Seòmar agus comataidhean

Yes.

As a basic answer to your question I will say that those are matters for negotiations, but it is important to me that Crown Estate Scotland can continue to do the good job that it is doing.

I will kick off. As I have touched on, the joint budget review was to take forward three strands of work. The first strand was to have a dedicated climate narrative in the budget document—which we have done. The second strand was to enhance the categorisation that we talked about earlier, which we have also done, although it is a work in progress.

The third strand was to develop and implement a Scottish Government-wide net zero assessment. That could be described as an iterative process, with the intention being to roll it out across the wider Scottish Government from late 2024. Following roll-out, there will be a review to ensure that it is fit for purpose.

That is about selecting a broad range of policies from across the Scottish Government to pilot the methodology and go further than we have so far. The benefit of that will be that we will be able to look at policies as they develop and check whether they are impacting positively and in the way that they need to, so that we meet our climate change goals. Once completed, the three strands will have taken us to a better place.

There will be work in progress to ensure—as we go forward and are able to compare budget to budget, for example—that we are able to provide more monitoring of whether we are making the improvements that we need to make. The new methodology evaluates each spending line on its potential impact, either on emissions or adaptation.

The capital and financial transactions funding position for 2024-25 is £6.4 billion, and it apportions around 42 per cent of spend to positive activities in absolute terms; that means around £2.7 billion for positive spend for climate. There is a lot that would be described as being in the neutral space. The resource budget is £36 billion for 2024-25.

Clearly, most of that spend is on front-line services including the NHS, social security, local government and so on. Seventy-five per cent of the total resource budget is categorised as neutral spend, so it is not having a negative impact on climate, but neither is it having a positive impact. It is important to make that point when we bring in the resource budget. The bulk of it is going on staffing, which will not have a positive or a negative impact. The resource side of things will have a minimal carbon impact.

As this is the first year, there is potential for improvements to be made to the evidence base that is used to assess impact. We see this as the start of a process, not the end of the journey. Perhaps after the experience of this budget, the committee might be happy to revisit it to see where we might make further improvements.

There will be such information in the evidence base on what makes the biggest impact. That is where we get into quite difficult decision making, because if there is an array of things that make an impact to some extent, but there is only a certain amount of money to deploy, we then have to make judgments about where the biggest impact will be at this moment in time. That does not mean that we will not revisit it. Philip Raines’s point was that the budget trajectory is not a straight line. There will be peaks and troughs, but the destination is the planting of more trees and meeting the targets. In years when there are big real challenges, we sometimes have to prioritise other areas.

Neil Gray may want to—

I guess that I could not say, hand on heart, that it will all be fully functioning across every line and policy decision by the time of the next budget. It probably will not be, because it is complex, but we are on a journey that is about all the stages, including the policy development stage as well as the negotiations to agree policy and the amount of money that we are going to spend on it. When we are looking at policy, we need to embed analysis of the impact on net zero from the start and be able to set it out.

We talked about that a few months ago when we were looking at the outcomes of the small vessel replacement programme at phase 1, when the outline business case was presented at the end of 2023. Subject to approvals and procurement, that could see the delivery of the seven new small vessels between 2026 and 2028.

The reprofiling was due to the stage that the discussions had got to, in terms of the detail. The funding follows where the contracts and the negotiations are at, and the reprofiling was due to the stages at which the funding would be deployed not being reached.

You will know this, Convener. When you set out your funding profile, it is based on what you think that the timeframe will be. Inevitably, things change, and that is what happened. Transport Scotland gave assurances that that would have no impact on the end point, but it was about the profiling of the resources that were going to be needed at which stages. That allowed us to make those in-year savings.

That does not mean that the pot is going to be any smaller by the end of the process—far from it—but the timeframe of when and what is spent has shifted because of where the contract negotiations were. That is what I set out a few weeks ago.

The profiling of the funds that are required by Ferguson Marine is part of the negotiation with Ferguson Marine in terms of what is required when. There has been a lot of attention given to the funding profile of what has been required and what has been spent—probably more attention than many areas of Scottish Government investment have received.

I am sure that Neil Gray will be able to give more detail on that. When we negotiate with any organisation that is receiving public money, there is a negotiation about what is required for that particular year to deliver what the organisation says that it is going to deliver.

The history there is quite challenging, and no one is going to say otherwise, but we are attempting to make sure that we align the required resources with what is realistically going to be delivered in that financial year. That is the best answer that I can give.

Thank you very much, convener.

The challenges facing Scotland’s public finances will be well known to the committee. The pressures on the 2024-25 budget cannot be overstated and, as I have said before, represent in my view the greatest challenge to any Scottish Government since devolution. We are continuing to manage a wide range of pressures due to volatility from global factors such as the Ukraine resettlement, the impact of inflation, the cost of living crisis and, of course, the on-going legacy of Covid-19.

The United Kingdom Government’s autumn statement delivered the worst-case scenario for Scotland with a fiscal settlement that challenges the viability of public services across the whole of the UK. Our block grant funding for the budget, which is derived from the UK Government’s spending decisions, has fallen by 1.2 per cent in real terms since 2022-23, and our capital spending power is due to contract by almost 10 per cent in real terms over five years.

As I set out in December, we cannot mitigate every cut that the UK Government makes, and we are at the upper limit of the mitigation that can be provided within our devolved settlement and competence. The UK Government has chosen to prioritise tax cuts over investment in public services, but we have made different choices.

At the heart of our budget is our social contract with the people of Scotland, whereby those who earn more are asked to contribute a little more, everyone can access universal services and entitlements, and those who need an extra helping hand will receive targeted additional support. We have chosen to act to do everything in our power to protect public services, including through a £6.3 billion investment in social security and more than £19.5 billion for health and social care, alongside record funding for local authorities and front-line police and fire services. Importantly for this committee, in 2024-25, we are committing £4.7 billion in capital and resource for activities that will have a positive impact on the delivery of our climate change goals. I look forward to the committee’s questions.