Seòmar agus comataidhean

I do not think that alarm bells should be ringing.

Yes, it has improved. I had the projection earlier on—I was looking at it and now I cannot find it. The figure is projected to go from £163 million to £300 and something million—does somebody have the figure? I have it somewhere—it is annoying because I had it earlier.

There is an increase in financial transactions, and we will be looking at using them primarily for SNIB and housing. However, although we welcome any such increase, there is a bit of opaqueness in the way that the bulk of FT funding is routed through things such as the National Wealth Fund. We are not clear about the governance arrangements for that; we want that fund to invest in Scotland, but, as I have said, how the decisions are made and how they align with the priorities that we and local government have set out is a little bit opaque. Those things are just not where they need to be; after all, at the end of the day, this is collective funding. I can now tell you that the figure for FTs is projected to go from £167 million to £360 million.

We get a better bang for our buck if we clearly align funding with joint and shared priorities. We do not want to go back to the days of having roundabouts somewhere with a UK Government badge on, as used to happen, because that is not a good use of money. We need big strategic capital investment in joint and shared priorities to make the best use of our collective resources.

Well, the UK Government is routing its funding through, I think, Homes England. It is a different set-up. We route funding through local government and registered social landlords; they can borrow, too, and the funding that we put in is enhanced by the borrowing that they undertake. The model is a bit different in that respect.

I am talking more about big infrastructure projects. The National Wealth Fund is supposed to fund catalysts for a lot of big industrial or net zero projects, but there is no clear governance with regard to how those decisions are made. I just think that there is scope to do better in that space. We are not the only ones saying that—the Welsh and the Northern Irish are saying the same.

I do not think so. There are one or two things that we said we would come back on; we have made a note of them, and we will do so.

Let me reassure you that we have learned lessons from all that. I should also point out that we have brought forward hubco; we have had the non-profit-distributing model; and we are exploring things such as the mutual investment model that the Welsh have used. These things are a million miles away from the terrible deal that the public sector previously got out of PFI.

We are also quite interested in understanding where the UK Government is going with revenue-based finances, but any approach has to pass the value-for-money test. Given the current financial climate and current interest rates, the situation is not ideal.

I am a bit of a pragmatist. I am in the space of making something work that will deliver projects that otherwise would not be delivered, but any approach has to meet the value-for-money test and has to be good value for the public purse. We are still working through some of those issues in relation to some of these projects.

Yes. There is volatility, but we have to plan for the worst-case scenario, so we have those discussions. It comes back to the lack of flexibility in the fiscal framework. We want to discuss and have been discussing the borrowing limit, and there is the issue of having flexibility over borrowing powers more generally. We will monitor the situation very carefully and work with the Treasury on the borrowing limit for a worst-case scenario. Given the level of volatility, I suspect that the figure will change—I hope, in a positive direction—but we will work with the Treasury on contingencies.

Exactly. I assure you that we have made that point very powerfully, and we will continue to make it. We want to make progress through some short-term flexibilities. There is the wider issue of agreeing the scope of a more fundamental review of the fiscal framework, but there are some shorter-term flexibilities that could make a big difference, such as those relating to the use of the reserve, borrowing limits and borrowing flexibilities. Those could all make a real change.

On the fiscal framework, the income tax net position can change not just due to differences in tax policies but due to the composition of the tax bases in Scotland and the UK. As the committee has recognised, the position of every area in the UK is skewed by a comparison with London and the south-east, so, if the budgets for every part of the UK were set on the basis of that comparison, it would be very challenging. How the fiscal framework applies in the devolved context absolutely skews the funding base. We have to address that, and we have seen how the framework works in practice for enough years now to know its weaknesses, so the time is right for a more fundamental review.

There are areas for broader consensus around reforms to the existing system, but it is more difficult to find areas of consensus when you get into considering a wholesale council tax replacement. However, we are interested in looking at where the UK Government goes. Seeing whether there is enough common ground will be a post-election discussion.

That is a very interesting idea, which I will take away. The Finance and Public Administration Committee might have a view on that.

The Scottish Fiscal Commission has gone quite far by suggesting that the spending review is a point at which, if others have a different approach to spending plans, they should set that out, particularly in a pre-election period. Given that an organisation as eminent as the SFC is saying that, it will perhaps put a little bit of pressure on Opposition parties to set out alternative spending plans. If they do not do so, that is quite revealing.

It goes back to the point that I just made. Work is absolutely the best route out of poverty—we all agree on that—so how can we ensure that there are routes back into the workplace for people who have been out of the workplace for whatever reason? It goes back to what we talked about earlier—our employability schemes, what works and where the evidence base is. Without a doubt, some of those schemes are very effective, particularly for women who have been out of the labour market for some time due to having kids and so on. However, there is more work to be done in that space.

There is also the point about avoiding people falling out of work in the first place. We know that the longer someone is off work, the lower the chance that they will go back into work. I do not think that we are as good on that as we could be. We could do more in that space.