 The minister will take questions at the end of his statement, so there should be no interventions or interruptions. I call on Tom Arthur up to 10 minutes, minister. Presiding Officer, I welcome the opportunity to update Parliament on the provisional outturn against the budget for financial year 2021-22. The provisional outturn demonstrates once again that this Government has prudently and competently managed Scotland's finances. This again has been another exceptionally challenging year. The Scottish Government has had to respond quickly and decisively to significant challenges, in particular the on-going impact of the Covid-19 pandemic, the cost of living crisis, and the tragic illegal war in Ukraine. However, our effective and prudent financial management has meant that every penny received by the Scottish Government has been channeled to where it was needed the most. In 2021-22, we spent over £5.7 billion in relation to Covid. That includes just over £2.6 billion of supporting health and wider public health initiatives, and around £1.5 billion in business support and self-isolation grants. Part of the business support was a £375 million package announced to support firms impacted by the unexpected spread of Omicron. That was proportionately significantly more than the chancellor announced for the UK as a whole. We continued to roll out a highly successful Covid-19 vaccination programme, including those vital fford booster doses to combat the unexpected Omicron variant. We spent over £3.5 billion on social security benefits, including £57 million as we started the game-changing Scottish child payment. We also committed an additional £4 million of Scottish Government humanitarian aid as the first part of the contribution to support of the Ukraine crisis, supporting those inside Ukraine affected by the conflict and for vulnerable people who were displaced from Ukraine whilst they were in transit. Looking forward, the Scottish Government remains committed in ensuring that, as a country, we continue to effectively manage the on-going recovery from Covid and provide stability and support against the impact of the cost of living crisis. Responding to the pandemic, sharply rising inflation and the cost of living crisis has once again put a spotlight on the challenges that we face in managing such volatility within the narrow, restricted fiscal powers that we have. We face the same interrelated challenges as other Governments across the world, but we do so currently without the tools and levers that other Governments have at their disposal. The current fiscal framework is inadequate and leaves us with an imbalance between the risks to which the Scottish budget is exposed and the levers that we have to manage those risks. We have uncertainty over our UK Government funding. The UK Government does not confirm our final funding envelope until six weeks before the end of the financial year, materially changing it with no prior warning right up to that point. That limits our ability to do long-term optimal planning and makes efficient and effective deployment of late funding changes extremely challenging. That is an important point and links directly to the management of the budget and spending well. The total resource funding confirmed solely in the year was over £1.1 billion. Some of that was expected, but large elements were not. We want to make the most of that funding and do so requires managing programmes of spending across the cut-off that is our year end. That is not underspending, it is maximising the effective use of our budget. There is a challenge of managing this volatility in our funding envelope and it is compounded by a funding model that means to carry forward other budget between financial years is tightly restricted. Our priorities need to be managed using a multi-year model. Those challenges, unfortunately, do not stop at the end of a financial year. We also have to manage within strict limits on how much and for what purposes the Scottish Government can borrow, leading us to be overly dependent on UK Government policy. That has been compounded by the UK Government's decision to remove necessary Covid consequential funding at a time when we undeniably need to continue to provide additional support to our public services. That is why, until such a time as the people of Scotland choose a different constitutional path, we will also continue to make the case to the UK Government for more proportionate financial powers to help to manage pressures and volatility in Scotland's financial position and allow the Scottish Government to respond fully to its priorities. The forthcoming fiscal framework review must take place in that context. A narrow technical review of the framework will not deliver what the people of Scotland need or want. Turning now to the 2021-22 provisional out term, under the current devolution settlement, the Scottish Government is not permitted to overspend its budget. At the same time, the carry-forward of budget between financial years is very limited, meaning that phasing of expenditure between financial years is extremely restricted. The UK Government does not constrain its economy and businesses to manage their finances through one single year, so why do they expect a devolved nation to do this? This is the situation that we currently face in Scotland. There is therefore a balance to be struck to ensure that we maintain spend within our budget limits, but we do not generate high carry-forward between financial years that would risk breaching our reserve cap and result in loss of funding. However, we have once again managed to maintain this balance under those strict fiscal constraints. I can report that the provisional fiscal out term for 2021-22 is £47 billion against the total fiscal budget of £47.6 billion. The remaining budget of £650 million, which represents just over 1 per cent of our total budget, has been carried forward in full through the Scotland reserve. It is made up of £421 million of fiscal resource, £183 million capital and £46 million of financial transactions, which, of course, can only be used for loans or equity investments in entities outside of the public sector. It is important to note that there is no loss of spending power to the Scottish Government as a result of this carry-forward. As I have said, every penny has been allocated in full, allowing us to implement measures at the most optimal time rather than being constrained to a single financial year. That is evidenced by the fact that the majority of this carry-forward has already been proactively anticipated in the 2022-23 spending plans that have been approved by this Parliament, including £324 million anticipated within the 2022-23 budget, published on 9 December 2021, and the £120 million announced on 27 January of this year by the Cabinet Secretary for Finance and Economy to support local government costs at stage 1 of the budget bill process. £265 million of that funding is directly linked to late UK Government consequentials, which was finally confirmed only six weeks before the end of the financial year. The remainder represents just not 0.4 per cent of our budget and is already built into our 2022-23 plans, funding expenditure in 2022-23, with the full budget allocations being disclosed to Parliament as part of our autumn budget revision process. I highlight that the outturn figures for 2021-22 remain provisional, as they are subject to the on-going audit process. Finalised figures will be reported as usual in the annual Scottish Government consolidated accounts and a statement of total outturn for the financial year of 2021-22 later this year. To conclude, the provisional outturn demonstrates that the Scottish Government has maintained a firm grip on Scotland's public finances in the context of a year with significant challenges. We have delivered on our priorities, maintained a balance from not breaching our fixed budgetary limits and ensure that we have sufficient backbalances to fund our 2022-23 spending commitments. That is despite the challenges and fiscal restrictions that the UK Government places on us. I commend today's figures to Parliament. Thank you. The minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions after which we will move on to the next item of business. I would be grateful if members wished to ask a question where to press their request-to-speak buttons now. I call Liz Smith. Thank you. I thank the minister for prior sighting. There is absolutely no doubt whatsoever that that remains a very challenging fiscal environment in which many factors are combining to make the path to recovery uncertain. It is perfectly true, as the minister said, that the Scottish Government cannot overspend on its budget. However, what the whole of Scotland wants to know is why ministers have not acted upon the demands that they themselves have repeatedly made to ensure that both businesses and public receive financial support as quickly as possible. That is exactly what the cabinet secretary demanded of the UK Government just a few weeks ago. However, today we learned that there is a large underspend of £650 million, and yesterday we learned that the Scottish Government has still not decided a month on what to do with the £41 million that it received in Barnett consequentials from the household support fund. Why, when we have businesses who are collectively struggling with debt, with a recruitment crisis and rising costs, and many families really struggling with the cost of living, is the SNP not releasing more money now so that it can deal with the current financial constraints? Secondly, will the minister confirm to Parliament that the cabinet secretary will make a statement prior to recess to announce how the Scottish Government will spend the £41 million Barnett consequentials to help low-income families that she has been sitting on for a month? I trust that the member has received the provisional outturn briefing note for MSPs, and I am sure that she will have familiarised herself with the annex of that, which details all of our spending on Covid in the last financial year, including in business support. In business support over the course of the pandemic, we spend £4.7 billion. That is £500 million more than we have received in consequentials from the UK Government. As I stated in my statement, all the money that is in the reserve will be disclosed to Parliament through the autumn budget revision process, which is a formal process for parliamentary reprieval. Ministers, as always, will appear before the committee as part of that process and be subject to scrutiny. As we regard the future parliamentary business, that is of course a matter for the bureau to determine. Daniel Johnson Thank you very much and I thank the minister for early sight of his statement. Indeed, both Covid and the cost of living crisis necessitate the Government gets the money that it has at the door as quickly as possible. Of course, the minister cited £5.7 billion of Covid spending. That is £100 million less than was received in consequentials that year. Indeed, the total consequentials due to Covid was £14.4 billion over the last two financial years. Can the minister confirm how much of that £14.4 billion has been spent cumulatively over the two financial years and how much of it, given the issues raised by Audit Scotland, remains in reserves not just of the Scottish Government but in local authorities, NDPBs, health boards and IJBs? I also ask the