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In relation to dialogue with the Scottish Fiscal Commission, I had a discussion with its chair quite recently in which we reflected on those uncertainties, but not with any certainty of our own about the information that might be available to us. My officials are in regular discussion with the Scottish Fiscal Commission to ensure that, as far as possible, we are in a position to satisfy our full obligations on the provision of information. As I said in my opening statement, I am wholly committed to ensuring that we carry out that exercise properly and fully, as is envisaged by statute and by agreement with the Scottish Fiscal Commission.

There is a bit of a moving picture as to the information that we might have available to us. We will only have answers to those questions based on whatever material is published by the United Kingdom Government and the certainties that it would have. As things stand, based on conversations that are now about two weeks old, I am fairly confident that we will not have a United Kingdom Government budget before we have a Scottish Government one. We will therefore be dependent on the information that comes out from the further fiscal statement that is expected in the next few weeks.

On potential revisions, we have set out the resource spending review, which is an indicative direction of travel on public expenditure based on the comprehensive spending review and our assessment of appropriate block grant adjustments. Obviously, the review does not translate into a budget, which is the exercise that we are about to undertake for 2023-24. If there is a change to the content of the UK Government’s spending plans for the next financial year—which, as I said in my previous answer, I fear will be the case because of the unfunded tax cuts and the market turmoil that is being experienced—that could have an effect.

The committee will be familiar with the fact that the choices that are made by the United Kingdom Government can have different impacts on our budget. A significant reduction in social security expenditure will not necessarily have a direct impact on the Scottish Government’s budget, although it certainly would have an indirect effect on the challenges that we face. However, reductions in English departmental expenditure, such as on health, education and local government, would have a direct impact on public expenditure in Scotland.

The committee will also be familiar with the fact that ministers are obliged to balance the budget, so we would have to take decisions based on the appropriate balance between taxation and public expenditure in the light of the data that had become apparent and the block grant adjustments that would follow from that.

If Mr Lumsden is waiting for me to announce a reorganisation of local government boundaries, I shall save him from the worry. That will not be a part of what we look at.

Once I complete this committee session, I am going to take part in a Cabinet sub-committee on joint priorities with local government. Many of the issues feature in that discussion.

We should be clear. I wrote to the committee yesterday with a revised assessment from His Majesty’s Treasury of the impact on the Scottish block grant adjustment arising from the UK Government’s policy changes on income tax and stamp duty land tax. That assessment indicates a potential positive block grant adjustment of £35 million in this financial year, assuming that we do not make any changes to land and buildings transaction tax in this financial year in light of the change to stamp duty. As I have told the committee already, I think that the disruption to the property market will make those numbers very uncertain.

The purpose of the emergency budget review, which I commenced before the fiscal event, was to explore what more the Scottish Government could do in targeting support to assist people facing financial challenge. That remains the purpose of the exercise.

I have been looking with care at the UK Government’s changes to income tax and stamp duty land tax. At this stage, given the turmoil that we are experiencing and the importance of an orderly forecasting process, I think that any tax changes should be made within the Scottish Government’s normal budget process.

I intend to come back to the Parliament in the week commencing 24 October—the particular date is to be confirmed—to set out the emergency budget review’s conclusions. My view at this stage is that the response will focus on this financial year only and on any measures that the Government can take to support those who are facing difficulty. It will also wrestle with the in-year financial challenges that I set out to the Parliament in my statement on 7 September, which have arisen primarily because of the significant inflationary pressures and the pay deals that are coming in at higher amounts than we anticipated.

The timescale for the Scottish Government’s budget is an emerging picture. As we speak, we are in a position where—this is my understanding, but I do not think that it has been publicly confirmed yet—the UK Government will accelerate the information that was expected to be published on 23 November. We have been assuming that, if that information is available on 23 November, we will be able to produce a budget for the Scottish Parliament prior to the Christmas recess. The steps that will need to be taken for budget scrutiny and the timetabling of that will be the subject of dialogue with the committee. However, if that information is published earlier, it will provide us with a bit more time and certainty about our ability to produce a budget before Christmas.

Under our normal protocols, we are required to give the Scottish Fiscal Commission 10 weeks’ notice of a budget event. If we wanted our budget to be announced on 15 December, we would have to give a notification by this Thursday. The deadline for 8 December has gone if we are to satisfy the 10-week notice period. From the question that you posed, convener, I assume that you share my view that we should go through the normal sequence of events, taking independent advice and getting the information that we should have, which will require us to give the Scottish Fiscal Commission 10 weeks’ notice.

The other point, which I make for completeness, is that I am not certain about the information that we will have available to us. If we receive OBR estimates, we will get estimates of what the block grant adjustment will be. However, I do not know what information we will have about spending or whether the fiscal statement that we will get from the United Kingdom Government sometime in the next few weeks will give us sufficient clarity on whether there will be any revision to the assumptions that we will make, based on a comprehensive spending review.

In all honesty, I cannot see how the comprehensive spending review numbers can be sustained given that there have been £43 billion in unfunded tax cuts and that there is market turmoil. If such turmoil is to be addressed and the £43 billion-worth of tax cuts are to be sustained, rebalancing measures will have to be taken. I fear that those will involve cuts to public expenditure, which will have an impact on the Scottish Government’s budget and on the assumptions that would be in the resource spending review.

Yes.

There are a couple of significant issues there.

