teacher numbers to reduce and why we were removing ring fencing from teachers. Now I actually think teachers are a really important part of reducing and eliminating the poverty related attainment gap. They're not the whole story, as the convener pointed out earlier on, but they are an important part of the story. So either if we put £145 million into having more teachers, we expect local government to then make sure that the teacher workforce is of a size that can help deliver that poverty related attainment gap closing. The same with the council tax freeze, we've put £147 million into helping local government deliver a council tax freeze. That money is for the freeze and I don't think that it would be acceptable to council tax payers for us to say, well, you can have the money and you can put council tax up as well. I don't think that's going to wash with council tax payers. The money is on the table and it is for councils to decide. We've already seen a number of councils of all political colours make the decision to freeze the council tax. I know it's obviously a policy of UK Labour as well for council tax freeze to be supported. In difficult financial times, we have, I think, been fair to local government, but it is a tough budget and it is tough for the whole of the public sector. Do you now know what the budget for further education is? The budget for further education is as I laid out previously. You didn't lay it out previously. I gave the global amount that was for higher and further education. If you're asking me whether the funding council have agreed with universities and colleges around the places, if that's what you're asking me, then those discussions are on-going, as I understand them. I think that last year, in the spring time before those discussions had completed, and this year will be no different. Spring time will be when those discussions are concluded and colleges and universities will have the final agreement with the Scottish Funding Council. I think that this is the fourth time I've asked you this. Yeah, but there's nothing different this year than any other year. Well, there's nothing different this year. That's not what the college sector tell me. Well, it was spring of last year when the final agreement with the Scottish Funding Council was reached, so there's not any different this year at all in terms of those discussions with the Scottish Funding Council. Spring last year, it'll be spring this year. Okay, the flexible workforce development fund, obviously of huge concern to the colleges and also to employers has been, since last time you're here, an awful lot of coverage from that about people asking, can you maybe just give us your justification as to why you think that was an area that should be cut in preference to other areas? Well, portfolios have had to wrestle with some very difficult decisions because there's less money to go around, and in fact, with tax cuts that you're proposing to be even less, I think over half a billion pounds less to spend on public services. Even with the tax position that we have proposed and that has raised £389 million of additional funding, difficult decisions have had to be made, and each portfolio had to make the judgments of where those areas that couldn't be sustained have had to have funding reduced, and the flexible workforce development fund has been one of those areas. Despite that, we recognise that Scotland's colleges are absolutely the heart of the skills system and will be a major part going forward. Obviously, we have the review of the skills landscape and colleges within that are going to continue to play a very, very important role going forward. Yeah, because the Federation of Small Businesses have also made representation on this particular area, and you've said, despite the evidence that we've had that this is a budget for growth, that seems to be one of the key asks for quite a reasonably small amount of money in the global budget. There seems to be a really key issue that cuts across a variety of different stakeholders within that economic side to it. I just feel that it could do with a little bit more of a robust justification. Well, there are hundreds of small pots of money across the whole of government that all add up to a lot of money, and I guess I took the strategic decision that I was going to prioritise front-line spend, so front-line spend in our front-line public services required me to shift money in that direction, which means it's difficult for other areas of spend. We wish it was otherwise, of course, but with less money, there is less money to go around, and every budget, therefore, has to be looked at. The strategic priority was front-line spend on our public services, which is why, again at an evidence session, we've not heard quite so much about front-line spend on the NHS or police or fire. I suspect that the reason for that is because those are the areas where we've prioritised the spend going to, and what we do hear about are the areas that have had to take a hit in order to do that, and you've highlighted one. If you want to come to me when we have our meeting and suggest that that is the priority that you would like to see addressed and you can suggest to me where we would look to make changes elsewhere, then, of course, I'm happy to hear that. Can I ask about higher education? Since you published the budget, we have had the admission figures for international postgraduate students across Scotland. There's been a very significant decline