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A number of factors are pressing on our public finances. One is that we have a huge number of programmes, all of which need to be supported, and the financial position has come under increasing pressure. For example, the level of inflation has squeezed the budget and resulted in a significant reduction in the value and purchasing power of every £1 in the Scottish public finances.

Added to that are pay deals. Nobody would deny any public servant a reasonable pay deal, but we have, by and large, had to fund those through the resources that are available to us, which has meant difficult decisions. We saw that with teachers’ pay and the decision that had to be made on the £46 million for universities and colleges. We said at the time that the money had to come from somewhere. Those are real decisions and real issues that have to be navigated.

The medium-term financial strategy that I will soon bring to Parliament will set out the horizon scan of what the public finances are looking like and some of the difficult decisions that will require to be made. Ultimately, one of the reasons that the First Minister set out the missions was that we need to look at everything that we do and spend money on through that lens and ask ourselves some perhaps quite difficult questions around whether each thing delivers those key missions. That will have to guide us through some of the quite difficult decisions that will inevitably have to be made in order to balance the budget. The Scottish Government has to balance the budget. It is a legal requirement; we have no option. My job is therefore to make sure that my colleagues are doing what they can to address all those issues, including the programming.

It is difficult for civil servants that one minute they are working on this and the next they are working on that. However, based on what I have seen and experienced, the skill of the civil service is that they are very quick to adapt; they are agile and able to get to grips with new policy areas.

There is a recognition that we have to keep a close eye on head count. We cannot have exponential growth. That means that it has to be an agile organisation and that civil servants will have to pivot, such as they did on Ukraine, for example. Nobody knew how to set up a Ukraine resettlement programme and its being set up was an amazing insight into how the civil service is agile, experienced and able to deal with things that nobody could have predicted in a very efficient and professional manner that delivered a good scheme.

There is maybe a fair point there, but the pay deals came at us due to the rise in inflation. Those pay demands and therefore the pay deals to try—quite rightly—to avoid industrial action were perhaps beyond what had been envisaged in the RSR. That put additional pressure on the budget and the money had to come from somewhere. Part of the EBR process was to help with that.

The former DFM laid out that one of the driving forces was the pay deals, driven by inflation. That would have been quite hard to predict, to be honest. We absolutely want to avoid being in EBR territory again this year, which is why I am undertaking the work that I am with cabinet colleagues to manage those in-year pressures.

You raise an important point. Obviously, I will not stray into commenting on live legal proceedings. However, one of the reasons why we felt it important to challenge the section 35 order was the issue of precedence and the potential chilling effect on other policies.

A section 35 order is a wide-ranging power—essentially, it could be brought to bear on any policy decision making by the Scottish Government that the UK Government does not like or agree with. That approach very much goes against the memorandum of understanding that was in place, in which a section 35 order was to be seen as a last resort and only to be used if everything else had failed. That did not happen in the case of GRR. The UK Government used the order as a go-to first salvo. That action completely blows the memorandum of understanding out of the water.

Where does that leave us? We must be guarded against that chilling effect of not wanting to take forward policies that the UK Government might disagree with. There will continue to be policies that we want to progress with which the UK Government might fundamentally disagree. If we believe that it is in the interests of the people of Scotland to act on an issue, and we have set out a commitment to do so, we should take the matter forward.

Say that we were putting through legislation on minimum unit pricing for alcohol. That is a good example of a policy that the UK Government did not agree with. You can now see how it could use either a section 35 order or the United Kingdom Internal Market Act 2020 to say that that policy would be a disrupter to the drinks industry and that it would therefore not allow it.

We are in new territory. The situation is of huge concern. We need to get a different relationship. Getting into the territory of the memorandum of understanding would be very helpful. We will continue to pursue that with the UK Government, to get away from the threats of not granting an exemption under the internal market act or of using a section 35 order. That is not a good place to be in—and it gets in the way of the good day-to-day working relationships that civil servants have with their UK counterparts and, indeed, that we in Government have with some ministers.

I finish on this point: I have a good relationship with many of the departmental ministers in the UK Government. Much of the problem emanates from the Scotland Office. I will just leave that there.

Some of that will be done on a more formal basis than it might be in other areas. For example, there is a big, high-profile and in-depth public inquiry around Covid.

There has also been a commitment to a further inquiry on Ferguson’s—on top of what has already been done in Audit Scotland’s section 22 report—once 801 and 802 are delivered. Work still needs to be done there that will generate further information and lessons learned in depth.

