COVID-19 Recovery Committee

Meeting date: Thursday, January 19, 2023

Official Report 615KB pdf

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Budget Scrutiny 2023-24

We turn to agenda item 2. The committee will take evidence from the Scottish Government on its budget for 2023-24. I welcome to the meeting John Swinney, the Deputy First Minister and Cabinet Secretary for Covid Recovery; Simon Mair, deputy director of Covid recovery and public sector reform; Christine McLaughlin, director of population health; and Jamie MacDougall, deputy director for budget and public spending. I welcome you and thank you for your attendance this morning. Deputy First Minister, would you like to make any remarks before we move to questions?

Thank you, convener. I will make some brief opening remarks.

I am grateful to the committee for the opportunity to discuss a number of matters that relate to the impact of the 2023-24 budget with regard to the Scottish Government’s Covid recovery strategy and the Covid-19 strategic framework—as well as any other issues that are on the minds of committee members, of course.

The Scottish Government’s 2023-24 budget has been developed in the most turbulent economic and fiscal context that most people can remember. The impacts of the pandemic, coupled with Russia’s continued illegal invasion of Ukraine, have created a disruptive set of financial and economic challenges that every Government must address: energy and fuel prices are surging and inflation has reached a 40-year high. Furthermore, the UK Government is responsible for additional uncertainty and instability: Brexit has impacted our labour supply and undermined trade with our nearest neighbours. These are incredibly difficult times in which to manage public finances, and the constraints of devolution mean that the Scottish Government cannot borrow to meet additional costs that arise during the financial year.

In that challenging context, the 2023-24 budget focuses on reducing child poverty, supporting a just transition to a net zero economy and delivering fiscally sustainable person-centred public services. Those priorities are aligned with the principles of the Scottish Government’s Covid recovery strategy, which focuses on addressing systemic inequalities and supporting those who were most disproportionately affected during the pandemic. Since the Covid recovery strategy was published, the worsening cost crisis has made it even more critical for the Scottish Government to focus its efforts on supporting those most in need.

The Government has consistently taken decisive action to prioritise spending where it is most needed, including in the emergency budget review. The 2023-24 budget demonstrates the Scottish Government’s continued commitment to prioritising those who most need support. For example, we are extending and increasing the Scottish child payment to £25 per child per week, uprating all devolved benefits by 10.1 per cent, widening the warmer homes fuel poverty programme and freezing rail fares until at least March 2023.

In total, the Scottish Government has allocated around £3 billion this financial year to contribute towards mitigating the increased costs crisis. More than £1 billion of that support is available only in Scotland, with the remainder being more generous than that provided elsewhere in the UK.

With regard to the on-going response to Covid-19, the Scottish Government published a revised strategic framework in February 2022 that sets out our long-term approach to managing Covid-19 and its associated harms.

The Scottish Government remains alert to the threat that potential new variants of Covid-19 pose, and I welcome the national respiratory surveillance and variants and mutations plans that have been published by Public Health Scotland, which set out the processes that will be undertaken to identify and assess any future risk. We are supporting those plans with direct investment of approximately £7.4 million and £3 million respectively, with up to a further £3 million available for waste water surveillance.

The Scottish Government continues to work with partners and is ready to respond to any increase in the threat that the virus poses, whether that comes from waning immunity, a new variant or other factors. In any future response, we will apply careful judgment to ensure that responses are appropriately targeted and the necessary resources prioritised. In my recent letter to the committee, I included further details of funding arrangements for the on-going pandemic response. I will continue to keep the committee updated on in-year changes to the Scottish budget through corporate reporting and in-year budget revisions.

I am happy to answer any questions that the committee might have.

Thank you, Deputy First Minister. I think that we all appreciate how challenging circumstances are at the moment for the Government.

We move to questions. I will begin. The latest data estimates that one in 25 people in Scotland currently have Covid. Due to the vaccinations, we are in a much better place than we were in 2020 but, sadly, in Scotland, we lost 2,864 people to Covid in 2022, and 81 people have lost their lives to it so far in 2023. Our thoughts go out to every family, but behind those statistics is the stark reality that Covid is still a threat. Can the Deputy First Minister give us an update on the Scottish Government’s plans for the next round of booster vaccinations, including the predicted timing, targeted groups and estimated funding requirements?

The data that you recorded about the loss of life in relation to Covid is very sobering and demonstrates the importance of taking all necessary measures that are appropriate in the context to protect the population against Covid.

Obviously, the commitment that the Government has given to the vaccination programme has provided significant protection for wider population health in relation to Covid. The vaccination programme that has been set out is targeted at a range of particular groups that have been identified by the Joint Committee on Vaccination and Immunisation. The Scottish Government continues to do what it has always done, which is to follow the clinical advice that is given to us by the JCVI. The Covid vaccination programme is available to a wide variety of groups, including older adults in care homes, people who are over the age of 50, front-line health and social care workers, and those people in the five to 64 age group who are at risk from Covid.

