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I thank the committee for its input to the resource spending review. As I have said publicly, this is a particularly challenging time to be setting out our resource spending review. We are recovering from the pandemic, there is an unprecedented cost of living crisis and there is very significant volatility in the fiscal outlook. When the UK Government published its spending review last autumn, which is the basis on which our spending review is drafted, inflation was 3.1 per cent. As members will know, just yesterday, inflation reached a height of just over 9 per cent—a 40-year high—and it is due to increase further.

Despite that, the reason why we proceeded with a spending review was to give our partners as much clarity and transparency as possible. The resource spending review sets out how we will spend £180 billion over the next few years.

In light of some of the challenges, we set out a number of priorities in order to focus where we would spend our money over the next few years. Those include the long-term ambitions of tackling child poverty, addressing the climate crisis, strengthening the public sector and growing a stronger and fairer economy. Despite the challenging circumstances, we have set out an ambitious spending review that maximises that £180 billion over those four key areas.

We have also chosen to prioritise social security in the spending review, and the social security allocation shows the strength of our commitment to building a modern social security system that has dignity, fairness and respect at its heart. Clearly, that will help us to meet our child poverty targets.

My last point before I stop is that it is obviously not a budget. Detailed tax and spending plans will still be a matter for the annual budget process. The spending review is, in essence, a planning document that shows our commitment to delivering on our key priorities.

I look forward to the committee’s questions.

I am very happy to answer that question. The priority at the time was to balance the need for effective targeting—you talked about the four groups of people—with the need to deploy that funding as quickly as possible. We consulted with the Convention of Scottish Local Authorities to understand how we could do that.

It is not often that politicians stand up and accept that processes or schemes are imperfect, but I am pretty sure that when I announced this I accepted that it was imperfect, but that it was imperfect for a purpose. That purpose was to get funding out as quickly as possible. We looked carefully at mirroring what was done with the low income winter payments that were deployed by local government during winter. That took months and months to deploy, and my view was that, in April, families did not have months and months to wait for funding. Therefore, although council tax is imperfect by design it was the fastest way to get money out the door.

The other element is that our council tax reduction scheme is unique in the UK; it does not exist elsewhere, and, if memory serves, it captures about 394,000 households on the basis of low income. It is based on not only property value, but income, so we could use it to reach families, including pensioners, who might not be in council tax bands A to D. The third thing that we did was to increase the fuel insecurity fund.

We sought to target as effectively as possible within the commitment that I made to deploy the funding as quickly as possible. I appreciated the ideas and suggestions that we received from a number of stakeholders, and they were all carefully considered, but all of them would have taken longer to deploy—probably six to nine months longer—and they did not reach as many people as possible.

Yes is the short answer. Shona Robison might have something to add on the policy question.

I do not have the figure in front of me, but I think that the funding will go up by about £100 million over the next five years. The funding is intended to provide a wraparound service for people who are furthest from the job market. That will include disabled people. It is a highly intentional investment that involves the very labour intensive and financially intensive process of working alongside people for 12 months and continuing to support them when they are in work.

I would be happy to follow up on specific policy areas but, from a financial perspective, I would make the point that funding is there. We must remember that such work—if we are serious about it—is extremely financially intensive.

As well as the moral imperative of supporting disabled people into employment, which you have identified, there is the economic imperative of doing so. Unemployment is at 3.2 per cent so, essentially, we are at full employment. We know how desperate businesses and so on are to find workers. Although economic inactivity, if I can use that phrase, is reducing—it is about 21.9 per cent, according to the most recent statistics—there are people in that group who would be keen to work if we can provide the right support. As well as having a moral impact, that would have a huge economic impact.

Those are the SFC’s assumptions, rather than mine.

I am happy to answer on local government, but it is probably a policy question if you want to answer it, Shona.

I am delighted to be welcoming the Chief Secretary to the Treasury to Edinburgh on Monday. We will be meeting to discuss both the spillover dispute and the fiscal framework. We are hoping to announce details about the independent report, which has to precede the review. We are a bit behind time, which is unfortunate, because that independent report should, theoretically, have been completed by the end of last year, and we should be in the review phase. We need to move as quickly as possible.

