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It sounds as if Colin Smyth and I are on the same page. It is entirely because of the huge economic challenges that we face that the total allocation across the three enterprise agencies—Scottish Enterprise, Highlands and Islands Enterprise and South of Scotland Enterprise—is the highest that it has been since 2010. In the overall budget this year, we have not just protected the enterprise agencies’ budgets, but ensured that there is funding to help them to respond to the economic challenges that we face.

I have discussed the budget allocation with each agency’s chair and chief executive, and they are planning their business activity right now. We are also fully funding the financial transactions requirements for the Scottish National Investment Bank. You cannot get away from the fact that not only have the enterprise agencies been protected, but there is funding in place to help them respond.

You talked about cuts to HIE and South of Scotland Enterprise. There are two changes to their budgets. One is removing the ring-fenced Covid funding, which I have explained already, and the second is the non-cash element that seems to be dominating discussions. Non-cash funding is not spending power. It is just to cover depreciation and accounting standards, and it is determined by what the enterprise agencies tell me they need. That is where there is fluctuation, particularly for HIE and South of Scotland Enterprise. Incidentally, Scottish Enterprise’s non-cash allocation has gone up significantly, because of the need to cover some of those issues. It is not about spending power.

I can go into that in great detail, but anybody who suggests that the structural challenges in the Scottish economy are entirely the result of budget decisions on the enterprise agencies is missing the point in the SFC’s evidence and the evidence from many other commentators.

There are a number of challenges. Productivity is an obvious example. Although productivity has increased in Scotland over the past decade and a bit, it still lags behind. We need more significant investment in businesses from the private and public sectors. We need to tackle the skills challenges and try to reduce economic inactivity. There is a whole host of issues on productivity and growth. There is also our dependency on particular sectors in the economy. When those take a hit, as happened with the oil and gas sector in the Covid period, there is a disproportionate impact on the Scottish economy compared with the impact in other parts of the UK.

We could probably spend an entire evidence session on the structural challenges and also the opportunities, but suggesting that the entirety of the structural challenges is purely linked with enterprise agencies’ budgets is probably short-sighted.

One way of doing that is to apply fair work conditionality. For example, if a company cannot access a grant or get a public contract unless it is investing in its employees, there is an incentive for it to invest in its employees. The primary way of creating incentives is through conditionality. We are trying to embed conditionality in all forms of business support.

I think that they get it, increasingly. My sincere hope is that they take the approach that once a strategy is published it will become a defining mission. There is a lot to be considered about dealing with structural inequalities in participation and about the benefits of a thriving economy. I think that the enterprise agencies are getting there. A more nuanced approach is being taken. Clearly, enterprise agencies are—to go back to the previous question—leading the charge on net zero, for example. They have expanded their approach.

Yes, we are absolutely doing that. The primary way that we do it is through working with Co-operative Development Scotland and the enterprise agencies to support the growth of co-operatives and other alternative business models. The matter is very much on our radar and we have mechanisms to work with and invest in alternative business models.

We have extended the deadline for the voucher scheme because we understand some of the challenges for businesses. The overall value of a voucher is determined by whether a household or business property is likely to get access to commercial build or R100 build. The voucher is worth less for those that are in the scheme’s scope. That might have come into it, but the deadline has been met. In terms of overall contract delivery date, you are probably more interested in the R100 north lot contract, which is expected to be let by 2026-27. The delivery years for the central lot and the south lot are earlier because the more remote and rural areas will require more investment and will take longer.

I will answer the question in two parts. The first is that, although I do not want to constantly compare households north and south of the border, it is important to do so, because the same overall settlement is involved, as a result of the Barnett formula. Shona Robison has said that council tax is lower in Scotland than elsewhere. We should remember that, on average, council tax went up significantly in England last year after a number of years of rises, whereas, in Scotland, there has not been the compounding effect of an increase last year. That is precisely why, on average, band D charges are about £590 more in England and £423 more in Wales than they are in Scotland.

On what we are doing, witnesses on the previous panel alluded to the fact that, from April, we are reforming the council tax reduction scheme, with £351 million being baselined in the local government budget for the policy costs. We have changed the scheme to ensure that we do not miss people as a result of changes to universal credit. In other words, we are trying to cover as many eligible households as possible. For the past few years—certainly the past five years—the money that we have provided to cover council tax reduction schemes has been higher than the demand, so there has been headroom for local government to manage that.

My final point is that we cannot look at council tax arrears in isolation. Challenges with paying council tax are part of a challenging financial situation for households. We cannot look at the council tax reduction scheme, for example, in isolation from our wider budget commitments. There is £197 million in my budget to double the Scottish child payment and extend it to under-16s. Over the past few months, Shona Robison has taken forward a huge amount of work to provide additional support to households.

We need to look at the wider support. Without getting too political, a lot of that is compensating for a welfare system that does not help families when they need to be helped. Removing £20 a week from households will not help them to pay their council tax.

I assume that you are talking about the funding for business support relating to omicron.

I have another meeting with my counterpart in the UK Government in the next few weeks—in fact, it might be this week. I think that it is. I apologise; it has been brought forward because of omicron. Covid consequentials are one of the most frequently raised issues on my agenda for meetings with the UK Government, so I will again talk about the need to cover them.

Off the top of my head, I cannot think of any budget that has been immune to the impact of Covid. Whether it is justice remobilisation or the need to remobilise hospitals and wider social care services, Covid has an impact right across the board. Nonetheless, we have a budget from which Covid consequentials have been stripped out. Over the past two years, they have amounted to about £14 billion. Last year, it was about £4 billion. That money will not be available but we still need to absorb the costs of Covid because we cannot wish it away. That means that Covid is clearly a priority, so we rightly have to meet the costs of it, but that puts pressure on other things that we want to do. That is how I frame the matter.

One of the last things that I did in the past financial year, just before purdah started, was to allocate an additional £275 million of Covid consequentials to local government, over and above the £259 million—if memory serves—of Covid consequentials in the settlement for local government. A considerable amount of funding was allocated to help local authorities with Covid pressures.

However, those payments were clearly one-off Covid consequentials in the same way that Covid consequentials are one-off payments for us, which makes it harder for local government—in the same way that it makes it harder for us—to deal with the on-going costs of Covid without additional funding to deal with it.

Will I answer that one?