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I hear the point that you are making, and it is not lost on me. In normal times, a 3 per cent real-terms increase in the local government budget, plus the resources that we have put into local government for pay, would have been able to support the pay deals that local government is trying to negotiate. However, inflation has meant that the pay settlements that we have seen across the public sector are way beyond what any part of the public sector had budgeted for. I make that point because we cannot get away from the fact that that is an absolutely critical driver of some of our problems.

You are right that the social security spend is not just about the Scottish child payment. We also need to be on top of what the adult disability payment, for example, looks like going forward. We have been under pressure from cross-party representation in Parliament to make the system more generous. That, however, comes with a cost to social security spend: making it a more dignified and progressive system that is based on dignity and respect means that it costs more. That is not the wrong choice, but it costs more. Social security spend is set to rise and, therefore, we need to make decisions elsewhere, whether those are spending decisions or revenue-raising decisions, in order to make sure that, going forward, we have a fiscally sustainable budget.

I will furnish you with what I can, but, at the end of the day, it is a negotiation and negotiation is a two-way street. Getting it right is really important. Local government rushing into something that might have disadvantages, depending on the fiscal arrangement, pay deals and inflation and where that all sits, is something to be considered quite carefully. Taking the time to get it right is important, but we will probably need to approach the budget with a complex set of discussions that refer to the principles that lean into the work that has been done on the fiscal framework, although it might not be the finished agreement.

Both Governments drew from the independent reports. It is important to say that those were important reports. We agreed to publish them on the same day as the outcome of the review because we thought that that would help people to make sense of why we had come to the conclusions that we had come to. I guess that that constrained things. I do not know whether there would have been any great public or media debate on the independent reports, because they are quite technical, but that was the logic. Rightly or wrongly, both Governments agreed that that made sense.

At the beginning, we had said that we wanted it to be a more expansive review, but it became clear that that was not on the table. There was no point in pursuing something that was not on the table, so the process became about increasing our borrowing and reserve capacity and securing the use of the index per capita methodology. That is really important for us, given the issue of population—the position is different for Wales, but that is really important for us. To be blunt, it was a negotiation that involved seeing where we could get to, and some things were easier to settle than others. With a bit of give and take on both sides, we got to a landing space that I think is pragmatic. I will probably not say this very often, but I found John Glen, the Chief Secretary to the Treasury, to be one of the easiest UK Government ministers I have ever had to deal with in all my years in government. [Interruption.]

I do not know what his views and reflections would be, but we allowed our officials to get on with the job. Treasury officials and our fantastic officials here in the Scottish exchequer were allowed to get on with finding solutions without political interference to make that process difficult. John Glen and I then had an opportunity to agree the bits that we could agree. We had a bit of negotiation around some of the other bits, and we came to a pragmatic solution. I will spare his blushes, but that is not always the case when dealing with the UK Government—sometimes, you might think that you have agreed something, but that turns out not to be the case. I did not find that during this process: what was agreed was agreed.

Basically, we agreed to consider the approach at a later date and that we would progress the matter at a future meeting of the Joint Exchequer Committee. I am happy to keep the committee informed when we get to that. There was a recognition of the complexity and the dangers of having responsibility but not having levers, which would put us in a very vulnerable position.

As I said, we got to a position in which we probably obtained the best outcome that we could get, given that it was a negotiation. We will undoubtedly revisit the fiscal framework on a number of occasions, but, at this moment in time, we have made some substantial gains. We have not made gains in cash terms—the budget has not grown, because any borrowing has to be paid back—but having the ability to smooth the peaks and troughs is really important.

Of course, the northern regions of England do not compete with London and the south-east, either.

I am well aware of the delays—

As I said at the time of the statement, we need to look at our spend through the lens of the core missions that were set out in our policy prospectus. Given the financial challenges, the spend needs to be really focused. The core missions relate to poverty, net zero and sustainable public services. A lot of our policies are already focused on the first core mission—tackling poverty. For example, the Scottish child payment is a key lever in helping us to meet our child poverty targets.