in big parts of that market. Can you tell us what impact that is going to have on the budgets of our higher education institutions? Our higher education institutions will, as ever, have a challenging set of circumstances that they will need to wrestle with. One of the circumstances that you'll be well aware of is the restriction on international students, for example. I'm not downplaying the factors that are all at play with universities, and they will have to manage the levers that they have in order to find a path through. I think that the larger universities have the ability, probably, to do that more readily. I think that there are perhaps some particular challenges for some of our smaller institutions, compared with the larger institutions, but I don't downplay the pressures that are here on our university sector. The point that I would make is that we have supported as best we can within the available resources for our university-funded places. Given the best support that we can, given the limitations of the budget. I suppose what I'm saying is that, since you made the budget announcement, you've not brought any amendments today. The circumstances in the universities have changed quite significantly. We now see—and it's the medium-sized institutions that are particularly affected in Scotland—some, perhaps, running in your deficits of up to £15 million, with very significant issues in terms of what that might result in terms of their own budgets. Have you had those discussions with the sector in terms of how you could flex or assist in any way? Discussions with the sector will continue. Of course, we want to try and be as helpful as we can, but you would literally be asking me to bring forward amendments to take money from elsewhere to give to the universities. If you're suggesting where that comes from, I'm all ears. To be fair, cabinet secretary, that's not what I'm suggesting. What I'm suggesting is that the circumstances have materially changed that will affect employment in Scotland for people in these institutions, their financial stability and whether you've had the conversations with them about how robust that is. I think that that's a pretty reasonable question to ask. Conversations, as I've just said, take place with the sector on an on-going basis. I've had individual discussions with some institutions as well. Of course, those issues have been brought to the fore. Until 6 March, though, I don't know whether the money that we even have in this budget is going to be there, let alone have any additional funding. There is a scenario where the UK Government makes decisions on 6 March that could impact negatively on the funding that we have available. I hope that that's not the case, but, of course, we'll continue to discuss with higher education and others how we can work with them. If there are things that we can do that are helpful beyond trying to find money that doesn't exist, then, of course, there are many other areas that can be looked at that could be helpful to them. Last time that you were here, I asked around the £28.5 million cut to the university's teaching budgets. I postulated that on dividing that by the amount of money that's allocated per head student that would result in 3,900 student placement cuts for Scottish students. You said that you didn't recognise that figure at that point, but really the question here is about whether you're going to instruct the Scottish Funding Council, as ministers do, to take the number of places or to cut the amount per student. Are we any further forward in making that instruction to the Scottish Funding Council? The Scottish Funding Council, as I said earlier on, is in the process, as it was last year and produced this in the spring, of producing the academic year 24-25 indicative allocations for both colleges and universities, which will provide the detail that you're looking at in terms of university-funded places. That will be expected in the spring of this year, as it was in the spring of last year. We spent a lot of time at the last session talking about the 1,200 places for universities, which, of course, University of Scotland have been very clear were Covid additional places, which were never envisaged to be there for the long term. They always knew that those places would be reduced, and the time frame was always very clear. We'll allow the Scottish Funding Council to get on with the job that they do every year. I'm not sure how it works, though. My cabinet said that ministers would indicate what the cap is in terms of the number of students that would be admitted. It's a ministerial decision that they speak to the SFC about, and then a letter is sent. That's the issue in terms of the number of students. What they're waiting as far as I'm away for is an instruction from ministers as to whether it is less money per student or fewer students. Do we know if ministers have given that instruction to the Scottish Funding Council? That isn't about negotiation with universities. It's about ministers and the Scottish Funding Council who work for the ministers. The Scottish Funding Council will be discussing with colleges and universities what the number of places are. Of course, that will be within the overall budget that's been allocated to colleges and universities, but you're literally asking me here about additional money in an environment where— I'm genuinely not. What I'm asking you is about whether you're telling the universities to cut the number of students or cut the amount of