While the vaccination programme is targeted towards those individuals, the uptake varies in different groupings. For example, in older adults in care homes, the uptake in Scotland is 89.3 per cent; among the over-65s, it is 90 per cent; and, among those people who are aged 50 to 64, it is 64.3 per cent. The uptake rate for front-line health and social care workers varies, but the percentage is in the low 50s. Although there is variation, those are generally pretty high rates of uptake of the available vaccination.

In relation to cost, the expenditure on vaccination in the current financial year is expected to be around £170 million. That does not include the cost of the vaccinations; those costs are dealt with as part of the four-nations programme. If we were to opt out of that programme, we would be likely to get a consequential but, for reasons of efficiency and procurement, we have habitually taken part in a four-nations programme on, for example, flu vaccinations. That is the cost of the delivery of that programme in Scotland, and we are planning on a relatively similar amount in the 2023-24 forecasts.

My final point is that we have followed the advice of the Joint Committee on Vaccination and Immunisation this year, and we expect to follow it next year and to fund that accordingly. We await further advice from the JCVI about its review of the appropriate steps to take for a vaccination programme for the next year. We anticipate that the current programme will end at the end of March.

That is a helpful update. Thank you. Will you provide an update about news reports that the coronavirus and Covid-19 infection survey for Scotland, which is carried out by the Office for National Statistics, might be shut down in the spring? What implications would that have for the monitoring of and recovery from Covid?

I will invite Christine McLaughlin to provide some information about that. I make the point that we now have significant health protection for the population as a consequence of the effectiveness of the vaccination programme, so there is no longer a necessity for the scale of arrangements that we had at the height of the pandemic. Even if there is a new Covid variant, the level of population protection is very high because of the vaccination programme.

Having said that, it is still important to have effective surveillance and monitoring arrangements in place to ensure that we can accurately gauge whether we have a wider problem that needs to be arrested. Some of the information that I placed on the record in my opening statement set out the type of societal assessment that we routinely undertake to ensure that we have those preparatory arrangements in place.

I invite Christine McLaughlin to say something about the ONS survey.

Discussions across the four nations are on-going. As members will know, one strength of the ONS study has been its consistent, four-nations approach. As far as I am aware, no decision has been taken yet. The matter is part of the consideration of the scope and shape of the surveillance programme for the next year.

The ONS study has been world leading and it has been very useful to have that data, but it is just one of several sources of data. I think that you have had Public Health Scotland talk to you about our surveillance approach. We have invested in new areas of surveillance that we did not have in place before or did not have to that extent. There is a community surveillance programme, which is a rolling programme of tests in community settings. Samples are also taken every week in acute hospital settings and are tested and sequenced. That is also part of our surveillance.

Members will also know that we have technology for waste water testing, which we did not have before. That has been so successful that we are not only looking to maintain it, but looking for other uses for waste water testing. We have recently put polio testing in place. We can now even sequence waste water samples. Our public health teams see that as a really valuable technology. We also have the SARS-CoV2 immunity and reinfection evaluation—or SIREN—study of routine testing that healthcare workers voluntarily take part in.

For us, surveillance is all those things taken together. The ONS study has been a unique component of that, but it is also a very expensive part of our surveillance when compared with things such as community or hospital surveillance. It needs to be looked at in the round. Its strength has been the consistency across the four nations. We can see what is happening and can understand the regional components of the data. We never look at the ONS data on its own; we always look at it with data from other sources to see whether they are all saying the same thing.

In case the ONS study is not to continue at the same scale or on a four-nations basis, we have already been working through with our Public Health Scotland colleagues whether we would bolster some of the other surveillance that we have in place. The weakness might be that we would not have consistency across the four nations as we go forward. However, that is a live part of our discussions and we are a partner in those considerations rather than it being solely a Scottish decision.

10:15  

We have taken evidence on surveillance, so the committee is familiar with that.

Good morning, cabinet secretary and colleagues. I am interested in exploring a little bit further how Covid-related measures will be funded in the budget for the coming year. You mentioned the booster vaccination scheme and you will recall that we had an exchange about that in the chamber yesterday. Is it expected that, in the coming year, there will be another programme of booster vaccinations? Has funding already been set aside for that in the budget for next year or are we waiting to see what happens elsewhere?

We are working on the assumption that a further booster programme will be implemented. As I indicated in my answer to the convener, sums of money at about the same level as those that we have had in the budget for this year are predicted to be deployed in the next financial year to support a booster programme. Obviously, if we get advice that the programme is not necessary, that money will not be required, but a prudent assumption at this stage is that there is likely to be a booster programme.

If another variant or—perish the thought—another pandemic occurred in the coming financial year so there was a need to step in with new interventions such as bringing back the track and trace service, would there be anything in the budget to fund that or would you be reliant on Barnett consequentials from what happened elsewhere in the UK?

We are making provisions in the budget for what I describe as a baseline level of preparedness for further challenges from Covid. However, I make a distinction in my response to Mr Fraser’s question between a new variant and a new pandemic, because those are two fundamentally different propositions.

