Seòmar agus comataidhean

Much of that goes back to the core objectives that I set out, such as tackling child poverty. Much of the spend for that is in the social security line, as members will see, but there is also much of it in the education line, which covers, for example, the roll-out of free school meals and early learning and childcare expansion.

We have tried to ensure that the trajectory of spend in each portfolio matches the plans for the roll-out or expansion of particular initiatives. Someone else might want to come in on the breakdown by year, but that has been our starting position. We have tried to match the funding to the commitments that have been made which are specifically tied in with core objectives.

There is another element to that. The trajectory is quite bumpy over the next few years because of the impact of reconciliations that need to be accommodated. For example, there are larger reconciliations in certain years than there are in others, and that eats into spending power, because there is a limit on borrowing of only £300 million to manage some of those reconciliations. You have to use your core spending power to make up the difference, as it were.

We have also tried to smooth the trajectories so that, for example, we do not have a portfolio that has to deal with a rapid and sudden drop in one year, only to have a climb up in the following year, because that involves employees, or workers. You cannot expect a portfolio such as education to see a drop. Therefore, we have tried to smooth the trajectory over the period across portfolios.

I hope that that answers the macro question as well as the particular question. I do not know whether anyone else wants to add anything.

I feel equally passionate about it, and I appreciate that much is challenging and difficult about the resource spending review, but I do not think that it is unreasonable to set out a programme for improving our outcomes; doing so goes hand in hand with efficiency.

In the examples that you identified, I do not know how many people or teams had to manage that application or what the cost of that additional time and inefficiency was. If we are serious about achieving our objectives, we have to make sure that the processes are there and efficient and that we have the right people and teams to deliver them.

The resource spending review does two things: first, it sets out the challenges of the financial position, which I cannot change, because I can spend only what the SFC forecasts; and, secondly, it sets out the fact that, if we want to improve our ability to meet our objectives, we will have to take a long, hard look at how we achieve that. I have used the example of the enterprise and skills space. I am sure that we all have businesses in our constituencies that go to five, six or seven different public bodies, because five, six or seven public bodies provide grants. That is inefficient. We want to make it easier for businesses to access the help that they need in a one-stop shop.

I have used the SFC’s forecasts, which are based largely on the UK Government’s spending review and on tax and social security forecasts.

They all have an important role to play, but they need to ensure that they are as efficient as possible and focused on the core objectives that we have set. My impression, based on my extensive conversations with the enterprise agencies and VisitScotland, is that they are all on board with that and get it.

I would say so—yes. Certainly it is embedded in the resource spending review. The medium-term financial strategy focuses a lot more on the funding that we have available, and the resource spending review focuses a lot on how we are going to spend it. That is the distinction between the two documents.

I go back to identifying the four objectives. Tackling child poverty is completely in line with the national performance framework. Transitioning to net zero is completely in line with the national performance framework. Economic recovery and resilient public services are also completely in line with it. I would say that this resource spending review is far more focused on outcomes than perhaps many things are.

Let me just say that we are spending £1.8 billion on the Scottish child payment, which will go up to £25 per week. That will just about mitigate the cut to universal credit of £20 per week.

There is a more balanced answer to that, and hopefully a more balanced question behind it than I was asked in the chamber. I accepted in the national strategy for economic transformation that increasing productivity is one of the most important objectives that we can have as a Government, a society and an economy. We take it as read that increasing productivity matters, and we need to up our game on that.

You still have to accept that between 2007 and 2019 we saw significant growth in productivity; indeed, productivity in Scotland grew by 10.7 per cent compared with 5.2 per cent in the rest of the UK. Why is that important? It is important, because it brings us back to the question of what we need to stop doing, because it might be dragging down productivity, and what we need to keep doing, because it might be boosting it. That is what the national strategy tries to get underneath.

Our economy is recovering right now, and we have the unique circumstance of a record low unemployment rate of 3.2 per cent. We cannot do much more with regard to the labour force if unemployment is at 3.2 per cent, with the exception of trying, as I said earlier, to work with those who are classified as economically inactive and get them into the labour market. There is work that we can do on migration, too.

I did not catch everything that the SFC witnesses said, but they made it quite clear that Scotland is exposed to an ageing demographic and, as far as earnings are concerned, to the situation with the oil and gas industry. While there has been a significant increase in financial services down south—the figure is about 16 per cent, if I remember correctly, but I would need to double check that—the oil and gas industry in Scotland has had a challenging time, which has had an impact on earnings. You have to distinguish between wages and productivity a little bit; they are linked, but I think that these are two different questions to which there are two different answers.

Interestingly, I posed a similar question to various advisory council members and to a lot of the people with whom we consulted. I asked what needs to be done to deliver a step change. By and large, the feedback was that we know what to do—I am sure that the committee and the Government are mostly aligned on what needs to be done for the Scottish economy—but we need to improve our ability to get it done and to be focused, determined and ruthless in our execution of the strategy during the next 10 years.

When we look at international examples of models that involve Government-led national strategies, we see that what often separates the successful ones from the unsuccessful ones is that, in the successful ones, there is consensus across political parties, Parliament and Government about what needs to be done. That means that, irrespective of the challenges that emerge, those Governments are able to deliver, because whoever forms the Administration knows what needs to be done.

One thing that makes the strategy stand out considerably is the ruthless focus on delivery. Of course, that will never grab a headline. There is a lot in this document that will grab headlines, particularly around entrepreneurship, but that focus on the execution of what we know we need to do and on streamlining our ability to do it is key.

There is one smaller area that is equally important, and that is the new opportunities that have emerged. When the previous strategy was published, in 2015, we knew that Scotland had great strengths when it came to our natural assets around energy, but in the past few weeks we have seen the announcement of the world’s largest floating offshore wind technology. That is remarkable, but it will be effective only if we can develop the supply chain and establish the businesses that accompany that. Those massive, momentous opportunities that are recognised the world over are new, and the strategy sets out in detail how we can make the most of those opportunities and, basically, build businesses and deliver jobs over the next 10 years.

I will prime Gary Gillespie, in case he wants to come in with additional analysis about additional costs.

Certainly, the anecdotal feedback from businesses, particularly smaller businesses, is that higher costs and increased bureaucracy have impacted on trade. They seem to be disproportionately affecting small and medium-sized enterprises that had previously been able to trade in and of themselves. Some larger businesses are able to access markets more easily, but there are increased costs.

If we go back to the questions about how we improve our productivity in our economy, I note that one of the most significant opportunities is through increased exports. That is why our export plan and the 25 per cent target are so important; there being additional costs of accessing one of the largest trading blocs in the world does not help with that.

Gary Gillespie might have some analysis on EU exit.

?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.