money per student. That's not about additional money. I'm asking you about the process that you've undertaken with the university via the Scottish Funding Council. The Scottish Funding Council will be discussing with both sets of institutions around the number of places. The overall budget that's been set is the overall environment that the Scottish Funding Council will be operating in. That is the budget that has already been set out. The figure is there, and that is the context of what the Scottish Funding Council will be operating within in terms of those institutions. The spring of last year—the spring of this year—will be when those places will be agreed with both sets of institutions. It's a very challenging financial environment. It would be made more challenging if the tax decisions that we've made had not been made. I think that you have alluded to your against the tax rises. You have said that you would want to cut the intermediate rate of tax, all of which I think would lead us to having half a billion pounds of less money, whether it's for universities, colleges, health and local government. You can't just talk about the tax side of things. You have to also address the spend side of the budget in terms of the decisions that you're saying you would take. I'm also just asking about the competent operation of the system. The question here is that we've got people applying for university courses being given conditional or unconditional places at the moment. The difference at the moment is that there's going to be a significant cut to the teaching budget, and the universities who are offering conditional and unconditional places don't know how many places they can offer. This is not usual. Well, it is. There's nothing different about this year that happened last year. The position is the same, and the budget process is exactly the same this year as it was last year. The negotiations of the Scottish Funding Council are no different this year than they were last year, but if you're saying to me that you want more money for university... That's not what I'm saying, cabinet secretary. Well, you have to decide whether you're saying you want more money or not. You can't just describe a problem. I just wanted to go back to the issues around the enterprise bodies and relating to economic growth. When you came before this committee in January, I asked you about the cuts to the budgets for Highlands and Islands Enterprise and South of Scotland Enterprise, and you suggested that they would be focusing their attention on key priorities. You also said that, in your response, you talked about key things that matter, key priorities for delivery, key interventions, key sectors for growth. Today, earlier, I think with the convener, you talked about prioritised funding and an approach which was careful and targeted, but we still don't know the detail of where you think those priorities and those key focuses are going to be. The budgets have been cut, so what are you looking for them to deliver and what are they now not going to be able to deliver given their role as you state in your report their important role in driving economic growth? Well, the detail of what we ask our enterprise agencies to do will be part of the discussion and then the correspondence and agreement of the priorities with the well-being economy secretary. I guess the point that I was making is that, as ministers, we have a responsibility to not ask organisations to do more with less, and I think that's a principle that is a fair one. In order for them to focus on what is key, we would expect them to be looking at, for example, the key objectives of NSET, supporting growth of local businesses in their area, all of the key priorities. There are some things that may take longer for them to do and may have to be done over a longer timeframe and there are things that they may have to pause or stop doing. The detail of which will be for local partners to discuss and for the economy secretary to be involved in setting the strategic direction of travel rather than for me to say as the finance secretary what they shouldn't do. I'm just making the point that we recognise that, with constrained resources, we can't ask them to be doing more with less. Given what you said previously, you're accepting that our key enterprise, Body's Highlands, Islands Enterprise, South Scotland Enterprise, are going to be less able to drive economic growth to support those businesses they need to than they have been in previous years. What I'm saying is that they will have to focus what they are doing on those key priorities or maybe other things that they are doing or have been doing that they may have to do less of in order for them to focus the resources on that key objective. The brutal truth is that the strategic priority that we have taken is to invest as much as we can of the limited resources that we have in public services, in front-line public services. That means difficult decisions elsewhere. If you've got less resources you can't give everybody the same amount of money you have to prioritise. I've been very clear throughout this session of prioritised public services. That's meant difficult decisions, whether it's enterprise agencies or universities, because otherwise I would have to be cutting front-line public services. There were choices and we've had to make those difficult choices. Within that resource that they do have, we need to be really clear on the priorities that we would expect them to deliver. There