On the basis of what we know and the variants that are around, we are fairly confident that the level of population-wide vaccination protection would enable us to withstand the effects of a new variant, given the level of protection that is inherent in the vaccination and the nature of the variants that are emerging. A completely different pandemic would be a different matter altogether. That could conceivably require us to put in place the type of arrangements that we have experienced over the past three years.

Obviously, we hope that it will not happen but, to enable us to respond to all those scenarios, we have certain provisions in the budget for the surveillance activity that Christine McLaughlin talked about. We have provisions for a level of testing, the delivery of a further vaccination programme and a level of workforce considerations, personal protective equipment issues, equipment considerations and some wider factors. Those are built into the budget. That is funded from the overall budget that is available for the health and social care portfolio, which is in excess of £19 billion.

A certain amount of consequential funding from the United Kingdom Government comes generally for health and social care priorities as a consequence of decisions that are made in the autumn statement and announced by the Chancellor of the Exchequer. However, the Scottish Government is putting more than those Barnett consequentials into the health service. It was an explicit part of the statement that I gave to Parliament in December that I was making tax changes and applying tax increases to enable me to be in a position to better fund the national health service, which we have been able to do.

That money has been set aside in the overall health budget. Should it not be required, could it be redeployed elsewhere?

On the level of provision that we have here, I do not really think that that could be the case, to be honest. I would expect to undertake expenditure around PPE preparedness—the committee will be familiar with the importance of the PPE provision in general in all aspects of the health and social care system. I cannot be certain, but it is likely that we will have a booster vaccination programme, so that money will be spent. In addition, the testing arrangements are at a level of preparedness in that we maintain a capacity to undertake testing, which creates a platform for us to significantly increase it should we be required to do so.

The best answer that I can give is that I expect that expenditure to be required during the financial year. Of course, we monitor the situation regularly. The committee will appreciate from the updates that I have provided on the wider financial situation that, for the Government, demand and pressures on the budget in general can vary widely over the course of the financial year. Even if we do not have to spend the money in those areas, I imagine that something else could come along that would demand further expenditure.

The Covid recovery strategy is currently due to wind down by the summer of this year. Is it still your intention to wind it down on that timescale?

I am not sure that I would express it in that way. I understand that Mr Fraser is looking at it from an 18-month perspective, but if we look at the themes of the budget that I set out in December and those of the Covid recovery strategy, a dispassionate observer would see a very strong link between the two.

I think that the best way for me to express it is to say that the Covid recovery strategy is being mainstreamed within the Government’s budget and policy programme. For example, the emphasis that we place on the shift to person-centred public services is absolutely central to the budget programme, and the emphasis on eradicating child poverty, which is implicit in the Covid recovery strategy, is central to the budget priorities that I set out in December. The focus of the strategy and the indicators of performance is part of the performance framework of the Government.

Good morning, Deputy First Minister. I am conscious of and understand the difficulty and uncertainty in predicting what will happen with the pandemic, particularly as new variants are being experienced. However, what I see is that population testing has largely ended and the Lighthouse labs are closing. It has been suggested to me that antiviral medication is not getting to people in time, and we are not yet using prophylactics in Scotland.

All those things will vary depending on the prevalence of Covid at any time, but I want to explore what the flexibility and surge capacity are, beyond what you have said, that would allow things to be flexed up really quickly. In response to Murdo Fraser’s questions, you talked about additional funding for the health budget, but are those measures covered by existing Covid consequentials or have you had to add to them?

I will try to deal with the number of issues that Jackie Baillie has raised. First, I observe that she has talked about her experience of antivirals. I also have some experience of antiviral distribution and I could not compliment the health service more for my family’s experience of the availability of antiviral drugs. The efficiency of the delivery and the impact of the antivirals, for which our household was profoundly grateful, stunned me, to be frank.

On the flex capacity, there is a careful judgment to be made. I assure the committee that the Government’s strategic approach and our budget provisions are designed to create an appropriate platform from which we could increase provision. It is a higher level of preparedness than there would have been prior to the intelligence on Covid—

That was quite a low bar.

—but it is an appropriate platform. Christine McLaughlin has gone through the information on wider population surveillance, which has developed remarkably in a short space of time and which provides us with significant levels of intelligence. We are monitoring that information carefully for any signs of development and deviance of performance that might raise concerns. We are also plugged into international networks on new variants and we are monitoring those carefully.

There is a level of testing capacity. We have maintained the laboratory at Gartnavel, which, as things stand, has the capacity to process 60,000 tests a week. That is a formidable level of testing capacity. We also have regional PCR testing arrangements in different parts of the country. We have stocks of lateral flow devices that can be deployed should a new variant emerge, along with plans for a new variant, should they be required.

We are following closely the thinking and expertise of the pandemic preparedness committee that is led by Professor Andrew Morris, who has given evidence to the committee, to ensure that we are maintaining an appropriate approach. As I said in an answer to Mr Fraser, a variety of other investments are being made routinely in the budget programme on PPE and other factors.

