³ÉÈË¿ìÊÖ

All those elements would need to be taken account of in any proposition for any alternative system. Any system of local taxation will have to have a property element—for me, that is important. Trying to reach agreement on a system that addresses those issues will be tricky. There are lots of political challenges within that. I am keen—if there is the space in Parliament, for example—to create a bit of consensus on those matters, which would be helpful.

The fiscal framework is important to COSLA and local government. They want to see a reformed system that addresses some of the anomalies that we are all well aware of. That is a challenge. I am keen, as I said, to create a bit of consensus in that space, if possible.

It is—there is nothing about what is happening this year that is different from what happened last year. The position this year is the same and the budget process is exactly the same as it was last year. This year’s negotiations with the Scottish Funding Council are no different from last year’s.

If you are saying to me that you want more money to be provided for universities and colleges—

I am talking about the number of things that they are doing.

I respect Sandy Begbie, as I have said, but I do not agree with that description. Earlier in the meeting, I mentioned a number of economic indicators, and I also quoted the Fraser of Allander Institute, which does not always use the language that it has used in relation to the outlook for the Scottish economy. Despite the recession that we are seeing across the UK and despite the financial and economic challenges that exist, those economic indicators show improved productivity, improved tax take and wage growth. They all show that Scotland is still a very good place to invest and do business in, whether from the point of view of inward investment or of business investment decisions that are made here in Scotland. All that I can do is point to the economic indicators, which give a slightly different narrative from some of the other things that we have heard.

As I have said, I have a lot of respect for Sandy Begbie, but I do not agree with his description.

Let me say a couple of things about that. First, I go back to the point that, with less money, we have less money and there is less money to go round. The decisions that we have taken have been very difficult. There is the ring-fenced funding of £61 million, on which I have given a commitment that it will be returned to the portfolio. The first instalment of £15 million will be returned in 2024-25. I will look at the remainder of the funds being returned in full at the right time, in negotiation with the sector, to help—

No, but I want to do it in a way that supports the reform and transformation of Scotland’s farming and food production industry. That is the purpose of that funding—that is what the sector wants it to be for. However, I want to do it in a way that brings it in at the right time for the sector. If we do not do it at the right time, there is a danger of its potentially not being spent. The preparation has to be done so that, when it comes to the reform and transformation process, we are clear about what is needed when.

Those discussions are on-going, but I can give an absolute commitment that all of the £61 million will be returned and that it will be done in a way that is absolutely in line with what the sector needs.

I have been very clear with the retail, hospitality and leisure sector when I have met organisations or, indeed, individual businesses that the choice in what I did with the £260 million out of the £310 million of consequentials was between investing it in public services or business tax cuts, and I could not in all conscience not invest the money in public services, primarily the NHS. As Liz Smith will be aware, we hear day in, day out from her own back benchers calls for additional public spending in many areas, including the NHS. I suspect that, had I used the £260 million to fund business tax cuts for retail, hospitality and leisure, I would have been answering questions either here or in Parliament as to why there was less money for front-line public services.

Ultimately, these decisions have to be made, but in a constrained fiscal environment where money is tight, I cannot in all conscience not give the money to the NHS rather than business tax cuts. It is for others to say whether they would have made different choices and what the impact would have been on public services.

I do not know who you have been speaking to. I speak regularly with local government leaders of all parties, and I have given those assurances to be helpful. I thought that it was important to give certainty on that, not least because COSLA was asking me about the baselining. That is alongside the £45 million, which is contingent on the spring budget showing that that is a positive addition rather than something that leaves us in a negative position.

The relationship with local government has been challenging in this budget process. Probably every budget that I can recall has been a time of tension with local government, and this year is no different. However, one of COSLA’s top asks was about the share of the budget, and I would just reflect that local government’s share of the overall budget is increasing, from 31 per cent to 32 per cent. Despite the challenging fiscal environment, local government has an increasing share of what is a constrained cake, if you like—local government has a bigger slice of it. That needs to be borne in mind.

I will continue to discuss those issues with local government. There is a lot that we are working very positively on. We do not always hear about that in the public domain, but a lot of joint work is going on in a lot of areas that will be good for public services.

No. The Verity house agreement is really important to COSLA. I met the presidential team just a couple of weeks ago and they stressed, despite the difficulties of the budget and some of the disagreements, how important the Verity house agreement is to them because, apart from anything else, it will deliver a new fiscal framework that will be helpful going forward. The agreement has delivered a range of areas of progress. Again, we perhaps do not hear about them because, inevitably, the areas that get the attention in the public domain are those where there is disagreement rather than those on which there is agreement, but there is huge agreement in a lot of major areas of policy that we are taking forward.

There is nothing different this year from any other year.