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That is a fair point about comparing actuals. That is the bottom line for Barnett consequentials. We do not receive what is announced; we receive what is actually spent. Therefore, we have to wait for the UK Government to know what it has actually spent—which comes very near the end of the financial year—to know what we will actually receive. By that point, we will have had to make the decisions on what we will announce and actually spend weeks or months previously.

I therefore absolutely agree that what matters is comparing actuals. You were talking about this financial year. I suppose that the Scottish Fiscal Commission ultimately has the final say on what we are allowed to actually spend. The Scottish Fiscal Commission’s view on what is actually available is therefore really the most important one.

Dougie is nodding. I do not know whether he has anything to add.

I do not recall seeing costings.

I was quoting David Bell—I have the quotation in front of me—who, when asked, talked about fluctuations in the oil and gas sector over the past two years. We all know that the oil and gas industry is vital to Scotland, but its value fluctuates in line with oil prices and decisions that the industry makes. Scotland is disproportionately affected by that because of the industry’s importance to the country.

I had a conversation with some well-known representatives of the north-east oil and gas industry last week. They are making an important argument, which I support, about the need for further diversification. Let us take ScotWind as an example. There is excitement about the supply chain for that because there is great talent, there are great resources and there is, in the north-east, already great investment potential for the transition.

That is already happening. Almost irrespective of what the Scottish Government is doing and has done, industry is already diversifying and considering new opportunities that are on the horizon. That is not an argument to say that there should be anything other than a just transition; I am not making that argument and have never backed it. Industry is already ahead of us in the transition.

My ambition is to grow the tax base—to grow the percentage of tax that each threshold takes—and to ensure that we are less exposed because we have diversified and invested, and have identified our strengths and backed them. I am not saying anything that the industry does not say. It is about creating more well-paid secure jobs; it is not about reducing the number of such jobs in Scotland.

Absolutely. You are right that the quality of debate was higher when we were all basically pushed to a position of ideologically considering what were the best tax options for Scotland, balanced by the need to ensure that we had a sustainable revenue stream. Ultimately, I need to ensure that there is funding to pay for the national health service and so on.

I would certainly be open to doing that; I am always open to ways of improving the budget process. One might argue that, this year, there was less need to engage with Opposition spokespeople because, in a sense, the passage of the budget bill was more secure than it has been in previous years. However, I was still very keen to have cross-party conversations, which I have had with all parties on several occasions prior to and since the introduction of the budget.

If there are ways in which we can strengthen the process—in particular, in considering tax—that will be fine. There is a constant and very live debate on whether non-domestic rates are fit for purpose and reflect the Scottish economy as it currently operates. I am sure that members round the table have different views on that. It is fair that many people ask the question, but the question that I would pose in return is to ask what would replace non-domestic rates.

My priority for the resource spending review is that we improve outcomes. It is a budget process and it is based on affordability, but what we need more than anything to achieve through it are programmes of investment that improve outcomes. The decisions are difficult because of the challenges that face the Scottish economy, which the committee is well versed in, including the ageing population, the changing economic mix and a number of other things including disruption that has been caused by the pandemic and Brexit, which I will not go into.

On the other side, dare I say that I think that we agree on more than we disagree on, across the parties? We cannot ignore those elements. For example—unless anybody corrects me—we all agree that we should pass on health consequentials to be spent on health. In next year’s budget, spending on the NHS will be £18 billion out of £41 billion, give or take, which is a substantial part of the overall budget. On top of that, there is £12.6 billion for local government. With just two budget lines, we have used a considerable amount of the £41 billion.

Therefore, the question is not so much about where and how we spend and whether the numbers are big enough, but about whether we are delivering outcomes that respond to the challenges, in which all of us are well versed. That is difficult—not just for reasons of affordability, which we need to grapple with, but because—to go back to Liz Smith’s question about outcomes—it asks us to question whether the funding that we spend is delivering the most effective outcomes. That is where the difficulty lies.

There are difficulties in relation to affordability that we need to contend with—not least because of what I have just said about health and local government. The bigger issue is that at the end of the resource spending review I would like us to be in a position to reflect that outcomes are better than they were because of the difficult decisions that we have made.

My last brief point is to call for a mature debate. If we make decisions in order to improve outcomes, and not just for straight money reasons, that will inevitably require some funding to decrease as other funding increases.

That is probably one of the most important questions, which I will obviously answer with trepidation, because the moment that I say in a public place what I will reduce spending on, I can already see—with no offence intended to the Opposition—the press releases being written about how outrageous it is.

I go back to a comment that I made in the chamber about how this requires a genuine and mature debate across the Parliament in which we look at outcomes and make decisions about shifting funding. I know that everybody will look at the budget document and compare last year to this year, and that anything that has a decrease will instantly be jumped on, with politicians—rightly—asked to justify that. That is why this whole discussion sounds laudable but is a very difficult conversation to have.