It is difficult to be precise about consequentials. If my memory serves me correctly, arising from the statement that the Chancellor of the Exchequer gave in November was a consequential for health and social care of between £200 million and £300 million. We have added to that to uplift the budget by about £1 billion.

10:30  

As Jackie Baillie knows, the UK consequentials do not come with a badge on them, other than a badge of health. We have generally taken the consequentials from health and put them into health and social care. However, they do not come with a badge that says “Covid consequentials” or whatever. Uplifts in the English departments give rise to a Covid consequential for the Scottish Government. We have increased that by the contributions that we have made.

May I ask about long Covid?

May I make a final point? The cost of the vaccine is handled through a four-nations agreement with the UK Government outwith all the sums that I have just talked about. In theory, if we were to say that we were not part of a four-nations arrangement, we would get a consequential for that. However, on a variety of vaccination programmes including those for flu and Covid, we have generally taken the view that there are logistical and procurement advantages to being in a four-nations arrangement.

Sure. I understood that from your previous response, but that is a helpful clarification.

I think that we would agree that long Covid is a considerable challenge not just in health terms but economically. The number of economically inactive people has increased substantially as a consequence of long Covid. The sum of £3 million was announced for NHS services to help with that this year, but that was when 77,000 people were affected. Now, 180,000 people are affected. Given that that intervention is not just for health purposes but is an economic intervention, what plans are there to increase the amount that is available for the treatment of long Covid?

I agree about the importance of long Covid and supporting the recovery of individuals who experience it. However, I challenge Jackie Baillie on the point about a significant increase in economic inactivity, because that is not what the data says. Data that was published on Tuesday shows that economic inactivity in Scotland has reduced by 0.8 per cent over the year. The fall was larger in Scotland than in the rest of the United Kingdom. I appreciate that there will be ebbs and flows within that, and that some people will become economically inactive because of long Covid, but for the accuracy of the data that the committee has before it, I note that that is the position on economic inactivity.

There has been a significant amount of discussion about the appropriate means of addressing individuals’ experiences of long Covid. Fundamentally, there will be a need for health interventions to support individuals. It is difficult to disaggregate what is spent in the health service on supporting people with long Covid, because that will be felt in a variety of areas, such as services in community settings—for example, the work of general practitioners—and more specialist clinics, where people will be provided with support that addresses their experiences.

As I said, the health budget has been increased by more than £1 billion during the year to provide the capacity to meet the health needs of the population. That will of course include people who have experience of long Covid, and it is important that individuals who have that experience are supported in the appropriate way.

I have a final question, convener. Can I clarify—

Sorry, Jackie, but can I move on to John Mason? We will come back to you if we can. We are short of time.

Okay—no problem.

Deputy First Minister, you answered the convener’s question about how vaccinations are going. The figures for the over-65s and older adults in care homes seem very good, but the figures for care workers do not seem quite as strong—I think that you said that the uptake rate was around or below 50 per cent. For specified front-line social care workers, I think that the figure is 39.8 per cent, which seems quite low. Do you have an explanation for that?

I cannot give a definitive explanation. For example, the uptake rate for front-line social care workers is 63.2 per cent. There are other categories for which the figure is slightly lower.

Much of the reason for that can be about convenience of and access to services. Some of it can be because people performing those roles might have to take time to access those services when they are under pressure to fulfil their social care tasks, which is obviously quite a conundrum for individuals. Those people are on low pay and have difficult dilemmas about how they spend their time.

Do you think that there is active resistance? Misinformation continues to come to me on social media. Is that having an impact?

I do not think so. The numbers are increasing week by week. We are not at the end of the programme; we are in January and still have the best part of two and a half months to go. We are trying to make it as easy as possible for people to access opportunities, with clinics widely available across the country.

I accept that meeting the cost of travelling somewhere else is quite difficult for people in low-income situations. That is why we are taking all the practical steps that we can to support people in those circumstances.

You replied on 20 December to the letter that the committee wrote to you. Our first question was about Covid recovery and the cost crisis—specifically, whether inflationary pressures and the cost crisis are negatively impacting on the Covid recovery strategy. We got a page-long answer, but I was still not very clear about the matter having read it. Can I press you on that point? Are inflationary pressures impacting on the Covid recovery strategy?

I will sharpen up my language for Mr Mason. My long and detailed text was designed to say that yes, of course, inflationary pressures are putting enormous pressure on the Government’s budget in general and will inevitably put pressure on the Covid recovery strategy.

Because of his membership of Finance and Public Administration Committee, and his assiduous following of financial matters in Parliament, Mr Mason will be pretty familiar with my current worry list. At the top of my worry list is the fact that there has been no restatement of the budget available to the Scottish Government during 2022-23 and no additional consequential funding to deal with inflation since the start of 2022-23. The budget was set when inflation was expected to be 2 per cent; inflation was at 10.5 per cent yesterday, and there has been no consequential funding to assist us. The Government has also had to wrestle with legitimate pay claims from public sector workers.

