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?Thanks very much, convener. I will take that on board and keep my opening remarks fairly short.

As you said, the national strategy for economic transformation was published earlier this month. The strategy sets out what we want to achieve and what kind of country we want to be. We want a strong economy that outperforms the previous decade, builds on our strengths and recognises our weaknesses.

Some of those weaknesses are short term and relate to the emergence of the economy from Covid, but some of them are longer term and the strategy does not shy away from that. We used extensive and detailed analysis, consultation and input from the advisory council for economic transformation to develop five programmes of action. Although “Delivering Economic Prosperity” explains the front end of the strategy, I encourage members to engage with the analytics paper, which is a lot lengthier and gives more detail on the data that underpins the five programmes of action.

The five programmes of action are entrepreneurial people and culture, which covers citizens; new market opportunities, which covers emerging economic opportunities—in particular, those that relate to net zero; productive businesses and regions; skilled workforce, which will enable all of that; and, finally, a fairer and more equal society, which is what we want to achieve.

I know that the committee, the country and the Government will judge me on our ability to deliver what we have set out, so there is also a hugely important sixth programme that focuses on delivery. That will introduce a new, streamlined model to maximise our success. That issue has been of interest to the committee on a number of past occasions.

That is all that I have to say at the outset, but I could go into detail about some of the challenges that we face. The situation in Europe has become worse since the strategy was published, and that will have an economic impact. Therefore, my last comment is that publishing a 10-year strategy when none of us has a crystal ball is challenging. The strategy has to be flexible and high-level enough to be able to adapt to emerging situations, but it also has to be focused on the routes to success. I hope we have achieved that balance by being flexible and focused at a macro level as well as on the key vehicles to success.

The Bank of Scotland and PWC would disagree with you. Both of them have referenced Scotland as leading the way in the creation of green jobs. In the UK, the greatest opportunities in the green economy are already here in Scotland. That is not wishful thinking for the future; that is in the present.

Our commitment, which comes through loudly and clearly in the strategy, is to a just transition. Great economic opportunities are emerging. I have already referred to some of them, such as ScotWind. We must do that transition fairly. We have moved a significant distance on conditionality, with a commitment to embedding conditionality by this summer. We also recognised the importance of sectoral agreement and of trade union recognition. Those points will ensure that the transition, and the significant economic opportunities, are underpinned by a fair-work approach.

Adam Reid may want to come in on the subject of fair work.

It is good to reference that growth in productivity over the past 10 years in particular.

Productivity is an issue with which a lot of developed countries are grappling just now. In the strategy—there is more analysis in the analytics paper—we identify a mixture of business investment and the need to improve business productivity. That mixture includes specific investment opportunities. It also includes increased digitalisation. We know that more businesses have access to, for example, superfast broadband than use it to its full extent.

Alongside business investment and digitalisation, we need to address workforce matters. We need to ensure that our workers have the skills that they need to be as productive as possible.

Quite clearly, productivity is one of the most important metrics for not just improved economic performance but wellbeing, because it drives up wages, improves work-life balance and, ultimately, positions Scotland internationally. That is on the private sector side.

On the public sector side, we have a role when it comes to improving infrastructure. We have set out the second strategic transport projects review, which is under consultation just now, to ensure that we are investing in the right infrastructure to improve productivity. That is my quick summary of what we are talking about.

There is one other part to our actions that I am hugely supportive of, which is the notion that it is not a mark of success to improve national productivity while leaving parts of the country behind. We must identify the building blocks and try to work with every region in Scotland to improve regional productivity, which will contribute to national productivity. There is a big focus on not forgetting any part of the country or leaving any part behind. In terms of the measurement, some regions are coming across as more productive right now, which is due to the skills and industry mix. We need to work with those parts of the country that need additional Government investment and support for business.

I quoted two independent analysts.

The STUC makes a significant contribution on this issue, and I know that it is interested in helping us with delivery. On the launch morning, there were at least two representatives from unions, including one from Unite, who specifically said how pleased they were to see fair work built into so much of the strategy’s work.

The programmes of action that we have chosen are based on evidence, but we recognise that economic growth and prosperity have a purpose, which is to ensure that we have a fairer and more equal society.

