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Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Current session: 13 May 2021 to 24 December 2025
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Displaying 1088 contributions

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Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

Gary Gillespie might want to comment.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

On that point in particular, obviously, funding for employability is going up. It is therefore a choice. I am sure that we will come back to this, but employability and skills are probably the two areas that people most frequently raise with me in relation to the pressures right now—particularly with unemployment at 3.2 per cent—and the need to invest. In the finance and economy portfolio, we therefore see an intentional choice of investing more in employability and skills—and the skills line does go up. We cannot mirror that significant increase across the board because, by nature, a budget cannot prioritise everything.

Enterprise and skills link back to the national strategy for economic transformation and the constant refrain from the economy committee and others about decluttering the landscape. We need to be as efficient as possible. That does not compromise our objectives, but we need to ensure that we are reducing duplication across the various public bodies that operate in the enterprise and skills space. To my mind, we have struck the right balance in the finance and economy portfolio, because it reflects the constant refrain that I hear about the need to invest in skills and to ensure that we are as efficient as possible in supporting businesses.

11:45  

You asked where the workforce will come from and mentioned the need to invest in training and skills. That is why I have prioritised the budget in the way that I have. That means that the focus will nearly always be on the areas that do not see the more generous uplift; the focus is very seldom on the areas that are seeing an uplift in challenging areas.

On climate change, it is important to say at the outset that, from a capital perspective, we cannot reach net zero without leveraging in private funding; there is no question or dispute about that. The Scottish National Investment Bank has a role to play in leveraging in private investment. We need private investment. We can allocate public funding out of our available capital—bear in mind that that is approximately £5 billion per year, and we have approximately £450 million in borrowing capacity each year—but it will take more than public funding for us to reach net zero, and we should not hide that. I hope that that answers your questions about skills and funding.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

There are three reasons why the outlook right now is challenging across the board. First, our budget from last year has been cut by 5.2 per cent, and it is forecast to grow by 2 per cent in real terms, if social security devolution is excluded. The challenge for every part of the public sector is captured in the fact that less money is available. On top of that, inflation is at 9 per cent and is forecast to go to 11 per cent. That reduces our spending power. On top of that, if there is an increase in one budget line, there must be an equal and opposite decrease in another budget line.

My job has been to treat as fairly as possible all parts of the public sector, including universities, because I know how important they are. Again, that demonstrates the point that we have been discussing: I cannot spend a penny more than what I will receive or raise according to the SFC’s forecasts.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

The fundamental challenge with some of the discussion is that, if we are more effective at serving the citizens, by extension, we will have more efficient public bodies. What is not to appreciate about improving outcomes for citizens and businesses and ensuring that every penny of resource that we spend delivers our objectives?

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

I think that the greatest contributor to child poverty over the past 10 years has been UK Government austerity, and that view has been backed up most recently by a report from the University of Glasgow. We will do all we can to mitigate it, but we are limited in what we can do. We will continue to invest our money through a different approach to social security, but, ultimately, much of what we spend is on mitigation. If you fix that issue at source, we could probably redeploy the funding elsewhere.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

That is a statement of fact, yes.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

No, that is a very reasonable assumption to make. My question to you would be: if I had given significant increases on the four lines that you are asking about, would you have been here asking me about four other lines that had been severely cut?

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

It is unlikely that we will see that in the NHS. I have intentionally set out a flexible approach because we know that some parts of the public sector have grown and probably will need to grow further. For example, the national care service will need to be able to employ people and expand in some areas flexibly.

Other parts of the public sector will no longer need to maintain the Covid-related expansion of the workforce. Rather than taking a UK Government approach to this, which is to put arbitrary figures on it—I think that its figure for bringing staff numbers down to 2016 levels is 91,000 full-time equivalent—we have said that we will freeze the pay bill. That does not equate to a freeze in pay levels; we want to work with employers and trade unions during the next few months in advance of the budget to understand how we can manage workforce numbers in a flexible way that will allow some parts of the public sector, such as the health service, to continue to grow where it needs to grow, and other areas to decrease their staff figures when they do not need those post-Brexit, post-pandemic levels of staffing.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

No, that is not my position. Those are forecasts from the SFC. I believe that the £3.5 billion is actually our figure, which was published in December and which was based on a number of assumptions. The point that I was making in my answer to you, and which was made in the First Minister’s answer, was that we are now working with a resource spending review that is completely balanced. It is factually inaccurate to suggest that the resource spending review is not balanced, because I must balance it by law.

The gap between spending and funding, based on the RSR framework, which was published in December, has come to the fore again in recent days. That projection was based on, for example, inflation at 3.7 per cent and 2 per cent thereafter, and on social care growth in line with the 2018 medium-term financial strategy. It was based on a whole number of assumptions, and, in a sense, the resource spending review is the answer to a lot of those assumptions, and is based on more accurate information.

I am very clear that the suggestion, based on forecasts in advance of the publication of the resource spending review, that there is a deficit in the resource spending review is inaccurate.

Finance and Public Administration Committee

Economic and Fiscal Forecasts, Resource Spending Review and Medium-term Financial Strategy

Meeting date: 7 June 2022

Kate Forbes

We do not use figures in that way. The SFC updates its forecasts in the weeks in advance of the resource spending review publication, and then we have to balance our spending commitments. There has been so much change between December and the SFC finalising its forecasts a few weeks ago that it is just inaccurate to suggest that we go back to December figures.