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Yes. I note the urgency of the work.

I am conscious of time. My last question is about the Verity house agreement. I think that there was an expectation that there would be more meat on the bones on the fiscal framework by the end of September. Will you give us an update on that, and on the principles of how the financial flows will work with no ring fencing or direction of funding?

Good morning, and thank you for attending today. I have a further set of questions in addition to the convener’s. Part of our challenge is the breadth of what we have to cover.

You have eloquently outlined the fiscal challenges. Have you had discussions with other political parties? Thus far, have they approached you to indicate their preference for policy decisions, and, in particular, given the shortfall, which is often talked about in the chamber, have they set out their plans for their ideas of what should be cut?

I am conscious that other colleagues will want to come in, but there are a couple more areas that I want to ask questions on.

To finish my previous point, I have already picked up that some in the renewables sector are rattled by the Prime Minister’s recent cooling—or apparent cooling; perhaps that was for his conference—on renewables and the effect that that will have on global capital flows. The money will go where there is political certainty, so, when such sentiment is expressed, it will probably affect Scotland while it is constrained within the UK. I am not looking for you to treat that as a question and answer it, but it might be helpful if you can make some further reflections on how that may affect or limit our ambitions.

I have a couple of questions on the reform of public services. I know that that is a stated aim. I am particularly interested in public sector property management. That is a huge area, and we all understand how the landscape is totally different after Covid. I was interested in the commentary in the recent Audit Scotland report. It seems as though we are operating at ground zero. The report comments:

“Without robust data on the entire existing estate, it is difficult for the Scottish Government and public bodies to decide whether this estate will meet future needs”.

My understanding from a previous life is that it is incredibly complex and time consuming when the Government is bedded into full repairing and insuring leases. Will you give us an update on where Government is with that and, critically, what timescales you are working to? A huge amount of money must be being tied up that could be used elsewhere because things have changed.

I will leave the field clear here. I feel as though I have asked enough.

I am sure that you, like me, will welcome any costed proposals and alternatives, because we all need to own the issues that relate to the constraints on a fixed budget.

One of the things that is being discussed this week, with a helpful intervention from the Fraser of Allander Institute, is the suggested income tax rises and the effect of behavioural changes. The Fraser of Allander Institute modelling showed the different percentages and numbers that that would wipe off any tax raised, varying from £56 million to £161 million, or 30 per cent to 36 per cent, based on the proposals from the Scottish Trade Unions Congress and the Institute for Public Policy Research Scotland. I appreciate that that cannot be exact. The only time that the numbers can ever be exact is after the event; we all understand that. To what extent are you considering behavioural changes? What would mark the tipping point in a go/no-go decision for you?

Yes, I can understand that. The Fraser of Allander Institute’s paper sets out anticipated effects. As you said, the methodology that it is using will be the same as that of the Scottish Fiscal Commission. My wider concern is around perception. It is extraordinarily difficult—probably impossible—to work out some scenarios properly, but there will be a perception linked to what, in my view, is a relatively low committed spend to entrepreneurs, for example, of only £15 million, although, of course, we have not seen the budget. It is about the wider picture.

Again, it is this same question: what reflections have you made on the perception of people, businesses and investors? I accept that the foreign direct investment stats are very strong—we agree on that—but we are trying to predict how behaviours might change as a result of policy decisions. We have to compare apples with apples, as the convener said. Do you think that the perception, rightly or wrongly, that Scotland is a higher tax environment will play into investment decisions? How are you reflecting on that perception in your decisions on tax rises?

Sorry to interrupt, Deputy First Minister. I suspect that I will strongly agree with what you are going to say. My question, if I have not been clear, was, given the scale of the estate that you have outlined, do you have a worked-up programme in the Government to address that issue? I think that we are all agreed on the scale of the challenge and on the benefits therein. I fully understand your position, but there is a need to move to having something substantive—to have at least a framework—to operate to.

I accept your point, convener. I raised the pupil teacher ratio more as an example than as a specific point. I accept that it will be dealt with later.

Good morning, panel. Thank you for attending. I want to start with a quick question about the Verity house agreement. We know that some broad principles have been established, but, critically, we still need to work out the principles, never mind the details, of any fiscal framework.

Therefore, my question is, what consideration have you given to how the Verity house agreement will change your approach to setting the budget, giving advice to local authorities about budget setting and, indeed, policy making in terms of funding, ring fenced or otherwise?

I hear what you are saying and I accept all of that. You talk about accountability on both sides, and I think that the principles are clear. However, the budget for 2023-24 will be published fairly soon, in December, and local authorities will be asking what specifically it will mean for them in the following year. Have you managed to have any discussions yet with the Cabinet Secretary for Finance about what the interim measures will be? I acknowledge that you said that it will be an iterative process, and I am thinking specifically about local authorities that might wish to, for example, revert to using the more flexible pupil teacher ratio instead of going by the number of teachers and that will, therefore, be making specific budgetary plans based on that, because that is a longer-term issue. I am trying to flesh out how far they will be able to make those decisions straight after the budget, as I am not clear about that.