As a consequence, I have had to take some very difficult decisions to reduce public expenditure to try to balance the Government’s budget. At the same time, I have made provision for the Government to increase the value of the Scottish child payment to £25 a week, which is a direct investment to support families struggling in the cost crisis and which I know will be of benefit to many of Mr Mason’s constituents.

After all that, Mr Mason will be familiar with the fact that I am still wrestling with a predicted overspend of between £200 million and £500 million on the Government’s resource budget in this financial year. It is unprecedented for a finance minister to be wrestling with a problem of that magnitude so late in the financial year.

Absolutely—I completely agree with that. Has anything specific in the Covid recovery strategy suffered because of all that?

The pace of development is perhaps a challenge, but I would counter that by saying that the fact that we avoided local authority industrial action significantly across the country helped to maintain the impetus around the delivery of the Covid recovery strategy. The fact that we have, so far, avoided industrial action in the health service is a welcome consequence of the Government taking on the additional financial strain of wrestling with the public sector pay claims, which we have satisfactorily addressed.

On that point, it was previously suggested that the public sector staff numbers, as a whole, would go back to pre-Covid levels. Has that commitment been affected by the pay increases?

We will have to work carefully with trade unions and staff associations over the course of the four-year spending period to reduce staff numbers. The profile of the four-year spending envelope that is available to us could generally be characterised as less challenging in the first two years but extremely challenging in the last two years.

Those are the provisions of the current United Kingdom Government, and the Opposition in the United Kingdom Parliament has made it clear that it would sustain those numbers, should the election result in a change of Government, so we have to prepare on the basis that, in dialogue and partnership with trade unions and staff associations, we will have to carefully reduce head count over the next four years.

On a slightly different issue, we have just had an evidence session with the OECD. You came in straight after the session, so I do not know whether you were able to see any of it. There was quite an interesting discussion around spending reviews, in which we established that the OECD’s definition of a spending review is slightly different from ours. Its definition is based more on the fact that other countries look at specific areas. For example, Germany had a spending review of transport that really looked in depth at what the Government was already spending, to see whether it could make savings and move forward.

I asked the witnesses whether we could learn from that. For example, we could look at the health service and say, “We are spending all this money on reactive care, but we would like to move more into preventative primary care.” The feeling overall was that maybe we could learn from other countries. Is there anything in that space? I realise that that is a new topic, but can we do anything about examining present expenditure to see whether we can free up more of it? Are we already doing that?

To be honest, I feel as though I am living in a perpetual spending review, because we are wrestling constantly with all of the elements of challenge that you have put to me. When I talk about the public service reform agenda, which I spoke of extensively in the budget statement in December, that is us actively challenging the way in which public bodies are operating, with the objective of delivering greater efficiency.

I appeared before the Economy and Fair Work Committee yesterday, and I was challenged on some of the spending envelopes that are available to enterprise agencies, for example. Of their own volition, those spending envelopes challenge the existing way of working, as they require savings to be made to ensure that organisations can live within them. In the health service, the pressure of increased demand and increased pressure from pay settlements force a requirement to constantly review and challenge the efficiency of how we operate.

There is another fundamental element of thinking, which is the continuous work to deliver, for example, the Christie principles, with which Mr Mason will be familiar. In essence, those operate on the presumption that the earlier that we can make an intervention, the better it can be and the more it will help us to avoid acute interventions. However we badge them, acute interventions are expensive.

10:45  

It would be fair to say that we have struggled with that.

No, I do not think that we have. A lot of reform has been undertaken. There is a bit of commentary. When I look at all the magazine articles about the Christie commission, I do not think that people have been looking closely at what has been going on in public services and the focus on early intervention. I refer to the steps made in our education system or health service on early intervention. Of course there is more that could be done, but a lot has been achieved. In essence, we are trying to avoid crisis and acute interventions because the more of them that we have, the more difficult are the challenges that we face.

A lot of the evidence about presentations at accident and emergency departments in Scotland indicates that the people who are arriving at accident and emergency are much more ill and much more frail than would have been the case in the past. That is the result of a combination of the extension of longevity in our society, the ability to support people at home in the fashion that we have been able to and the success of some of the preventative and early intervention measures. However, if we have a population that has—I will try to word this as carefully as I can—more older people in it than it used to have, the pressures of frailty and old age will inevitably be more acutely felt in our health service than was the case in the past. That is why I say that demand requires efficiency in the health service.

We will move on to questions from Brian Whittle, but I will try to get back round to members.

Welcome, cabinet secretary. We know the cost of having dealt with Covid previously. You indicated to other members that, looking ahead, there is a budget that assumes further Covid spending. However, on dealing with the fallout of Covid, there is a cost associated with other conditions that were affected by the Covid restrictions. I refer to cancer, elective surgery, mental health, obesity and physical fitness, for example. We know that to be true, which is why I was interested in your last answer to John Mason. Will the Covid recovery budget reflect our ability to deal with that fallout from Covid? It will inevitably turn up somewhere in the ledger.

