Chamber and committees

Good morning, and welcome to the second meeting in 2025 of the Finance and Public Administration Committee. We have received apologies from Michelle Thomson.

The first item on our agenda is an evidence-taking session on the Scottish budget 2025-26 from two panels of witnesses. First, we will hear from the Scottish Parliamentary Corporate Body on its budget bid, and then we will take evidence from the Cabinet Secretary for Finance and Local Government.

I welcome our first panel of witnesses. Jackson Carlaw MSP, member of the Scottish Parliamentary Corporate Body, is joined by Scottish Parliament officials David McGill, clerk and chief executive, and Sara Glass, director of finance and resilience. I intend to allow around 75 minutes for the session.

I invite Mr Carlaw to make a short opening statement.

Craig Hoy’s question prompted me to recall that, in 2000, John Swinney turned down a £21,000 salary increase when he was the leader of the Opposition only for there to be a double-page spread in a newspaper a week later about how his office was spending £3,000 on furniture and computers. He effectively got no credit for turning down that salary increase and was then slagged off for buying equipment for his office. That kind of hair-shirt approach does not necessarily go down particularly well or get appreciated.

Regarding salaries, are you aware yet whether ministers have refused a pay rise for the 18th—or the 17th or whatever—year in a row, or have they, this year, finally decided to accept a pay rise? What, if anything, does that mean for the corporate body?

Obviously, with a relatively fixed budget, if you are spending on A, you cannot spend on B. There is a concern in local government and other areas that they are not getting as much as they would otherwise receive, because money is being spent on areas that are reserved to Westminster, for good or for ill. There is a feeling that perhaps the Parliament should focus on its devolved responsibilities. If people are unhappy with Westminster policies, they have an opportunity to vote one way or the other at an election.

On the issue of welfare, which you just touched on, the Scottish Fiscal Commission has, understandably, expressed concern that social security spending continues to rise steadily. Next year, it will be £1,334 million higher than if welfare payments remained at UK levels. When one removes social security spending, the overall funding in real terms is going down by 0.3 per cent—in a moment, I will touch on one or two areas where that is happening. In the following year, social security spending is expected to rise to £1,608 million. Given that the Scottish ministers will not change tax rates, and although fiscal drag will impact all but the two lowest bands, how can that be funded without cuts to existing services?

Were you to use CPI, as happens in relation to benefit increases, that might make life a lot easier for everybody.

That is very interesting. I am not one of them, so I am particularly interested in that.

With regard to staff numbers and keeping the complement the same, my understanding is that there was a significant uplift in staff numbers at that time because of our having to adapt to post-Brexit arrangements. Are we still wading through those or have they been resolved? If so, do we still need the same number of staff to deal with that issue?

One of the recommendations that we made in our report last year was that the SPCB should

“focus on optimising value for money in its budgetary decisions and delivery. As part of next year’s budget bid, we would therefore like to see additional information on how the SPCB makes the most effective use of its funds, including setting out where savings have been identified and how projects have been prioritised”.

However, as the Presiding Officer said in her letter to us, the annual report does not specifically identify savings or set out how projects have been prioritised. Why not?

I will not have time to touch on reform or transparency in capital spending, and I am not going to touch on enterprise, although I point out that the £1,334 million additional spend on welfare is exactly the same as the total budget allocated to the Deputy First Minister and Cabinet Secretary for Economy and Gaelic, as is set out on page 78 of the budget.

My last question is about national insurance. The draft budget does not take into account the £549 million cost of national insurance increases in the public sector, the £210 million impact on the third sector and independent care homes or, indeed, the £49 million cost for universities. Has the UK Government confirmed how much it will allocate to the Scottish Government to cover those costs? How will that money be disbursed?

It would be helpful to see why some projects were prioritised and some were not. It would be good to have more specifics on those. For example, among the projects to be funded are net zero-ready projects worth £926,000. That figure includes £736,000 on a building environmental management system and £190,000 on net zero consultancy. It would be good to see what those projects will actually deliver. At the moment, we just have a list of projects that does not necessarily say what they are going to do. I am not looking for “War and Peace”, but a sentence or two to give the specifics on that would probably be very helpful.

For the second part of the evidence session on the Scottish budget 2025-26, I welcome to the meeting Shona Robison, Cabinet Secretary for Finance and Local Government, who is joined by Scottish Government officials Jennie Barugh, director of exchequer strategy; Richard McCallum, director of public spending; Ellen Leaver, acting director for local government; and Lorraine King, deputy director, tax strategy, engagement and performance.

Given the time constraints, we will dispense with an opening statement. I will start the session with a number of questions.

There is a lot in the draft budget that stakeholders will be pleased with. Health and social care spending is up 9.8 per cent, ferry services by 22.7 per cent and housing by a whopping 57 per cent. Justice and local government have significant increases in resource relative to last year, budget to budget.

However, there is some confusion. Last year, this committee asked for the autumn budget revision numbers to be used as a baseline, but without making adjustments to strip out routine in-year transfers, because that makes it difficult for the committee to see clearly exactly what is going on. It would be good if that could be remedied for next year. Are there any plans to do that, to make scrutiny easier for the committee?

Regarding the lifting of the two-child cap, which the First Minister said will happen before 2026-27 if possible, the Scottish Fiscal Commission has said that funding will be awarded to the families of 43,000 children, at a cost of £155 million. That includes the administration costs of delivering the funding and equates to more than £3,600 per child, which is nearly £70 a week. Are those figures correct? It seems an awful lot.