Seòmar agus comataidhean

I have set out three areas in relation to public finances. The first is prioritisation and ensuring that we are targeting and examining all our programmes—as people would expect any Government to do. The second is that we increase our tax base so that we keep more of the tax that we raise. The third is continued consideration of what our tax policy is. All those levers are equally important in ensuring that our public finances are sustainable and that we can create headroom.

Looking to the future, we will need to see what the Chancellor of the Exchequer’s autumn statement brings on whether the position on the block grant will improve over the next few years. We just do not know that. We also do not know whether there will be potential for consequentials in areas including childcare. Of course, those will have to be factored into all our policies.

Imminently. [Laughter.]

That is in case the date changes.

The council tax position in England has been set out previously. On the future position, there has been more flexibility on council tax setting here. We have moved away from the freeze that was previously in place and councils have more flexibility on the rate that they set.

The financial challenges that local authorities face are the same as those that are faced by the public sector more broadly. The policies that we have put in place on issues such as the attainment challenge funding and pupil equity funding have been important levers.

Dundee City Council has put in place an extensive package to support people through the cost of living crisis. For example, the food insecurity network provides for and supports organisations that are literally putting food on people’s tables. In tough times local authorities have to make tough decisions. However, looking to the future, that is one of the reasons why we need the new partnership agreement and the new fiscal framework with local government.

There are two aspects to that. First, local authorities need more flexibility in how they spend their money, so we need to reconsider ring fencing. That does not mean that all ring fencing will go overnight, but we acknowledge that local authorities have lots of pockets of funding, all of which have to be reported on and some of which are very constraining, so that probably does not make a lot of sense. The partnership agreement will set out the principles of how we will work together, and the fiscal framework will set out details of how that will work.

Our giving that flexibility will mean that local authorities will, over time, have more levers at their disposal. That is the second aspect. I am keen to work with local authorities to find out what other fiscal levers they might wish to have. A few relate to second homes, empty properties and a visitor levy, but there might be other levers that local authorities want to discuss, and I am keen to have that discussion with them.

It depends on whom you speak to, though. Stakeholders who are recipients of care are really keen for progress to be made on things such as national consistency, standards and other improvements. Where challenges exist, local government’s view is that it does not want to lose control over the service that it provides. I think that we can find a way forward through all that. I guess that the money that is required will relate to what the service will look like and what the timeframe for its delivery will be; we have to get that bit right before the money comes into play. I suspect that there will need to be a new financial memorandum, which will, of course, be there for all to see in advance of stage 1.

We are discussing the review, which is imminent, with the UK Government, but our priorities as we head into it are to ensure that the block grant adjustment methodology continues to protect the Scottish budget from potentially slower population growth in Scotland, which is important; to secure greater budgetary flexibility and the appropriate and required budget management tools more generally; and to retain protection from economic shocks that affect the Scottish and UK economies equally. It is about ensuring that we have the appropriate suite of policy levers and that we are not unduly exposed to risks outside of our control.

Those are the starting points. As the committee will appreciate, it is a negotiation, and negotiations require give and take both ways, but those will be the central areas on which we will require to see progress. Whether we can get something in place for next year’s budget depends on those negotiations, which we are entering into in good faith.

The committee will also appreciate that negotiation requires a private space, which the UK Government has very much asked for. However, once that negotiation has reached a certain point, I will obviously want to provide more information to the committee, and to Parliament more generally, as soon as I am able to. However, that can be difficult. I guess what I am saying is that we cannot have a running commentary on a negotiation.

One of my reflections is on whether there was a way of building more of a consensus around the issue. I felt very strongly that it was important to try to do that. Could we have done that at an earlier stage? Was it possible? The difficulty is that I do not know what trying to bring people together to coalesce around compromises would have looked like, because the debate had become so polarised, not least on social media—far more than it was initially, six years ago. For a minister in charge of a piece of legislation who can see the public discourse being so polarised, the room for compromise becomes quite difficult. However, I am the first to reflect on whether things could have been done more effectively.

I was not party to any discussion in the Cabinet.

The permanent secretary would not have been in post—

It is a difficult balance and you are then looking at how much risk you will be carrying. You will have the best advice in front of you but nothing is ever 100 per cent certain; everything carries a risk. If you have three options in front of you, the relative risks of each option will be set out and—not always but quite often—a recommendation will be made by civil servants, who will have drawn on their experience in order to present the relative risks of all those options to ministers. Ultimately, again, you have to apply some judgment to that.

On speed, you are right that you will hear quite differing views. Some are criticisms of things taking too long, and at other times there is an accusation of too-rapid decision making. The truth is that differing decisions require different time frames and time for analysis. Drawing again on my personal experience, if I look at something and I am not sure about the relative risks and it just is not clear to me, I will not make a decision on the basis of the submission in front of me. In such cases, I call all the officials into a meeting so that I can probe more fully what lies behind some of the assumptions and the risk analysis. In that way, I can get at what inevitably lies behind, for example, a six-page submission. That takes time, but it is better to take that time so that I make a decision with the full facts in front of me and an understanding of all that.

That is how I go about decision making. All the frameworks, standards and steps that were mentioned earlier are there to ensure the quality of the advice that comes out.

I have a final point. Nobody, including civil servants, can be an expert on everything. Inevitably, you have to draw on other stakeholders such as the business community, who have a level of knowledge and experience, and a view. You draw all of that in to try to make the best decision on the information that is in front of you.