We have more than 500 programmes running across Government. I do not think that it is unreasonable to put those programmes under that lens and to look at how far they go in meeting the core missions. There is a balance to be struck. It is clear that we must consider what the objective of changing any of the programmes would be and whether we can create better outcomes for people who need support the most.

We need to balance that with the social contract that we have with people who pay their taxes. Those who are paid more in Scotland pay a bit more in tax. Obviously, they need to receive their part of the social contract for that, which comprises a range of services that goes beyond what they would receive elsewhere in the UK. After all that work has been done—it is on-going and will continue over the summer, so there are no conclusions as yet—we want to reach a position in advance of the budget that strikes that balance and creates a credible and fair set of propositions.

As I mentioned in my opening remarks, I would also like to create headroom for tackling some of the big issues. Our desire is to get more people into work and to help them to take on more hours and to get better-paid work, and childcare is a key lever for that. We have made huge progress on that—the childcare offer in Scotland is far in excess of what is offered elsewhere in the UK—but we need to go further. However, in order to go further, we need to have the headroom to be able to expand the childcare offer. We need to think about that, as well as about sustaining the services that we already have.

We will be open and transparent. Once that work has been done, we will present our proposition. It will be for others to consider that and to agree or disagree with it. If people want to propose alternatives, they will need to set out the detail of their proposals.

It needs to be about more than efficiencies. Efficiencies are the de minimis position. There are 129 public bodies, all of which do a good job but all of which have estates and back-room offices—and some of which do similar things. As a minimum, we need efficiency and digitisation.

For example, the National Records of Scotland has transformed its organisation. Scottish Water, too, has become very agile—able to respond and to drive efficiencies but delivering a really good service. There are examples that the rest of the public sector could learn from and we are requiring it to do so.

I have the responsibility of driving forward the overall picture of the programme of work that we have set out. I have had bilaterals with all my colleagues to make sure that we have clarity on the short-term objectives such as efficiencies.

We are also looking at the medium to longer term. People are working in different ways, now, so is there an opportunity to look at the vast estates across the public sector? In addition, are there opportunities for mergers or shared services? However, I want to avoid people becoming consumed by structural change rather than by the objective of improving services and getting better outcomes. We need to avoid tipping into the territory of “Who will get what job?” rather than “What are the better outcomes that we need for our public services?”

I see this as a very important area of work. If we create new public bodies, we will need to have thought through whether that is the right way to go, rather than that being the first go-to. Perhaps we have all been guilty of that. That landscape needs to be absolutely agile and to work to best effect in delivering good outcomes for the public. As I have said, I am driving that forward. I am happy to keep the committee updated on some of the detail and to point to examples of good practice and good outcomes.

We are not aware of anything, but we sometimes find things out very late in the day. We do not get an awful lot of information in advance of the autumn statement, for example, so we do not know. However, we would clearly utilise any capital availability. We benefited at one point from a financial transactions increase, which we utilised for the affordable housing programme. That was the main use that we put FTs to. However, even that has dropped off, and it looks as if it will continue to decline. We will continue to make representations, because that is a key point in respect of the recovery.

In terms of the rest of the UK, we of course have the lowest poundage—that was the number 1 ask of business and that is what was delivered. We are discussing with business the issue of non-domestic rates. Tom Arthur, the minister responsible, has a working group to look at the future and business is represented around the table.

We want to make sure that Scotland is seen as a good place to invest and the SDI figures over the last period show that 86 employment opportunities have been supported here in Scotland, in terms of new and sustained business. I think that that has delivered about 8,500 new jobs or sustained jobs, which are down to the inward investment decisions that companies have made. Those companies could have gone anywhere, but they decided to come to Scotland. That has got to be a sign of their confidence and I am sure that we would all welcome that.