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We are not starting from the point of view of saying that everything is on the table but 1 per cent might be at issue. Everything should be challenged. The principle is that we have to challenge each other. If everything is committed, there is no room for change. However, there are clearly key priorities that are big spending areas. Health, local government and social security are the three big spending areas that constrain spending on everything else to a much smaller spend.

The work on health and social care reform will be important to ensure that the £21 billion that was allocated to health and social care for 2025-26 is spent in such a way as to reshape and do things differently. It will not be a great surprise that we have a commitment to maintain health spending and to pass on all consequentials, so there are some certainties in that big spending area. We need to manage expectations: we are not going to massively reduce health spending; the question mark is over how that money is spent and what it delivers. Richard McCallum, do you want to say more about process?

It is a very small number.

Each cabinet secretary will have a duty to point out areas in their portfolios where it might be difficult to deliver savings, change the culture and bring public bodies round to a different way of thinking. We need to ensure that programmes are being developed and delivered in an intelligent way—not through a salami-slicing approach—so that those things can happen. The administrative function is important, but it has to be streamlined and delivered in a sustainable way; otherwise, we cannot invest in our public services.

Quite rightly, and as you would expect, those cabinet secretaries will have highlighted things that will be challenging to deliver in their portfolios. The outcome of those discussions will be to find a route forward to ensure that any concerns are addressed as far as they can be. Change is difficult.

Let me be clear: the 0.5 per cent annual reduction absolutely has to be delivered and it will be. Ivan McKee, the minister leading on that, is looking at the plans for all parts of the public sector and what is required. Public bodies have a level of independence, but they are required to deliver the same targets. Within that, there is a 20 per cent reduction in admin costs, which will drive reform and the sharing of services, including corporate services in particular, and that work is moving forward at pace.

The reduction is not a nice-to-do question mark or a case of saying, “If you can get around it, please do,” but a requirement that we have to deliver on. However, within all that, we want to prioritise the front line, so there will still need to be recruitment in some front-line services, particularly in the health service. What is important is to deliver reductions in the right places in a managed, proper way.

On your point on compulsory redundancies, to be clear, we want to avoid those. However, as part of the process, if an organisation has gone through all the steps that are required, and looked at every possibility for voluntary severance and redeployment, but it cannot finish the job because people either cannot be redeployed or do not want to take voluntary severance, compulsory redundancy is a backstop option.

You will have seen from some of the coverage that VisitScotland has been in that situation. It has been working on that with the unions. When it became obvious that compulsory redundancy was the backstop, a lot of people who had not previously applied for voluntary severance did so.

It is important that organisations understand that that is the last resort. However, through the tools of voluntary severance and redeployment, I am confident that we can meet the targets in a way that avoids compulsory redundancy, if the process is carried out in the right way, through the work that organisations are required to undertake.

We have discussed that issue previously in the committee. First, I would say that investing in the next generation to try to eradicate child poverty is an investment in the cohesion of our society. The fact that we are the only part of the UK with falling child poverty rates tells me that it is an investment that is worth making. We are investing £649 million in this financial year in the package of seven benefits and payments that are available only in Scotland.

Analysis by the chief economic adviser shows that our additional spending on social security could deliver a £300 million boost to GDP in Scotland’s economy in the short term. I guess that people spend locally, particularly when they are on fixed incomes and low incomes. That analysis has been undertaken.

Going forward, we absolutely need to ensure that what we do is sustainable. That is why the fiscal sustainability delivery plan sets out the steps that we will need to take to continue to afford our priorities. We see social security as an important investment. We need to continue to challenge ourselves on the delivery and ensure that, for example, Social Security Scotland is delivering in an efficient way. Work is going on in relation to the adult disability payment to assure ourselves that the assessment processes are correct. I am happy to share more information on that with the committee. The starting point, however, is that we believe that this is not just an investment that is essential for the future cohesion of our society but one that has an economic benefit as well.

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.