In other areas, a more rapid, shorter and sharper analysis will take place around whether things have worked. The perm sec can say a bit more about that.

On Ukraine, an in-depth analysis will take place of what has gone well, what the lessons learned are and how the civil service and ministers responded—all that will be captured.

I am concerned to hear that. We might have work to do to reassure organisations that that is not the case. I ask organisations such as SCVO or any others to look at the evidence: many examples exist of organisations that are funded by the Scottish Government and are critical of policy decisions or legislative options—there is no shortage of them. I would have thought that that might have given some confidence to organisations that there are no questions about looking at funding arrangements if they disagree with the Scottish Government, whether or not they articulate that. We might have a job of work to do to make that more explicit.

I meet SCVO regularly. It does a hugely important job in representing third sector interests and I would want it to say if it were concerned. It is very forthcoming in arguing for more investment in third sector organisations—certainly in the meetings that I have had with it.

If that is so, we have some work to do because that should not be the case.

The third sector interfaces might offer a good starting point, given their reach into some of the smaller charities. It is important that we involve them, so that would be very much on my radar. The TSIs would be a good mechanism—so would others, but TSIs would probably be the first port of call.

The current and proposed disqualification criteria are based on behaviour or conduct that the Government considers makes a person unsuitable to hold office as a charity trustee. That goes back to the importance of the trustee role and the fact that trustees are responsible for managing money and property that have been donated by the public in good faith. However, it is recognised that in some circumstances a person might have valuable experience and expertise to bring to the role of trustee, notwithstanding that they would otherwise be disqualified.

Automatic disqualification for bankruptcy is time limited and applies only until the debtor is discharged. On discharge, which can happen quite quickly—in a matter of months, in some cases—the disqualification falls away.

It is also open to anyone who would otherwise be disqualified from acting as a trustee on any of the disqualification grounds to apply to OSCR for a waiver. The existence of the waiver mechanism means that, although disqualification is automatic, it is not absolute, and it can be waived at the regulator’s discretion.

The existing waiver system and its extension to the new automatic disqualification criteria demonstrates a recognition by the law that there will be cases in which a person who is disqualified can still hold a trustee or senior management position. Again, though, it is for OSCR to make that judgment.

I know that the committee has looked at that area in some detail. Currently, the ability to apply for a dispensation from the inclusion of certain information in the register is provided for in the 2005 act. The bill extends the current dispensation provisions to cover the new trustee information on the register. The ability to do that is already there and is being extended to cover the new trustee information.

OSCR will operate the mechanism in the same way as it does now: assessing the information that is provided case by case. In addition, the bill gives OSCR the power to exclude information from the register of its own accord, if it believes that the safety or the security of a person or property could be jeopardised, without a charity or a trustee having to apply first. That could relate to a specific charity or type of charity, such as a women’s refuge.

On your second point, about a deterrent, I stress once again that the bill does not alter anything about the dispensation mechanism that OSCR has been operating since the 2005 act was passed. As I said earlier, the bill extends that mechanism to the new provisions.

A charity or any of its trustees will be able to apply to OSCR for a dispensation from the requirement to publish the name or names of charity trustees on the register where, as I said, publication could

“jeopardise the safety or security of”

a person or property.

OSCR has an established procedure in place for dispensation and is well used to assessing requests and working with those who are applying for a dispensation before information is entered in the register, so it knows how to do that. The names of trustees are already contained in a charity’s accounts, and the accounts are already publicly available simply by way of a request that is made to a charity directly as opposed to automatically. The measures in the bill will put information on every charity in a single place in order to enhance access by the public.

I think that that is the right balance, and it does not make a huge fundamental change.

I acknowledge that there is an appetite for a wider review of the charity sector, but I thought that it was important to move forward, as we were ready to do, with some of the technical aspects that had already been consulted on.

Once scrutiny of the bill under the parliamentary process is completed, it will be important for us to scope what the wider review should look like, together with SCVO and the sector more widely. There will be varying views on the scope of the review and on what should be covered, and I am open-minded on that. I think that the role of SCVO will be critical. I have discussed the matter directly with SCVO; as you can imagine, it has raised it with me directly. The Parliament will have a view, and the committee will have a view about its scope, too.

Given that some aspects of the proposals have been somewhat delayed because of the pandemic, it is important to progress the bill, and we should then consider the wider review. Whether that review throws up the need for further legislation remains to be seen, and I am open-minded about its scope, as I have said.