Seòmar agus comataidhean

Good morning, cabinet secretary. Thank you for joining us.

Before I move on to my more substantive questions, I want to raise a couple of wee quick points, the first of which is about capital expenditure. Given the significant cuts that we face—it is anticipated that capital expenditure could be cut by 20 per cent, in real terms, by 2028-29—will you consider scheduling a debate on the issue? Ironically, people outside the Parliament have, for the first time, become alive to the implications of the capex cut, because of what it means for treatment centres. As you know, the subject is of great interest to me and one that I have consistently asked about. Will you consider scheduling such a debate? I think that it would be valuable.

If one had to put a wee bet on it, the evidence suggests that the constrained environment for public services will continue. To me, that suggests that there is a greater need to do something like that, because it is about fiscal sustainability.

My next question is on social security spend, which is another area where there are concerns about long-term affordability and sustainability. Ironically enough, having raised the point about the longer-term picture, I saw when I read through the response that it deliberately referenced

“monitoring all areas of expenditure during the year”.

That is exactly not what the point is; the point is that, when we extrapolate the numbers, we see that it is not sustainable, particularly given that it is a demand-led area. Therefore, regardless of whether the approach is responsible and capable, the point is that you are looking at expenditure only in-year. As a result, I was surprised by that response.

This ties in with earlier comments about the Scottish Fiscal Commission’s report on sustainability, but do you recognise the very real concern that, when we ask about the long term, your answer that you will take a responsible approach in-year does not provide confidence? That is the issue. Arguably, we have been taking a responsible approach in-year, every single year, but that is not the issue—the issue is the projection that has concerned the committee so much.

My last question concerns affordable housing, which I brought up before. I picked up on something in the wording of the Government’s response. In the light of the commentary made about capex—I strongly agree with that commentary, because it is a significant challenge—and FTs, the response says:

“We remain focused on delivering 110,000 affordable homes”.

Previously, the wording that was used was that “we remain committed” to delivering 110,000 affordable homes. Is that change an indicator of anything—given the significant challenges around capex and FTs that we discussed earlier?

We have had some discussions with the Government around the nature of risk. I made an observation on that when we were going through the Gender Recognition Reform (Scotland) Bill. According to the evidence that I saw, risk assessment concerned the probability of a risk occurring but not the impact, if it occurred. Can you reassure me that the risk assessment has been done with the academic rigour that you would want to see?

I raised with the Government the possibility of the situation that we found ourselves in with Isla Bryson, before it occurred, and I said that, although the probability of such a risk occurring was low, the impact, should such a situation arise, would be extraordinarily high. I cannot say that I was happy to be proven right.

It is a matter of disaggregating probability and impact. Can the minister reassure us that that technical approach is being followed and is embedded among all service providers?

My ears pricked up when you mentioned the Finance and Public Administration Committee, which I am a fellow member of. I do not recall evidence being brought to bear that backs up your assertion, although I do not doubt what you said. Will you help me to recall that?

To go back to a comment that was alluded to by the convener earlier, our specific challenge in this committee is to take a view on the financial memorandum as presented. The questioning thus far has brought out a significant number of areas where there is uncertainty on costs, and we have covered a lot of them. We know that standing orders set some rules around the production of financial memorandums including on the best estimates, costs and savings and so on, and also on indicating the margins of uncertainty and a range of costs. Therefore, when I looked at the FM, given all the things that have been brought out thus far, such as the lack of consideration for future inflation and certain areas being missing, I was surprised to see that all the costs appear to be fixed costs. What was the rationale for not including ranges that would give an indication of certainty or otherwise?

Do you understand the point that I am making about the role of the committee members? For the reasons that you have set out, there is a question as to how confident we can be in the numbers, as presented. I have asked this question of witnesses before. On a scale of zero to 10, where zero is no confidence and 10 is absolute confidence, what number would you give me specifically on the FM, as presented today?

You make a fair point about the probability of occurrence in both scenarios. There will not be huge volumes of cases, but when the situation occurs, it could potentially have quite a big impact on one person. Therefore, I want to follow up on the convener’s comment about the possibility of Revenue Scotland having some kind of discretionary power.

I think that you already concede that there continue to be some scenarios that, because of their nature, will require the introduction of further SSIs in order to be ironed out. I am still a bit unclear as to why you would not grant a discretionary power to Revenue Scotland. I know that you look for certainty in the law, which is eminently sensible, but you concede that there continue to be some anomalies as we get into the detail. Giving a discretionary power to Revenue Scotland would surely allow for the ironing out of such anomalies. If HM Revenue and Customs—which obviously has more resource; I understand that—can do that without there being continuing legal cases, why would Revenue Scotland not be able to do that?

You have highlighted that it is uncertainty cubed, because of the points that you have made. What consideration did you give to other mechanisms? I sense that you are going through the process, which says that you must present an FM in terms of the standing orders of the Parliament, in the face of considerable uncertainty. Did you consider other approaches? I fully accept that there are significant challenges around the cliff edge of UK Government funding, so did you consider going further on in the process before presenting an FM? You will appreciate that, as a committee, we cannot have a great deal of confidence in the FM, as presented, for the reasons that you have set out. For example, did you consider using co-design to get more firmness around the figures?

That goes back to the convener’s earlier point about framework bills. If you are saying that the bill is as good as it can be at this point and that further clarity over numbers will emerge later, that will happen beyond the point where the finance committee has oversight of it, which will necessarily lead to considerably less financial scrutiny from a parliamentary point of view. Therefore, logically, there will be a higher probability of increased costs, because we do not have our fingers all over it from a purely financial perspective. Do you recognise that that might be a concern for us? We are repeatedly noting that we have incredibly constrained public finances, but in the face of that constraint we are building less scrutiny into the processes.