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As the committee is aware, the programme and the parliamentary timetable around the national care service were paused in order to create some space over the summer for us to reach a more consensual position, not least with local government, which means that the financial statement around the national care service will need to be revised, too. The minister has committed to providing that information in advance of stage 1 of the National Care Service (Scotland) Bill, so that work is on-going.

As I have said previously, the national care service—as a former home care organiser, I could speak for the whole committee session about this, because I have seen up close and personal where the system does not work for people—will be important in ensuring that there is more consistency around national standards and ways of delivery so that people get the service that they would expect no matter where in Scotland they live. How we get to that point will form part of the discussions that will take place over the course of the summer. We need to have reform in that space.

As with systems everywhere in the UK, across Europe and beyond, the growth in the overall health and social care budget has been driven mainly by demographics—we have an ageing population for which we need to provide—and a workforce that continues to grow. We have had many discussions in Parliament about the need to avoid hospital admissions and to change some of the systems in order to sustain people in a way that does not result in everybody ending up in the acute system. Reform is an important part of that issue, as is ensuring that the spend can deliver what needs to be delivered.

Public bodies absolutely need to get out of their silos, but I think that they recognise that. The opportunity for shared services, for example, is being actively looked at and should be actively looked at. There might be opportunities for organisations to go further than that through mergers.

Local authorities are in a bit of a different position, because they are independent organisations. However, many of them are looking at the potential to work more closely with their neighbouring authorities on shared services. There are also discussions about whether local authorities can share people where there are discrete, specialist roles, rather than each of them trying to recruit from the same small pool of specialists.

I think that, given the opportunities through the new deal, there is an appetite for things to be done differently. There is active discussion in Orkney and the Western Isles about a single island authority. That is something that they have raised previously, and they are keen—I guess that “champing at the bit” might be the description—to get on with it. Again, the driver for that is that trying to recruit people, particularly to leadership positions, involves all the different organisations fishing in the same small pond. They have come to us and said, “We need to do things differently,” and we want to encourage that.

There are some issues to be overcome, not least given the point that you made about the relationship between local authorities and health boards and the lines of accountability there. However, those issues are not insurmountable. Where there is a will, there is a way. We want to be very encouraging and permissive where local government and other parts of the public sector generate ideas for reform, rather than saying, “No, it’s always been done this way.” The idea of a single island authority could end up being a trailblazer for how things might be done differently elsewhere, so it is maybe one to look at.

We have raised capital expenditure as a key concern in relation to the budgets and the fiscal outlook. We have made all those points that, in terms of recovery from Covid and the cost of living crisis, investment in infrastructure is key and reducing that investment is the wrong decision. We have made all those representations robustly.

Will that position change? The outlook is the outlook. As things stand, there is no sign of that changing. However, we will watch the autumn statement carefully to see whether there is any recognition that reducing capital budgets is not the right policy or direction of travel at this time. I can tell you only what is in front of us at the moment, which is a very difficult outlook on capital.

I have set out three areas in relation to public finances. The first is prioritisation and ensuring that we are targeting and examining all our programmes—as people would expect any Government to do. The second is that we increase our tax base so that we keep more of the tax that we raise. The third is continued consideration of what our tax policy is. All those levers are equally important in ensuring that our public finances are sustainable and that we can create headroom.

Looking to the future, we will need to see what the Chancellor of the Exchequer’s autumn statement brings on whether the position on the block grant will improve over the next few years. We just do not know that. We also do not know whether there will be potential for consequentials in areas including childcare. Of course, those will have to be factored into all our policies.

Imminently. [Laughter.]

That is in case the date changes.

The council tax position in England has been set out previously. On the future position, there has been more flexibility on council tax setting here. We have moved away from the freeze that was previously in place and councils have more flexibility on the rate that they set.

The financial challenges that local authorities face are the same as those that are faced by the public sector more broadly. The policies that we have put in place on issues such as the attainment challenge funding and pupil equity funding have been important levers.

Dundee City Council has put in place an extensive package to support people through the cost of living crisis. For example, the food insecurity network provides for and supports organisations that are literally putting food on people’s tables. In tough times local authorities have to make tough decisions. However, looking to the future, that is one of the reasons why we need the new partnership agreement and the new fiscal framework with local government.

There are two aspects to that. First, local authorities need more flexibility in how they spend their money, so we need to reconsider ring fencing. That does not mean that all ring fencing will go overnight, but we acknowledge that local authorities have lots of pockets of funding, all of which have to be reported on and some of which are very constraining, so that probably does not make a lot of sense. The partnership agreement will set out the principles of how we will work together, and the fiscal framework will set out details of how that will work.

Our giving that flexibility will mean that local authorities will, over time, have more levers at their disposal. That is the second aspect. I am keen to work with local authorities to find out what other fiscal levers they might wish to have. A few relate to second homes, empty properties and a visitor levy, but there might be other levers that local authorities want to discuss, and I am keen to have that discussion with them.

It depends on whom you speak to, though. Stakeholders who are recipients of care are really keen for progress to be made on things such as national consistency, standards and other improvements. Where challenges exist, local government’s view is that it does not want to lose control over the service that it provides. I think that we can find a way forward through all that. I guess that the money that is required will relate to what the service will look like and what the timeframe for its delivery will be; we have to get that bit right before the money comes into play. I suspect that there will need to be a new financial memorandum, which will, of course, be there for all to see in advance of stage 1.

We are discussing the review, which is imminent, with the UK Government, but our priorities as we head into it are to ensure that the block grant adjustment methodology continues to protect the Scottish budget from potentially slower population growth in Scotland, which is important; to secure greater budgetary flexibility and the appropriate and required budget management tools more generally; and to retain protection from economic shocks that affect the Scottish and UK economies equally. It is about ensuring that we have the appropriate suite of policy levers and that we are not unduly exposed to risks outside of our control.

Those are the starting points. As the committee will appreciate, it is a negotiation, and negotiations require give and take both ways, but those will be the central areas on which we will require to see progress. Whether we can get something in place for next year’s budget depends on those negotiations, which we are entering into in good faith.

The committee will also appreciate that negotiation requires a private space, which the UK Government has very much asked for. However, once that negotiation has reached a certain point, I will obviously want to provide more information to the committee, and to Parliament more generally, as soon as I am able to. However, that can be difficult. I guess what I am saying is that we cannot have a running commentary on a negotiation.

One of my reflections is on whether there was a way of building more of a consensus around the issue. I felt very strongly that it was important to try to do that. Could we have done that at an earlier stage? Was it possible? The difficulty is that I do not know what trying to bring people together to coalesce around compromises would have looked like, because the debate had become so polarised, not least on social media—far more than it was initially, six years ago. For a minister in charge of a piece of legislation who can see the public discourse being so polarised, the room for compromise becomes quite difficult. However, I am the first to reflect on whether things could have been done more effectively.