may be things that we would have liked them to do, but they may have to take longer or they may have to be paused or stopped. Taking that on board—you talk about priorities in areas where we're cutting, so we've accepted that they are going to be less effective, less efficient at driving economic growth. As our report highlights, how are you going to monitor the impact of those cuts on their ability to deliver economic growth? We would expect that to be done through the normal monitoring arrangements of our enterprise agencies and we would expect them to be prioritising economic growth and support to businesses' new starts and growth. There are other areas of the work that enterprise agencies do that they may need to reduce. Within those discussions of what is done and the monitoring of that with the normal civil service processes of oversight and ministerial oversight, we would expect those enterprise agencies to be clear about their objectives, what they're sitting out and then to be measured against those. The point that I was trying to make is that sometimes I was referring earlier on to the business leaders that I met who referred to the six-page letter that an enterprise agency had received from ministers at the time. They were pointing out that it should be literally one or two pages and it should be key elements rather than a whole list of things. I think that that's actually a fair point. When resources are tight, they really need to focus on doing perhaps fewer things but doing them well and to the best of their ability. Of course, economic growth and support to local businesses is their key objective. I'm saying that there may be other things that may have to take less priority. I would hope that they're doing things of the best of their ability anyway. I'm talking about the number of things that they're doing. So, when you're setting the budget, if you're setting the budget again next year, you will have reduced expectations for what they're going to be able to deliver because this isn't the first cut. This is a number of years of cuts that the enterprise bodies have faced. How will we not get into essentially a spiral where enterprise bodies are set targets on reduced budgets? They deliver less, although you might argue deliver it better, but they deliver less. How are we not going to be in a position where their budgets continue to be cut because they're not? Could you expect them to deliver less? The easy answer to that and the straightforward one is that we don't see a real terms cut to the Scottish budget that we saw at the autumn statement. So, if we see, for example, a better fiscal position emerge from the spring budget and that if we're allowed by the Treasury to use that as our basis of our forecast rather than the autumn statement, and if at the next autumn statement we see an enhanced position of our fiscal position, then we can address all of these points. With less money, we cannot give every part of the public sector and all of our agencies the same amount of money because it just doesn't exist. So, you can take a salami slice and you can say, well, there needs to be less money for health or for police and for fire, but I suspect if I had done that, the questions today would have been centred on those public services. The easy answer is the more money we have available to us and the bigger the cake, then we can address the issue of the enterprise agencies or higher education, further education institutions, but when there's less money, we have to make these really difficult decisions. I mean, that point might have more standing if there hadn't been cuts when times had been better as well. I asked at the, again, when you were here in January about, it's really just for clarification on business gateway now. Apologies if I've missed it in the quite large amount of papers that we've received for this meeting, but can you advise if there is government support going into business gateway and if so, how it's going and why it isn't identified in the budget at all? Do we have that level of detail? I'm afraid I don't have that level of detail with me, but I will absolutely come back at the earliest opportunity. Okay. All right, thanks very much. I mean, we all accept just before, and we all accept that economic growth is absolutely important, but absolutely vital, you know, for jobs, for our economy, but also obviously for taxes. How do you respond to the comments of Sandy Begby from Scottish Financial Enterprise at the weekend who said that the Scottish Government's tax policy is making Scotland a dangerous place in which to create wealth? Well, I've got a lot of respect for Sandy Begby, and of course we should listen to all voices in this matter. We have tried to, through our tax decisions, not just this budget, but for a number of years to develop a tax system that is progressive, that is based on those with the broadest shoulders pay a bit more, and the result of that is we have £1.5 billion of additional revenues that we wouldn't have had we followed the UK Government's tax position. Now, if we didn't have that £1.5 billion, we would have even less for the enterprise agencies, less for universities and colleges, so our tax decisions have led to a significant level of additional revenues for the Scottish budget, so those are choices that have to be made, but on the one hand you can't ask for more money. It is not a proposition that I think has much merit of lower taxes and higher spend. I don't understand how that would