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In setting out the budget, I concentrated on three themes: the elimination of child poverty, sustainable public services and the economic transition to net zero. That gives the best distillation of the policy framework in which we are operating, where there is an absolute necessity to make the journey to achieving net zero.

We assess our performance regularly, and we have been on the receiving end of a particularly challenging recent assessment from the Climate Change Committee about the effectiveness of our current arrangements. The plans that the Government is making are designed to advance that agenda to the greatest possible extent.

I acknowledge and accept the challenge that Maggie Chapman puts to me, but it is best reflected in how we take forward the wider policy agenda to which I have referred.

It will be helpful for the Government to understand the committee’s deliberations on that question. It is clear from the labour market data that was published yesterday that we find ourselves in a position in which employment is at a record high and unemployment is very low, at 3.3 per cent. Despite the fact that we are experiencing enormous volatility in economic conditions, employment remains very high and unemployment very low.

I have a couple of observations to make about that. First, that situation might not be sustained, because a lot of economic turbulence is coming our way. Secondly, we must be mindful of the importance that NSET attaches to increasing the value of employment. That is a major consideration in the approach to employment support, employability and economic development that we take as part of our wider programme.

We will see it in the data that informs the material in the national performance framework. Provided that the framework is delivering the right strategic perspective across the whole economy and the whole of society, and that we have that correct—again, I stress that it is being consulted on by the Government and that Parliament has been extensively engaged in that endeavour—we should see that in the data that emerges during the process.

Good morning. I welcome the opportunity to give evidence on the Scottish Government’s draft budget for 2023-24 and the delivery plans for the national strategy for economic transformation. If it is acceptable, convener, I will make opening remarks that cover both those areas.

The national strategy and the budget support our long-term aims and ambitions for transformation to a stronger, fairer and greener economy and, in the short term, although our levers are limited, they provide immediate support for our businesses through the current cost crisis. That crisis continues to present a significant challenge. The latest inflation figures, which were published this morning and cover December 2022, show that inflation remains very high, at 10.5 per cent.

When facing some of the most turbulent economic and financial conditions that most people can remember, the Scottish Government has had the difficult task of providing as much support as possible while our budget is lower in real terms than it was in 2021. That means having to make difficult choices in the coming financial year. We have chosen to concentrate our efforts on eradicating child poverty, providing sustainable public services and transforming the economy to deliver a just transition to net zero. The national strategy provides the right foundations on which to transform our economy and helps to secure better outcomes as we emerge from these difficult conditions.

In setting the budget and developing the NSET delivery plans, we have firmly prioritised the actions that will give us maximum return on our strategic objectives. In the coming financial year, we will introduce measures to boost entrepreneurship and productivity across sectors and regions, and to invest in our infrastructure.

We are committing to funding the transition to net zero not only to meet our climate change targets but because it will help us to realise our long-term economic ambitions, which will bring investment, jobs and growth.

The skills and employability aspects of NSET are also being supported so that more people can access more job opportunities now and in the future, which will help some of the most vulnerable in our society into employment and improve their wellbeing.

We have consulted the public, private and third sectors throughout the development of NSET, and we will continue to work in partnership with them as we push forward with delivery.

I appreciate the committee’s pre-budget scrutiny and report. As well as being given the opportunity to respond to that, I look forward to discussing with the committee some of the points that I have outlined.

There are several areas in which the Government is trying to provide support, within our resources and areas of responsibility. First, there is the approach that we are taking on non-domestic rates. The principal request of 16 business organisations was for the rates poundage to be frozen. Normally, there would be an expectation that that would increase in line with inflation. I took a decision to freeze the business rate, but that does not come without a cost to the Government, which is estimated at £308 million. Freezing the business rate means that businesses in Scotland have the lowest business rates poundage in the United Kingdom, and they also do not have to face an inflation increase.

Secondly, recognising the implications of the revaluation that is taking place, we have put in place some transitional relief for businesses. Thirdly, the small business bonus scheme is designed to provide support to companies in sustaining their operations. I do not suggest for a moment that all of that will address all the issues.

We have engaged in dialogue with the UK Government on its successor energy package and have contributed our thinking on that, but those are decisions for the UK Government. I welcome the fact that some on-going support is available, but I think that we are all conscious of the fact that there continue to be significant challenges for businesses as a consequence of those issues.

In addition to those measures, the Government makes other investments, such as in support for skills training, which is important, and, in particular, apprenticeships. That is linked to the points that the convener rightly raised with me about the labour market. We also make other investments in an effort to ensure that colleges are adapting their provision to meet the challenges that are prevalent in the labour market and the shift in the labour market that has to be made to support our net zero ambitions—I am thinking about the need to shift activity to support the development of renewables and the significant opportunities that arise out of ScotWind.

Those are just some of the measures that the Government is taking. We remain very open to listening to the views of the business community, which is why we set up the business regulation task force, which is jointly chaired by my colleague Ivan McKee and the Convention of Scottish Local Authorities enterprise spokesperson, Councillor Macgregor. The purpose of the business regulation task force is to listen carefully to business; where there are issues in the regulatory environment that are causing obstacles and there is no good reason for them to be there, we try to address those as quickly as we can.

I understand the comparison that Mr Smyth puts to me, but it is important to recognise that we are not looking at directly comparable schemes with regard to what Scotland offers in relation to business rates and what is habitually offered in England. We have two different propositions, and the small business bonus scheme in Scotland is much more generous than comparable schemes south of the border.

Of course, any measures that we take come at a cost. The overall estimated cost of the business rates measures that we are taking is £744 million, so substantial investment is being made in supporting business.

One of the factors that bore heavily on my consideration of what the right thing to do would be was the representations from business organisations asking us to freeze the poundage, which represents a comprehensive approach across business sectors. I was pleased to be able to do that.

The second relevant factor is that we estimate that half the properties in the retail, hospitality and leisure sectors will be eligible for 100 per cent small business bonus relief in 2023-24, so a substantial contribution is being made to alleviate the issues and challenges that those sectors will face.

I think, generally, that that would be the case. If you have specific data sets in mind, I would be happy to look at whether we can enhance them but, generally, we try to look at all issues through the prism of gender. The point that you put to me about entrepreneurship is particularly relevant, because the data that I have seen shows that there is a deteriorating position in relation to women’s involvement in entrepreneurship, hence the work that Ana Stewart is taking forward for the Government.

What kind of questions have you asked?

I think that that is an entirely reasonable proposition, but I will take it away and consider it in detail.

We have a continuing commitment to the women’s business centre. However, for completeness, the Government believes that we should look at how we will take that forward in the light of Ana Stewart’s review.

One of the points that I put on the record when I set out the budget statement to Parliament was that, given the financial challenges that we face, there might well be some policy commitments that take us longer to deliver than we would have wanted, simply due to the financial pressures, including higher inflation, with which we are wrestling.