I will cite an example in the health budget. This year, we have chosen to allocate more of the health and social care consequentials to social care. In the past, there has been a tendency for health consequentials to go straight into front-line health—and rightly so. However, recognising the preventative element, we have allocated more funding from those health and social care consequentials to social care. The equal and opposite effect is that health consequentials that would otherwise have been spent on health are now being spent on social care. However, there is a very justifiable argument for that; if we are looking after those who need social care and providing that care, there is less pressure on our hospitals, so it requires that shift. That is a very real example from next year’s budget.

On the £15 per hour wage, which Labour was keen for, with a staged approach of £12 per hour initially, our calculation was that £15 per hour would cost around £1.8 billion. If I am being fair, the Labour Party identified the additional Covid consequentials to cover that, but pay is recurring, so that would have impacted this year’s budget as well and there is certainly not capacity for anything in the region of £1.8 billion.

Yes.

I will make three brief points.

First, you are right: we have taken a policy approach to social security that is fairer, puts dignity at its heart and encourages the uptake of benefit and welfare support, because we think that there is an inherent right to access that support. That means that we have baked a prioritisation into the budget. We must accommodate and account for social security payments. Those payments fluctuate—that is the nature of demand-led payments—and we need to be able to absorb that. That goes back to the issue that I keep going back to. Do we have all the tools that we need to manage risk?

My second point is about value for money. There is an issue that I am particularly exercised about. If we want to drive reform, the only way to do that effectively is through multiyear budgeting. That comes through the resource spending review. The question that I ask is this: for every pound that ends up in somebody’s pocket, how much does it take to get there? I would far rather that as many of those pounds as possible end up in the pockets of people who need them rather than paying for jobs along the way.

We have looked at, and we will do, quite a number of deep dives as part of the resource spending review with stakeholders as well as internally to consider the issue of value for money. We will start with outcomes—in other words, we will not try to determine budgets on the basis of affordability initially. If the outcome is to ensure that a social security system cares for those who need that, the imperative is for us to maximise the funding that goes directly to those people through the resource spending review.

That was only two points—I rolled all three into two.

Absolutely. There was a lot in there.

The point about measuring transparency is legitimate. I will cite an example from this year of spending that has, I think, been difficult for the committee and Parliament to scrutinise, and for me to draw lines from. In a spending review year, the UK Government provides us with, in essence, a block net position. In normal years, as it were, we get the breakdown, so we can see to a greater extent what, for example, has been generated as consequentials elsewhere and should come to Scotland. We can then argue for how that money should be spent. That is where the national insurance contribution debate has kind of struggled, because the money is not disaggregated.

The other thing to consider is, of course, late consequentials. As I sit in front of the committee now, I do not know my final budget position for this year, because that money is still to come.

I absolutely accept that more transparency is needed; the more I get, the more I can pass on. I am always open to the committee detailing where it needs more transparency.

I will move on to improving outcomes, which is of fundamental importance. I know that there are local government colleagues around the table who can probably speak to this more effectively than I can. Perhaps one thing in how things currently operate that we should not do is place so many reporting requirements on local government. It has to report on outcomes from, or delivery on, every single pot of funding that is allocated. That is burdensome and onerous for local government, so I have made a commitment to try to reduce reporting requirements, as part of the resource spending review.

We have those requirements, however, in order to measure outcomes. For example, if investment is for employability and skills, I want to know that it has been spent on employability and skills. I want to know not just that it has been spent on that, but that there are, at the end of the day, people who are closer to the job market than they otherwise would have been, and that we are reducing levels of economic inactivity.

What we report on requires clarity, which we can get on outcomes only by doing deep dives on specific areas. The area that I look forward to getting in about through the resource spending review is employability and skills. We know that we spend substantial sums on employability and skills; nobody can argue that we are not spending the funding. However, as you and I know, businesses say that there is a mismatch between skills and jobs. There are all sorts of other issues, including immigration and our reliance on overseas workers.

At the end of the day, we need to know whether the significant funds that we spend on colleges, universities, the no one left behind policy and other programmes are delivering a net result for businesses. They would certainly say that we could do more. If we are going to do more, that cannot mean just me spending more money; we have to improve the effectiveness of the programmes that receive the funding.

I will make one last comment. This has been a really long answer, for which I apologise. The proposed national care service provides a very good example. At the moment, patterns of delayed discharge differ greatly across Scotland. The funding theoretically goes to each part of Scotland proportionally, but there are very different outcomes and results. There is a question about which local circumstances prove to be challenging. For example, there will be greater challenges in recruitment for Perthshire and the Highlands. How do we create a national care service that delivers improved outcomes, rather than just shifting pots of money from here to there?