work. I think if you have lower taxes and taxes are reduced, then you have less money to spend. Those are the choices that are also facing the chancellor at the spring budget on 6 March. I really hope that he prioritises investment in the public services rather than tax cuts, because that would enable us to make the investments in our enterprise agencies or universities or colleges, but that is essentially the two sides of the budget. Those are the issues that we have to grapple with at each budget. I mean, I get that. Without going on and getting into discussion on the Laffer Curve and areas around that, it must be worrying that a senior position, but a person within a vitally important sector in terms of the Scottish economy, is saying that your tax policy is making Scotland a dangerous place to essentially base himself. As I said, I respect Sandy Begby. I mean, I wouldn't agree with that description. Earlier on in the session, I gave a number of economic indicators that actually show, and I also quoted Fraser Vallander Institute, who does not always use the language that they have used in relation to the outlook for the Scottish economy. Despite the recession that we are seeing in the UK, and despite those financial and economic challenges, the economic indicators show improved productivity, improved tax-taking and wage growth, and all those indicators show that Scotland is still a very good place to invest and do business, whether that is inward investment or indeed business decisions in terms of their own investment decisions here in Scotland. I think that all I can do is to point to the economic indicators, which perhaps just give a bit of a different narrative than some of the other things that we have heard. However, as I say, I have a lot of respect for Sandy Begby, but I do not agree with his description on that. Okay. If I could just move on to an area around the rural affairs budget and agriculture funding. I just remind members of my interests in terms of agriculture. It is not mentioned in your report, because it was mentioned in our report, but not as a recommendation, but we saw cuts to the rural affairs budget and £33 million of ring fence agriculture funding as part of the view review has not been allocated back to the budget. Do you know yet when it will be? Let me say a couple of things. One is that I go back to the point that, with less money, there is less money and less money to go around. If these decisions have been very, very difficult in terms of the funding, there is the ring fence funding of £61 million that I have given a commitment that will be returned to the portfolio. The first instalment of £15 million is being returned at £24.25. I will look at the remainder of the funds being returned in full at the right time in negotiation with the sector. Do you have any timescales that you have to have that return back? No, but I want to do that in a way that supports the reform and transformation of Scotland's farming and food production industry. That is the purpose of that funding. That is what the sector wants it to be for. I want to do that in a way that brings it in at the right time for the sector, because otherwise, if it is not at the right time, there is a danger of it coming in in a way that is not going to be spent. The preparation has to be done so that, in terms of the reform and transformation, we are clear on what is needed when. Those discussions are on-going, but I can say that it is an absolute commitment that all of the £61 million will be returned. It will be done in a way that is absolutely in line with what the sector needs. If funding that you accept is ring-fence for agriculture can be taken out of agriculture, used in other areas as you make the case that budgets constraints are tied with no commitment, but no commitment on timescales to return it back or when it will be or how it will be returned back, does it make a bit of a mockery of the idea of being ring-fenced? No, because it will come back and it will be used for that purpose. The ring-fencing remains. It is just about the profiling of the funding. There is no question about the funding. The funding will be returned. It is just about the profiling of that funding. To be honest, there is a danger of the funding not being spent if the sector is not prepared and ready to use it for the reform and transformation that it wants to use it for. It has to be returned in a way at the profiling of which meets the needs of the sector so that it is ready to do X. The money comes in to help them to do X in the right year when they are ready to do that. There will be an element of back-loading, I suspect, because there is still a lot of work going on around the preparation of reform and transformation, but that money is ring-fenced. For that purpose, it will be returned. We are talking to the sector about when £15 million already committed for £24.25. The remainder will be returned thereafter and the split of that and the profiling of it will be negotiated. In terms then, on the general principles of ring-fencing, if the Scottish Government can take ring-fenced money and use it across their budgets, why should local councils not take ring-fenced money from the Scottish Government and use it across their ... What is the difference, sir? I will bring Alison in, but it is not about taking that money and spending it elsewhere in budgets. That money has been constrained, so there is less money. The profiling of that money is being deployed in a way that is required