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We do not need to wait for that. Conversations are continuing with the UK Government, and we are still fully committed to devolving the duty. There are two points to highlight. The first is that we were making good progress on resolving the Highlands and Islands exemption. Secondly—although I do not want to keep using it as an excuse—the fact is that Covid struck. Many areas that were being progressed at pace prior to Covid are now being picked up again. Because of the wider conversation that we are having on the fiscal framework, it makes sense to have our other conversations in that context.

There are two parts to that. First, we need a growing economy to ensure that there are tax revenues. I am a firm believer in the notion that, if businesses are trading well and paying their taxes, we have a secure source of revenue, and that was the reason why we extended non-domestic rates relief for a full year. We could have implemented non-domestic rates halfway through the year, when signs of recovery were obvious, but I wanted to extend relief to a full year in order to maximise the time for industry to recover. As we go into the budget, we will be very cognisant of the need to ensure that our taxation enables businesses to fully recover and fully trade. Clearly, since the pandemic, other challenges have faced business, not least the shortages that have perhaps hindered their ability to trade fully.

Secondly, we have to continue to use the mix of tax that we have. We get limited income tax as well as non-domestic rates, which, although a property tax, are often considered as the primary business tax. To be honest, I do not see any huge room for manoeuvre in both just now. We know that, when it comes to income tax, what really matters is our performance relative to the rest of the UK; moreover, we do not have allowances or incentives with it and we have to be mindful of how it interacts with national insurance contributions. As for non-domestic rates, they are a property tax rather than a business tax.

My first answer to your question, therefore, would be economic growth, and my second would be room for manoeuvre on tax policy.

It is a very significant consideration in our budgeting. You have mentioned a number of the impacts that it can have on our budget, but perhaps the most obvious one relates to pay, given that a significant percentage of our budget is spent on people—for example, the staff in our NHS, local government and public bodies. Public sector pay is therefore an important element of our budget setting; it has certainly been a big focus of previous budgets, and you have to be mindful of inflation when it comes to public sector pay policy. Inflation has other implications, too, but as you will know, it has an impact on costs, and we cannot escape its impact if we are to achieve our policy aims or build the infrastructure that we want to build.

I do not want to put him on the spot, but I wonder whether Dougie McLaren wants to come in on this question.

I am certainly open to suggestions about, and we will give more thought to, how we can be more publicly transparent in the budget. However, a more mature debate about the realities of budgeting is required, because a lot of our budget is demand led. Budgets were demand led for some business support. If, for example, we announced that £50 million was available and only £40 million was spent, which exhausted demand, accusations that the budget was underspent would be made, but that is the nature of demand-led budgets.

Sometimes demand can exceed the budget that is allocated, so we must manage that, and sometimes demand is less than was forecast. Budgets are a moveable feast, and budget revisions—they usually happen twice a year, with the exception of the Covid period, when they have happened three times a year—are just a snapshot in time, and as much certainty as possible is required when we publish them.

You made a point about the UK Government. I am sympathetic to the UK Government’s position that you cannot definitely say to the penny how much will be spent over a year at the beginning of a year or even at any point in a year, because who knows what might happen? Fuel shortages might happen or other events might need to be responded to. Budgets will always be slightly moveable feasts. My difficulty is not with budgets being a moveable feast but with having a fixed budget that must balance, which means managing a very volatile situation with very limited levers.

To go back to your question, if we can do more on transparency, I am open to that. If we can build more transparency into the budget revision process, I am open to that. I know that the committee will scrutinise that in the coming weeks, so your feedback from that could inform future budget revisions.

Your predecessor committee was very helpful in this regard. Its report on the fiscal framework was supported by all parties. The report identified some benefits of the fiscal framework, particularly during a period of volatility, but it also identified some of its shortcomings. We are due to work with the UK Government to commission an independent report on the fiscal framework. I am keen that that report captures all the points that the previous committee and independent stakeholders such as the Fraser of Allander Institute highlighted.