I am extremely keen that we get a resolution to the spillover dispute, which is about real money. There is a disagreement about the methodology to calculate what the Scottish Government is entitled to. The principle has been agreed—both Governments agree that the Scottish Government is entitled to additional funding as a result of UK Government policy changes on income tax. That principle has been conceded, but we are still in discussion about the quantum of funding, because that is not as clear cut. I have a duty to represent the Scottish Government in that regard, because if there is a principle in place, that raises a question of fairness.

The issue is very specific to my portfolio of finance and economy, in which the outlook—as is the case in every other portfolio—is very challenging. If you look at all the budget lines, you will see that the employability line is going up by a significant margin over the next five years. That is almost entirely driven by our commitments around tackling child poverty. Pam Duncan-Glancy has identified that we need to tackle the root causes of poverty. It is clear that employability has a key role to play in doing that. We want to support families who are not in secure, well-paid employment into such employment through the new offer to parents and the no one left behind approach.

I have identified our four priorities. The nature of prioritising is such that, if you prioritise one area, you have to deprioritise elsewhere. In my portfolio, that prioritisation is clearly visible in the employability line, which is intentionally designed to significantly expand employability services to help us to reach our child poverty targets.

My only comment is that a lot of that £3 billion-worth of investment is unique in Scotland. As members will understand, within a fixed budget there are ways in which we can pass on consequentials that come from the UK Government or decisions that we make on what to prioritise within our budget. By definition, if you prioritise one area, you cannot prioritise everything else. We have very intentionally prioritised seeking to support families with the increased costs that they are facing right now and we have tried to be conscious of inflation, despite the fact that our budget is not inflation proofed.

For example, the Scottish child payment has gone up by 100 per cent since April and is due to rise again by 150 per cent in December, in comparison with inflation at around 9 per cent. We have also uprated social security benefits by the rate of inflation at the time of the budget. We are trying to help families as those costs increase, but that is from the position at which our budget was set, when inflation was at about 3 per cent.

Those are conscious choices to help families, but it is an extremely challenging piece of work to manage a budget that is not inflation proofed, despite what families are facing.

I will make just one point on that. It is worth looking at the Scottish Fiscal Commission’s assumptions, which are that more people will be eligible for ADP than were eligible for PIP. I do not know whether you will have the SFC in front of the committee, but it might be worth unpacking why it believes that.

I will make a few comments about that. First, at a time of extreme volatility, costings that we established perhaps a few weeks ago will inevitably rise. We might have forecast that a particular pot of funding would be provided to deal with a certain number of people, but it is highly likely that, in the light of inflation, demand will increase or the support that we require to give will increase. I make that point in relation to project management—additional consequentials do not sit there unused. That is quite important. We have to manage the budget so that I do not get to January and discover that there is still more demand.

The second point on that funding is that things will probably become even more challenging than they are now. Inflation is at 9.1 per cent, and the Bank of England has forecast that it will rise to 11 per cent. I am not being political when I say that the UK Government is adamant that it will not do anything further on the cost of living now because of what it perceives to be the risks of contributing to inflation. I do not foresee any further consequentials coming down the line. We also need to ensure that any funding that we have in hand is used well and used to cover the rest of the year.

Those are the two considerations when it comes to that funding. I do not have much more to add, apart from making the point that every single penny that is for cost of living measures will go on cost of living measures. We have set out today the £3 billion figure; we had been using the figure of £770 million of additional resources to address the cost of living.

My final point is that pay is one of our direct cost of living measures. Right now, we are, quite rightly, engaged in a number of pay negotiations, and we are conscious of other on-going negotiations. We must see pay as a cost of living measure.

I mention those three areas to set the context for how we manage all funding, including the £41 million. That is why I do not have a more definitive answer. It would not be particularly wise to allocate funding without being conscious of those three pressures.

I do not know whether Shona Robison has anything to add.