by the sector that is able to be deployed in a way that is needed but also is affordable. There is no point in sitting with £61 million sitting in a budget line that is not going to be spent, it is going to be underspent, when that means that we have had to reduce funding elsewhere in order to provide that in particular. You have reduced funding from the rural affairs budget, so what you are arguing is that we cannot find a use for this money within the rural affairs budget, but you have cut the rural affairs budget. Just on the point that I was really asking about, why should a local authority that receives ring-fenced funding from the Scottish Government for certain parts of their public service delivery, why shouldn't they look at it and say, well, if the Scottish Government can use ring-fenced funding for what it wants to, why shouldn't we be able to do the same, given their budget pressures that they are under? On that point, we have removed ring-fencing this coming year of almost £1 billion for local government. Nearly £1 billion of local government funding will have ring-fencing removed, so there will be flexibility on nearly £1 billion that was previously ring-fenced. That shows the direction of travel with local government. We want to do more. We have an agreement, the very house agreement. That is a key element of an on-going journey. The remainder areas of ring-fencing are areas that are a bit more tricky. We talked about one earlier on about teacher numbers and the need for us to move cautiously, because we do not want to see teacher numbers going off a cliff. Questions would then be asked about, well, what have you done, Education Secretary, to avoid teacher numbers going off a cliff when they are so fundamentally important to reducing poverty-related attainment gaps? We are on a journey to remove ring-fencing, and we have made good progress, but there are some remaining areas that we will have to move cautiously through as we work with local government to get to our joint aim, and that is to further remove ring-fencing going forward. If I've got time for very brief. Very brief. We're an hour over time already. My apologies, convener. We've been too generous to members. It's actually following up really on something that Ross Greer talked about in terms of capital investment in some of the NHS, and we've seen plans for new Belford delayed and other areas. Obviously, those delays to new buildings mean that the NHS boards are going to have to look at how they can get the most out of the facilities they've got, so increased maintenance costs. Has that been or will that be covered or represented in their budgets going forward? Increased maintenance costs to basically increase the longevity of the facilities that they've got that would have been replaced with new buildings? Let me say a couple of things about that. We've said that while we await the spring budget, and of course the best way of addressing the point you're making about new NHS facilities is for the chancellor to reverse the capital cut and not have £1.6 billion. You have made that point, and I know that you've made it short on time, so I'm going to make it again. Because if there's less capital money, there's less money for NHS buildings, infrastructure or anything else. That is the solution. Meantime, what we've said is two things. One is that the priority needs to be on maintenance, so essential maintenance, for the capital that the NHS does have available, and that we will look after the 6 March at what the resources look like, the 6 March capital position both in terms of UK Government and anything that we are able to do in terms of our own position, depending where we end up with the year end to revisit that in the infrastructure investment plan. It's not the end of the story, but we couldn't have projects starting that might not be able to be taken forward, because that would just use money in starting projects that couldn't then be completed, and that's not a good use of public money. We've had to pause until we get that picture. Meantime, we would expect essential maintenance to be taken forward as a key priority by boards. Thank you very much, and thanks to colleagues, as I said, I have been very generous with time today, and your time, of course, has been in particular, Deputy First Minister, because we've been asking questions for an hour longer than was originally proposed, so I want to thank you for answering so many questions in such detail. Of course, we were all probably guilty of wondering off the report at certain points. We know that stage 3 of the budget is next Tuesday. Given some of the questions that were asked and comments made, have any Opposition parties come forward with alternative fully-costed budget proposals? None. We now move to our second agenda item, which is considered a budget bill at stage 2. We have no amendments, but in terms of the standing orders, we are obliged to consider each section and schedule of the bill, and the long title and agree to each formally. We will take the sections in order, with schedules being taken immediately after the section that introduces them, and the long title last. Fortunately, standing orders allow us to put a single question where groups of sections or schedules are to be considered consecutively, and unless members disagree, that is what I propose to do. Firstly, the question is that section 1, schedule 1, section 2, schedule 2, section 3, schedule 3 and section 4 do not be agreed to. Are we all agreed?