In my opinion, the budget provides the appropriate resources to assist Covid recovery in a variety of policy areas. Covid recovery applies not just within the health service but in the education and justice systems. We have people who are waiting for court cases to be resolved that have been delayed because of Covid and I have to ensure that the burden of a victim is lifted by having those cases resolved. Therefore, I have to allocate resources to a wide variety of areas and have endeavoured to do that across the Government’s budget.

However, there is a finite sum of money available. I have chosen to expand the amount of money that is available by increasing tax on higher-income earners. I know that Mr Whittle’s party does not support that, but I have made that choice to maximise the resources that are available to invest in public services.

Yes, I think that the budget will reflect our ability to deal with the fallout, but I also have to be candid with the committee that it will take us some time to recover from Covid, because it has been a significant and disruptive force in our public services and our society.

We wait with interest to see whether raising taxes actually puts more money into the budget.

I think that I can confidently say that it will do that.

I have heard that confidence before, cabinet secretary.

I can demonstrate it with outturn data, which gives me confidence about the future data.

I will go back to my original question, on the funding of treatment for non-Covid-related conditions during the Covid recovery. We know from data that those most affected by Covid and those who had the worst outcomes had other health conditions such as obesity, type 2 diabetes or heart conditions.

We are looking ahead and discussing the preventative agenda, as we prepare for future pandemics. From talking to the OECD, we know that it is not only us doing that: all Governments are dealing with what is in front of them at the moment and it can be difficult to look further ahead. Given what we know about the impact that Covid had on people with other conditions, would it not be prudent to start looking at how we can tackle Scotland’s poor record on health? The cabinet secretary knows that I am very interested in that subject. Would it not be prudent to start looking at how we can tackle that poor health record as we look ahead to future pandemics?

I assure Mr Whittle that we look constantly at how we can intervene early to proactively improve the health of the population. There are many different ways in which we are trying to do that. We encourage people to carefully manage their health, to exercise and to take all the necessary precautions that they can to maintain their physical fitness and their general health and wellbeing. There is a range of areas of activity and interventions across Government, local government and the third sector.

Mr Whittle raises an issue that is certainly important and that is not only pandemic-related. We should, in general, be attentive to and focused on how we can improve the health and wellbeing of the population. So many of the Government’s public messages and many of our policy interventions—whether on the minimum unit pricing of alcohol, the banning of smoking in public places, the exhortation to exercise or the daily mile—are all part of that agenda.

I will not sit here and say that there is no more that we could do. The Government is very open to dialogue with colleagues in Parliament about how we can maximise that work.

We agree on the outcomes that we want. Outcomes are important, but we currently have a poor report card for health compared to many countries in Europe. I was really exercised about this topic before Covid.

I agree that a lot of positive health outcomes will be tackled outwith the health service. Correct me if I am wrong—I am sure that you will—but I think that 44 per cent of our budget is now spent on health and there has been a reduction of 27 per cent in the local government budget. However, many of the interventions that are required to deal with the impacts of Covid will be dealt with by local government. How do you square that circle, cabinet secretary?

The local government budget is going up by more than £550 million, so it is not being cut.

I said that the percentages of the budget had moved.

I am dealing with cash, and local authorities are getting £550 million more next year than they got this year. Whatever way you want to dress it up, that is an increase. That enables us to sustain our delivery of the type of interventions that Mr Whittle is raising with me.

I do not want to sour the atmosphere this morning, but we come back to hard choices here—

Government is choices, is it not?

Precisely, and I have made them, and I have made my point about tax.

You have made them, and I am challenging you.

With the deepest respect, Mr Whittle is not challenging me; Mr Whittle is asking me to spend money without showing me where it is going to come from. Unless he wants me to take money out of the health budget and allocate it to local government, he has to come up with an answer.

I am going to challenge the Conservatives on this all the way through the budget process, because the money has to come from somewhere. We have an ageing population that has a large number of frail people within it, and that will increase demand on the health service, which is why we are putting more resources into the health service and why I increased tax to ensure that I could put more money into the health service to address those issues.

Mr Whittle will not disagree with me about the extra money that I have put into the courts to ensure that we deal with the backlog so that victims get their cases addressed, and he will not disagree with me about putting £550 million extra into local government, so, somehow, I have to magic up some more money.

Those are the hard realities. I have confronted them, and others must confront them, too.

My final question concerns one of the questions that we asked the OECD on data collection and deployment, which is one of the important issues with regard to potential future pandemics—not just Covid-related data but data relating to the other conditions that we discussed earlier, with regard to their direction of travel.

We heard that, generally speaking, across the OECD countries, there is a lack of such data and that, having gathered data, we cannot disaggregate it to help to shape the way in which we tackle the health issues that are associated with Covid. I have talked many times about the fact that we do not have an IT structure that allows that to happen—few countries do. Do you agree that we should invest in that area, as a baseline?