minister for clarification that £650 million is very close to the threshold permitted by the Government to hold in the Scottish reserve. Given that those numbers are provisional, is there any risk that that threshold will be breached? I thank Mr Johnson for his questions. On his last point, in terms of our management, there is that headroom of £50 million, but he raises a very important point, which is the fact that these reserve limits are now out of date. They are not indexed, they do not increase as with inflation in the Scottish budget. That is a key issue that will have to be addressed as part of the fiscal framework review. As regards the total money in the reserve, I will be happy to confirm to the member in writing, but there is no carry-forward from any Covid funding into the reserve. The money that was spent in the last financial year has been detailed in the annex. There are similar publications available detailing Covid funding that has taken place in previous years. That information is available and I am happy to write to the member to direct him to it if that would be helpful. John Mason, to be followed by Douglas Lomstone. I thank the minister for his statement, which I thought was very clear, and yet we still had the words, large underspend, being used by Liz Smith, somewhat misleading for the public, I would suggest. Can the minister confirm that the Government has to underspend because it is not allowed to overspend? Yes, and the member makes a really important point. This is the fundamental reality, and it would be a reality faced by any party and Government. We cannot overspend our budget, and if I was standing here reporting that we have spent above and breached our cap, I am sure that I would be rightly being criticised by Opposition politicians. However, I think that the important thing to look at as well is also the context, because when you look at the actual underspend, if you look at the money that was not anticipated, not 0.4 per cent. I would just draw members' attention to the fact that in the devolved administrations, our devolved administrations, where we have outtorned figures for 2020-21, the Northern and Irish Government had an underspend to budget of 1.1 per cent, and the Welsh Government had an underspend to budget of not 0.5 per cent. In England, where we have an underspend for this year, the figure was 6 per cent. The SNP Government recently claimed in its spending review that tackling climate change was one of its key priorities for the rest of the parliamentary term. However, it has now emerged that in the past year there was a £511 million underspend by the SNP Government in this portfolio area. How on earth can the SNP Government claim to be tackling climate change when it is not using all the financial resources at its disposal? This Government is absolutely committed to tackling climate change, which is why we have introduced world-leading targets. The reality is that many of those projects have been impacted by a combination of the pandemic, supply chain issues and workforce. If the member would care for, I will give him an itemised breakdown of some of the challenges. The £123 million in resource is ultimately a reflection across the SNP portfolio of improved passenger revenue in respect of rail. There was underspend in Norwin Isle ferries due to lower cost of fuel, and there is significant underspend in energy. That is ultimately a reflection of the fact that all capital delivery programmes are demand-led and have been severely hampered by continuing effects of the Covid-19 pandemic. In financial transactions, a majority of the underspend there within the NZ portfolio is in energy, where loan income was higher than anticipated. As the ministers outlined, the pandemic caused considerable uncertainty in terms of budgeting with the need to respond quickly to rapidly changing circumstances, and he has mentioned the additional uncertainty caused by late notice or indeed lack of engagement from the United Kingdom Government in terms of when funding could be expected. Despite that uncertainty in its recent report and Scotland's financial response to Covid-19, Audit Scotland has concluded that the Scottish Government managed its overall budget well. Can the minister advise what lessons can be taken from the experience of public spending during this crisis, and can he advise what changes can be made to better manage such uncertainty? The pandemic has brought into sharp focus the existing deficiencies in the fiscal framework. Unlike other countries across the world, we cannot respond quickly to emerging needs by borrowing, and that leaves us overly dependent on decisions taken by the UK Government. I think that we can all remember specific moments during the pandemic where that poses very severe challenges. Being reliant on consequentials with little clarity and certainty over their scale and timing makes response and recovery planning extremely difficult. The current fiscal powers are also being eroded by inflation as I touched on. Key borrowing powers on reserve limits within the fiscal framework are currently set in nominal cash values and hence are not protected in real terms from a growing tax base. As I said earlier, the fiscal framework review must consider the challenges faced by these fixed nominal limits on the current borrowing and reserve powers, as their real-time effectiveness continues to deteriorate over time. Paul Sweeney, to be followed by Stuart McMillan. Thank you, Presiding Officer. The minister knows only too full well the scale of the cost of living crisis and the misery that millions of people are living through at the moment, and the reality is that people need that underspend money in their pockets, not sitting in a