Some of the initiatives in the strategy are pretty pioneering from a Scottish perspective, not least building conditionality into support for business, ensuring that we focus on underrepresented groups and ensuring greater payment of the real living wage across our economy. Those are all in line with the STUC’s requirements. We are committed to developing sectoral fair work agreements with industry and to working with trade unions.

There is a lot in the strategy that will deliver what the STUC and others have looked for regarding fair work and greater equality.

I thank the committee for its very comprehensive and helpful report, which I was pleased to respond to yesterday.

Today’s amendments have one broad purpose, which is to increase the local government budget next year by £120 million. As I confirmed to the Parliament during the stage 1 debate, due to the changing position last week on this year’s budget and funding from the United Kingdom Government, it is my intention to utilise the Scotland reserve to carry forward sufficient funding from this year to allow me to allocate a further £120 million to local government for next year.

As members may be aware, any plan to carry forward funding requires the Government to use the Scotland reserve, which will therefore be presented as an underspend on this year’s funding when the final outturn is published later this calendar year. I hope that we can all recall our conversation at today’s committee when it comes to scrutinising that position later this year.

The amendments to the Budget (Scotland) Bill deliver on the commitment to give local government an additional £120 million. There are three amendments required to achieve that change. I will not move the amendments right now. I am happy to take any questions.

Yes, it will. Intentionally, it makes a point of rejecting a UK regional economic model in which London and the south-east essentially power the rest of the country, because that is completely unsustainable and is not, I think, defensible. The danger is that we adopt a similar approach in Scotland. I fundamentally reject that. We need to ensure that all regions of Scotland can participate in economic opportunities and contribute.

Obviously, national figures could be boosted by focusing on a few areas, but that would be to the detriment of the rest of Scotland. If you believe in a wellbeing economy model—by which I mean a model in which growth or prosperity is a means to the end of lifting people out of poverty, reducing child poverty and achieving health and social outcomes—you need to take a fairer approach that looks at strengths in the Highlands, Ayrshire and the north-east and asks how we can back those fundamental strengths.

Aberdeen and the north-east have a very proud and rich energy history, and parts of the Highlands have a proud and rich history in acting as supply chains. Let us back those strengths. However, what else can we do in Ayrshire, for example? Where are the opportunities? We should be intentional about supporting communities there to maximise the benefits of the assets and resources that are on their doorsteps.

I was interested in the evidence that the committee took on the report by the three Davids—I am sure that they are probably somewhat offended by being called that; I mean David Eiser, David Phillips and David Bell—and from experts on the Welsh fiscal framework. I noted the comments on two facts in that regard. First, Scotland is disproportionately impacted by fluctuations in the oil and gas sector, and always has been. That is largely because the north-east and the oil and gas sector have quite a number of well-paid jobs. As we know, higher and additional-rate payers account for a significant proportion of overall income tax revenues so, if jobs in a sector such as oil and gas are affected, there is a disproportionate impact in Scotland, which then feeds through to tax revenues.

Secondly, there is the comparison with the way in which the fiscal framework operates in Wales versus the way in which it operates in Scotland. We have two different forecasters, and we also have a situation in which the fiscal framework does not take into account the unique circumstances for the Scottish tax base.

We need to remember that, pre-pandemic, earnings in Scotland had been growing year on year since income tax was devolved. There is growth there; the question is about relative growth. As I said, there are two issues that impact on that. One is the exposure to particular industries, and the second is the fact that the fiscal framework does not take into account the faster growth in higher wages in London and the south-east, for example.

The short answer is yes. I go further than that, as I actually cite the powers that local government in Scotland has when I make the case for increasing our powers. Local government is able to determine on the basis of affordability and local needs what to carry forward from reserves and what to borrow, and that decision is for councils, not the Scottish Government, to make.

That probably illustrates why it is dangerous to look at the overall quantum without knowing what has gone on underneath. There are a lot of taxi drivers in Scotland. I do not know precisely why but, proportionately, there are substantially more here than there are in England and Wales, for example. The £28 million will probably deliver about £750 for each taxi driver. The figure for the funding that we allocated for taxi drivers last year is no longer at the top of my mind, but you will recall that they were unhappy with the quantum that they received—I think that it was in the region of £77 million. The reason for their getting substantially more is because there are so many of them.