There is a significant role for greater digital connectivity in our public services, which will enable us to better manage information about the way in which people interact with their public services. People of Mr Whittle’s and my generation have in their minds an image of IT systems as large and complex things but, of course, we all have phones with various apps on them that gather and use all sorts of flexible information. There are opportunities to better use that data—the apps on my phone tell me about my fitness, my health and wellbeing and how much I exercise, and sometimes they are reassuring and sometimes they are a wake-up call. A lot can be done to address these questions, and I am open to how we explore that.

We have access to and collect a lot of data. Whether those are the right data sets to help us address some of the questions that we face is a matter of debate, but I am generally open to the idea of using digital connectivity better. A critical part of our public service reform agenda is that, as we go through a really challenging spending period, we expect public bodies to be adept at using digital connectivity to support the finding of the solutions that we are looking for—that is what we are setting out to them.

11:00  

I will be very quick. This is slightly disjointed, but I want to go back to the stat about the economically inactive. I think that you would accept that there was a massive surge in the previous year and that, on Tuesday, there was a small reduction in the stats on what had been a very high number.

My question is actually about the national performance framework, which—I think that we agree—reflects the outcomes that we want to achieve but is not linked to the budget. I understand that you are planning a refresh of the NPF this year. Will you commit to taking that opportunity to link the two and to generate the additional data that is required so that your money goes to what you say your priorities are? That would be a significant step forward.

If I may say so, we went from, “This is particularly disjointed,” to, “This is a series of sweeping generalisations”.

Not at all.

On economic inactivity, the data that I put on the record is that the level of economic inactivity has fallen by 0.8 per cent in 12 months, which is a really significant fall. The number for economic inactivity was—if my memory serves me right—21.3 per cent; I may not have that decimal point right, but it was of that order.

It was much higher—

Jackie Baillie is saying that it was much higher—I do not think that it was. I will go away and check the data set.

Okay—good.

The point that I am making is that, however hard we try, a sizeable proportion of that economic inactivity level will persist, because there are people who genuinely cannot be economically active—Jackie Baillie and I would agree on that point. If the lowest level of economic inactivity to which we could ever hope to get is 15 per cent—which still is a large number, because a lot of people genuinely cannot be economically active—a fall of 0.8 per cent in one year from 22.1 to 21.3 per cent is a very big one.

The illustration, however, was that the surge was about long Covid.

I will go and look at the data, so that I can complete my view of this.

As for the other sweeping generalisation—

It was not sweeping at all.

—I assure Jackie Baillie that the choices that were made in the budget were made cognisant of working to achieve the outcomes in the national performance framework. I am certainly prepared to consider—I am not setting out my last word on this—that there is a misalignment of budget priorities with the national performance framework.

I said, in response to Mr Fraser’s question about it, that I viewed the Covid recovery strategy as “being mainstreamed”. I take that view because the Covid recovery strategy and, likewise, the budget, sit comfortably with our aspirations in the NPF. I am very open to discussions about how there may be misalignments between the budget and the national performance framework, and I am happy to engage on those questions.

I think that Jim Fairlie is going to pick that up now.

I apologise in advance, cabinet secretary. My questioning has been picking up bits of all the stuff that is being asked, so you might be made to jump about all over the place.

It is not an unusual experience in our conversations, Mr Fairlie.

Exactly. [Laughter.] One of the things that Álfrún Tryggvadóttir, the lead of spending review and machinery of government at the OECD, spoke about was the link between the spending review and the budget. Do you recognise that there is a problem there? Is that issue on your radar?

I am not dismissing Jackie Baillie’s points because I recognise the importance of that. What is the point of a national performance framework if we do not align our policy interventions with—this is crucial—a budget to support the outcomes that we are trying to achieve? There must be alignment.

I am very mindful of that point. My contention is that, in taking budget decisions, I am doing as much as I can to align our budget with the successful delivery of progress on the national outcomes in the NPF. However, I am open to a conversation on whether we could strike a better balance or put emphasis on particular areas. I assure the committee that the Government takes that endeavour seriously.

As I said, I will jump around. I will raise an issue that John Mason mentioned. You spoke about the Covid recovery strategy being mainstreamed. The link between the spending review and how you look back at previous spend is one of the issues that we considered in the previous evidence session. The point was made that, once something goes into a budget, it becomes stuck; it stays there for ever. As the spending continues over the years, the thing that you did at that particular time for a particular reason stays in place. Our current spending review method is not to look back and ask whether that spending is still relevant. That was emphasised in your response to Murdo Fraser when you mentioned that the Covid recovery strategy funding is now becoming part of mainstream funding.

You might have answered this in your earlier response to Brian Whittle, but is there an ability to look back at something that was included in the budget, say, five or 10 years ago? I am sorry—I am rambling; please bear with me. Local authorities quite often get to the end of the financial year and still have, say, half a million quid to spend, which they try to get rid of so that they do not lose that money in the coming budget. Does the Government use a mechanism currently in which there are incentives—Álfrún Tryggvadóttir used the word “incentives”—so that budgets are not spent in that way and the money is redeployed in a more sensible way? I am sorry if that was convoluted.

I understand exactly the point that is being made. The incentive in challenging existing spend is to ensure that spending is properly aligned with the Government’s objectives.