The previous committee’s report demonstrates that the arbitrary caps on borrowing for the forecast error and on spending are not keeping pace with inflation, with the size of the budget or with the potential size of the forecast error. The report also suggests that we have limited ability to carry forward and manage the budget across years. Thirdly, there are challenges to managing levels of volatility and risk and we should consider some additional levers to help the Scottish Government manage that. It is a very technical area and I would be grateful if the committee continued considering what it believes should be done with the fiscal framework. The review or the report should not be so narrow that we are not cognisant of what the pandemic has taught us about the operation of Scottish Government finances.

I think that that is a fair point. Although interventions around young people are important, we face real challenges in relation to people who face redundancy or have been made redundant because their industries are changing. That is where the national transition training fund comes in; it seeks to provide funding to particular sectors to help their people transition.

For example, I take you back to the tourism recovery plan. Bear in mind that that was the response to recommendations that were established by the tourism recovery task force, which was composed predominantly of industry leaders. They asked specifically for help for reskilling and retraining. An element of the national transition training fund has therefore gone specifically to help the tourism and hospitality industries reskill and upskill their staff. Obviously, they are facing labour market shortages, so it is really important that the right skills are there.

When it comes to people who are moving between sectors—upskilling not within their sector but between sectors—we also have support in place. Perhaps we need to review that support and make sure that it is fit for purpose, as we progress through the pandemic, to help take people from where they are now to where they want to be. The most obvious example of that would be providing support for people in the oil and gas sector, who have, unfortunately, faced redundancy, not because of decisions made by Governments in this country, but through the global reduction in the demand for oil and gas. That support needs to be made available within and across industries.

I will make a final point before I stop. Through partnership action for continuing employment—PACE—which is the wraparound support for employees who face redundancy, we have specific and targeted training available to help. However, it is a huge challenge to equip people with the skills that they need to transition to a new job or a different job in their industry.

We currently believe that the application of block-grant adjustments in relation to the revenues of £4 million per annum under the Proceeds of Crime Act 2002 breaches the Smith commission’s no-detriment principle. That is because we believe that that funding should come to the Scottish Government.

I have written to the Chief Secretary to the Treasury to try to progress resolution of that issue, and we have agreed that it should be resolved as part of the fiscal framework review. It is still an outstanding issue.

Obviously, this is a highly technical area. Claire McManus might be able to supply some information that I have missed out.

The UK Government has announced what money it thinks will be generated and therefore what will come in consequentials, but I encourage the committee to scrutinise what is finally announced, to ensure that the £1 billion—if it is £1 billion—is additional and not netted off elsewhere. That remains my concern, and we will not know the answer to that until 27 October.

It has been well documented that the national insurance increase will have an impact on private and public sector employers, as any increase in taxation will have. There is no doubt of that. Our job is to ensure that the money is used wisely and carefully.

Convener, I promised to provide an update on the small business bonus scheme, in response to Ross Greer’s question. Dougie McLaren says that he is happy to answer the question now, to save writing a letter. That is entirely at your discretion.

That is a good question. We have commissioned the Fraser of Allander Institute to review the effectiveness of the small business bonus scheme, in particular. That work is on-going. The institute is reviewing how effective the scheme is in meeting its policy objective of helping small businesses. The scheme has a huge role to play, especially in local economies and on our high streets. That is the primary review that is on-going.

However, we are regularly asked for additional reliefs. We now have reliefs in place for hydro power, new buildings and recently occupied buildings, all of which will have to be reviewed according to their terms. The business growth accelerator, which incentivises new builds, and the fresh start scheme, which incentivises tenants to occupy previously unoccupied buildings, need to be reviewed on their own merits. At every budget period, we consider again whether either those reliefs are the best use of our limited funds, or there is another way to meet the policy aims—which, I think, we all agree on—through other use of the funding. Such regular reviewing is important.

That is a good question. I might have to write to you on that. It was originally due a number of months ago, but was delayed because of Covid. We wanted to ensure that the reviewers got access to small businesses and had comprehensive data. If my officials do not know whether we have confirmed an updated timetable, I will get back to you in writing about the latest deadline.