Scottish Government reserve being saved for a rainy day. Can the minister tell us why he believes that it is appropriate, or indeed fiscally prudent, for the Scottish Government to recently announce the potential loss of up to 30,000 public sector jobs during this cost of living crisis, while sitting on an excessive £420 million resource underspend, that is money that could be used right now to alleviate hardship faced by millions of households across Scotland? It is money that is going to be used. It was anticipated in the budget last December, and the full process for disclosing how that money will be allocated to current and on-going commitments will take part, as it always takes part during the budget process at the budget revisions. That is just normally how things operate in this Parliament, and that is what we will continue to do. I want to work collaboratively and constructively on the cost of living crisis. I think that we saw a great example of that yesterday afternoon in the debate that we had when we saw agreement amongst parties across the chamber, not one party, but against most parties on taking measures to go and help people. The reality is that every penny in the reserve is committed to spending in this financial year, and that is exactly what we will do, and we will disclose that as we always do through the budget revision process. I thank the minister for the statement and the clarity regarding the substantial sums allocated to business support during the pandemic. It is clearly very vital that effective systems are in place to detect and prevent fraud, which is certainly very much in comparison to the situation down with the UK Government, which the Public Accounts Committee there found that billions of pounds of taxpayers might be lost to fraud and error as a result of the UK Government's approach. Can the minister, however, provide any further information about what assessment has been made while the effectiveness of systems, which the Scottish Government put in place, to detect and prevent fraud within its business support scheme? The risk of fraud was mitigated through a number of control mechanisms built into the design and delivery of the business support schemes, including the decision to ask local authorities to administer many of the grants based on non-domestic rates and their existing administrative capabilities, including fraud detection and prevention. That meant that local authorities could use a well-established, robust, existing dataset and other information relevant to determining eligibility to enable a large number of businesses to be paid quickly with appropriate checks in place to mitigate fraud. In late 2021, the Scottish Government undertook a retrospective fraud risk review on 11 major business support funds administered by local authorities and other bodies. That concluded that there was a reasonable assurance against fraud risk for business support and the appropriate controls were in place. That work is reflected in our unqualified consolidated 2020-21 accounts opinion, but Auditor General recognised the fraud estimate that was reasonable and acknowledged actions that have been taken by the Scottish Government to minimise fraud risk. It is the responsibility of delivery partners to recover payments that have been made fraudulently. The Scottish Government's initial work on assurance for fraud risk found comprehensive fraud prevention measures in place within local authorities, together with the experience of managing fraud risk in areas such as local taxation and the application of exemptions. There were high numbers of rejected applications within the largest scheme delivered by local authorities, which indicates proper scrutiny at a point of application. Thank you very much indeed, Presiding Officer. With the crisis in our NHS and social care, the cost of living crisis and businesses struggling to pay the bills, particularly in the aftermath of Covid, every pound needs to be put to work and fast. I echo the words of Liz Smith when she says that the Government cannot afford to sit on this money. We need to get it out the door as quickly as possible. It is important that the Scottish Government properly account for how the Covid funding was used. We have heard something in the last answer about fraud detection, but lots of money will have been lost to fraud, albeit mistakenly distributed by the Government. Can the minister provide further analysis to the Parliament and an update on how much the Government has lost to fraud or error, the steps that are being taken to reclaim the money, and how many people the Government has working on it at this time? As I made reference to in my response to Mr McMillan, we utilised delivery partners, and recovery will be the responsibility of delivery partners. I can say that, based on available data and a number of factors, we believe that undetected fraud, on an estimated level of fraud, was around 1 to 2 per cent of overall spend. However, the available data tells us that of the fraud detected, a loss of around £600,000 was realised as of April 2021. The total spend for the largest local authority delivery scheme at that time was £1.6 billion. Our estimate of 1 to 2 per cent would have put fraud at £16 million and £32 million respectively. We are currently working with delivery partners and Audit Scotland to improve our estimates based on an improved understanding and management of fraud risks to improve consistency and quality in the capture of data on fraud and error and to increase post-delivery testing of control effectiveness. The output of that work will form part of the Scottish Government's 2021-22 consolidated accounts. The need for a fiscal framework review has been reinforced through the