Do the spending reviews look back?

I look all the time, as do other finance ministers. I am here in a temporary capacity, but I have had to look very hard at commitments in this financial year and at how we are spending money, because I have had to find money.

As I announced to the Parliament, I have taken £1.2 billion out of predicted expenditure within Government. I have gone to different parts of the Government and said, “Those measures can’t go forward. I’m going to have to pull that money out. You’re going to have to do without this or do without that.”

That has been done in an abrupt sense because of the financial challenges of this year. However, we carry out periodic spending reviews in which we review provisions that we are making and things that we are funding.

Let us take, for example, a programme such as early learning and childcare. In the course of the 15 years of this Government, we have substantially expanded early learning and childcare. When we came to office, the level of early learning and childcare provision was about 425 hours a year, and we have put that up to 1,140 hours. We have done that on the basis of the early intervention advice—all the evidence shows that the earlier that we engage children in good, high-quality early learning and childcare, the better their educational, personal and health outcomes will be. We have made that choice and invested in it. If we had a spending review tomorrow, I am very sceptical that we would come to the conclusion that we would no longer do that. However, for other things that we do and are committed to, we might say that there is a time limit to what we can afford for those priorities, and we might change them.

The active purpose of a spending review is to determine what more we need to do. A spending review also has to take into account changes in the population. I am making a deadly serious point about the increased number of elderly people in our society. There are a lot of very fit, healthy and energetic older people in our society but, inevitably, there will be people who become frailer as they age. There will be more of those individuals, and they have to be supported by public services—ideally in their own homes but, on some occasions, that might have to be in an acute hospital setting that, by its nature, is very expensive to support.

I have a question in relation to the cost of Covid to the Scottish budget and the preparedness for another pandemic. Brian Whittle made the point that we have bigger challenges because of our distinct health challenges, which our previous witness did not agree with. I am sorry if I am jumping around, but I am picking up pieces. We had previous evidence about PPE. Do you still have the funding available for that 12-week rolling stock? When we took the evidence, it was very much in my mind that, if we have a stockpile of PPE, it will go out of date, so it will be a waste. However, NHS Scotland reassured us that it had a rolling contract. Is that under threat due to the budgetary pressures that you face?

No—the maintenance of the 12-week stock, which, as NHS Scotland will have explained to the committee, is done on a rolling basis, is supported by budget provision. The stock is used, but we have 12 weeks’ worth of it. We are using the budget to enable that to be constantly replenished but, as it is replenished, at the other end of the warehouse—if I can put it that way—it is being used.

I will make two final quick points. Jackie Baillie talked about economic inactivity, which this committee has looked at. It came out in an evidence session that a definite cohort was simply not going to go back into employment, on the basis of lifestyle or pension provision. After we took that evidence, I started asking people in my peer and age groups, “Why did you retire now, when you are in your mid or early 50s?”. Although it is anecdotal, I am hearing that, if employers were far more amenable to part-time work, a lot of those economically inactive people, who are more than capable of going back into the workforce, would do so on a different basis. I have been given evidence of a big organisation advertising 240 jobs, only one of which was part time. The Government might want to look at that, in terms of relationships with industry and whether it can change the way that it works. That is purely a comment.

I certainly think that we should be open to that, because, along with the other data that I was talking about, employment levels in Scotland are at their highest on record, and unemployment is very close to a historic low of 3.3 per cent. As Mr Fairlie will know from engagement in his constituency, which has a very similar profile to mine, we cannot speak to a local employer—in the public or private sector—without hearing that they are short of employees. Therefore, the need for us to be flexible about engaging people in the workforce is an absolutely central challenge, and the Government is doing some work on that in relation to the four-day working week pilot and various other measures of that type.

11:15  

Of course, there will be some complicated interactions around pension provision, and that is particularly the case in some circumstances in relation to the health service. Some of those issues are not immediately under our control, because they are more about pensions rules than employment rules. The more that we have an open and constructive dialogue with the United Kingdom Government—which regulates many of those issues—the better, in order to address some of them.

My final point goes back to a point that Brian Whittle made. In another session—I cannot remember which one—we took evidence about data gathering, and we have heard that we have world-class data. However, the link between what that data is and how it is used is not as strong as it could be in the Scottish Government. Would you look at that?

I am happy to look at that, but I think that we are in a strong position with the data that we have at our disposal. With regard to some of the data that we have through our health records, many people—internationally—have commented to me about the advantage that the Scottish data holds and how it can be used. The sequencing information that can be applied is quite remarkable and provides us with intelligence about how to position various early intervention measures. That point has been reflected on by the Standing Committee on Pandemic Preparedness, which is led by Professor Morris. We will continue to look at those questions, to make sure that we are using data as effectively as we can.

That concludes our consideration of that agenda item. I thank the Deputy First Minister and his supporting officials for their attendance this morning.

The committee’s next meeting will be on 26 January, when we will consider a draft report on our labour market inquiry.

11:17 Meeting continued in private until 11:27.