pandemic and now the cost of living crisis. That has clearly demonstrated how difficult it is for Scottish ministers to act without sufficient fiscal powers and often with late notice or lack of engagement regarding bannock consequentials. Can the minister provide an update as the Scottish Government's latest engagement with UK counterparts regarding the fiscal framework review and the changes that it hopes to see as a result of this review? We are clear that the review should be broad and scope and it should look at not only the operation of the framework today but also the balance of risks and whether further levers are required to grow Scotland's tax base and support economic recovery. The review must ensure that the Scottish Government and Parliament have the necessary powers to manage the risks that we face within our devolved responsibilities and to support economic recovery. I understand that the joining secretary committee will be meeting later this month and the cabinet secretary for finance will discuss further arrangements for the review with the chief secretary to the treasury. I thank the minister for his statement. The pandemic and cost of living crisis have had and continue to have extremely harsh impact on the Scottish public sector and on our economy more generally. Those crises show the need for reflexive fiscal powers to deal with the shocks that affect Scotland in a unique way. Does the minister agree that the outturn statement illustrates the increasing extent to which the fiscal framework and devolution settlement more generally fail to meet Scotland's needs? Can he say how independence would ensure that Scotland has all the fiscal levers and flexibilities that it needs to invest in its own vision of a green recovery? There is a very important point within that question. Firstly, we have the upcoming fiscal framework review that I referred to in my response to Mr Gibson. I will not repeat what I stated there, but it is clear that we need movement. When the fiscal framework was agreed, it was recognised that there should be a review, and that in itself was an admission and an understanding that this would be a process and an event. I think that we have a number of areas, regardless of what our constitutional views are across the chamber, that we should be able to unite on, for example, expanding borrowing powers, expanding flexibilities around the reserve and making sure that limits and caps move with inflation. Those are simple, straightforward measures, but there are other things that we could do in the well to enhance the powers of this Parliament through the fiscal framework review, full powers over income tax, full devolution of national insurance and devolution of VAT. However, the member is absolutely correct to say that the best option for Scotland and the option that the people of Scotland are going to be presented with in the near future is that of becoming an independent country. I call Alexander Stewart to be followed by Co-Camp Stewart. We understand that those figures are provisional, but it is crucial, minister, that getting the detail when it comes to social justice, housing and local government. Therefore, can I ask the minister to further comment on how this spending will be broken down, given the tight financial difficulties facing local government? The member is asking specifically with regard to the outturn, with regard to local government. He will note that there is a £210 million overspend in resource. That was a reflection of money transferred for a range of measures such as business support and employability from the finance and economy portfolio. If it is with regard to the variance on capital spend, that is similar to the case with capital across the board. It is specifically focused on the affordable housing programme, and it is a reflection of the challenges around emanating from the pandemic supply change in workforce that have impacted the construction sector. I hope that that provides the detail around that portfolio that the member is looking for. Brexit continues to have a substantial economic impact on the UK and Scotland. Could the minister provide any further information about the assessment to which the Scottish Government has made of the impact of Brexit on Scotland's economy? Can he say more about the steps that the Scottish Government is taking to mitigate the impact of Brexit on Scotland's public finances? We do know that it is six years to the day when Scotland voted overwhelmingly to remain within the European Union. We are closer to rejoining the European Union than we were to the day that we were forced to leave. We know that Brexit is contributing to the 19 consecutive monthly rise in prices charged by businesses in Scotland and causing UK food prices to increase by over 6 per cent, hitting the poorest family's hardest and contributing to the cost of living crisis. According to the OECD, the UK will have the lowest growth in the G20, apart from sanctioned Russia, and the OBR forecasts that Brexit will hot GDP growth by twice as much as the pandemic. Brexit has direct implications for public finances through lower working-age population and GDP, resulting in lower government revenues in the long run. Since 2019, Scotland's good exports fell by 20 per cent, largely driven by a decline in oil and gas exports, amounting to a falling goods trade with the EU of 16 per cent, whereas trade with the EU—non-EU countries dropped by only 4 per cent—but even as Scotland tries to cope with the fallout of a reckless hard Brexit, the UK Government is irresponsibly risking a trade war with the EU over the Northern Ireland protocol. That, once again, reinforces the need for this Parliament and this country to become independent.