I am happy to look at what further information would be helpful in following public expenditure to outturn. Going from budget proposals to enactment and then to the autumn and spring revisions and the outturn involves quite a number of steps. I appreciate that the numbers are quite high level by the time that we get to outturn. Inevitably, many budgets perform as we expect while others go either side of our expectation. We try to display that information in the revisions that are made in the autumn and spring and we report on that in the outturn. If there are changes that we can make, I am happy to engage in that.

Social care is a fundamental issue. The level of delayed discharge is way too high and is a source of enormous concern to ministers. We have taken a number of steps and have had a number of discussions, including a lot of dialogue with local authorities, to tackle that.

The problem of delayed discharge is the product of at least two factors, and perhaps a third. I am certain that our systems are not yet proactive enough and are not sufficiently preventative in supporting people at home to avoid their having to go into hospital. Lots of good work is going on around the country. There are low-level care packages that deliver just enough support to keep people in their own homes. A variety of public and third sector support services assist in that endeavour, but I accept that there are probably not enough services, which results in some people being admitted to hospital when we really should be able to support them at home and avoid them going there in the first place.

Part of the problem with waiting times at accident and emergency is that our hospitals are congested. Some people who come in through the front door of A and E should not be coming. Other people, who need to come in through the front door of A and E and then go out the back door and into the hospital, cannot make that journey quickly enough because the hospital is congested with people who really should be out of hospital and back home. They are not at home, because we do not have sufficient capacity to support people who might need higher-volume care packages than the other people I talked about, who might need very modest amounts of social care support.

I do not think that that is all about the third thing that I am debating in my mind, which is the availability of money. For once, I do not think that there is a shortage of money in social care. The issue is a shortage of people. We have lost a lot of people from social care. If I think about the community that I represent, a lot of people who were delivering social care had come in from other countries to provide that support and many of them have gone away.

For completeness, I must recognise a point that I acknowledge that the deputy convener has made on many occasions during parliamentary debate, which is that social care salaries may not be high enough to attract people when they make choices between different areas of economic activity. We have undertaken a local government pay deal that has been designed to strengthen pay for those at the lower end of the pay scale. I hope that that will help us on that journey, but we must remain open to that legitimate issue.

A number of steps are under way under the Covid recovery strategy. In essence, they envisage a focus on the person-centred delivery of public services. That requires a great deal of alignment of activity from a range of organisations. The work on taking forward that approach is a constant part of the policy agenda that we are taking forward with our local authority partners, the national health service and other players. That is about reforming the way in which we deliver services, so that we support people more directly rather than relying on them to link up public services themselves.

Secondly, we are looking carefully at the functions of different organisations, and colleagues have set out to the Parliament some of that work—for example, in the field of skills, or in what is under way on the national care service.

Lastly, in the discussions that we have had this morning, I have highlighted work on the public sector workforce, and the range and selection of tasks that we expect to be undertaken as part of ensuring that the sector is appropriately sized and equipped to meet the challenges that we face.

Thank you, convener. I add my comments to yours in relation to the bereavement that Mr Gibson has experienced, and I send my sympathies to him and his family.

I welcome the opportunity to meet the committee to discuss the pre-budget scrutiny of the 2023-24 budget and issues in relation to the public finances. The preparation for the budget takes place against a challenging and highly volatile landscape with significant implications for our fiscal approach. From the Covid pandemic to Russia’s illegal war in Ukraine and rising inflation, we are in the midst of a cost crisis that is having profound impacts on households and businesses across the country, as well as creating significant strain on the public finances.

That cost crisis has now been exacerbated by the United Kingdom Government’s mini-budget, which involved substantial unfunded tax cuts, led to rises in mortgage costs, sparked turmoil in the economy and has been described as

“the worst unforced economic policy error”

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I wrote to the committee yesterday to share the Treasury’s latest estimates of the block grant adjustment impact of the cuts to income tax and stamp duty land tax, which imply a £540 million net benefit to the Scottish budget over three years, including this financial year. In the space of just 10 days, that estimate has fallen from £660 million, which is a fall of 18 per cent.

As the committee is aware, those estimates should be treated with a significant degree of caution because they are not informed by independent forecasts from the Office for Budget Responsibility. They also assume that Scottish tax policy will remain unchanged. However, the United Kingdom Government’s mini-budget poses important questions for our devolved taxes policies. My judgment is that we need to take the appropriate time and care to consider those implications as part of our annual budget process. As part of that work, I have established an expert panel of economists who will assess the impact on Scotland of the Chancellor of the Exchequer’s fiscal approach.

It is also essential that we engage more broadly on the tax and spending choices that are before us, including our commitments, priorities and values as a Government. Alongside the review, I will therefore publish a discussion paper to encourage public engagement on those important and difficult choices on tax and public expenditure.

The committee will be aware that the Office for Budget Responsibility is now expected to publish its forecast earlier than the originally proposed date of 23 November. The OBR forecasts are crucial to our budget planning and they will allow Scotland’s block grant adjustments for 2023-24 to be calculated. Those forecasts will inform our approach to setting the Scottish budget and will provide information to the Scottish Fiscal Commission to inform its independent forecast. It is vital that we base our budget decisions on high-quality information, and I am unreservedly committed to doing exactly that.

I am keen to discuss and agree with the committee a timetable for that work on the budget, and we will do that in due course. The committee will also be aware that I am expecting to conclude the Scottish Government’s emergency budget review in late October, the purpose of which is to identify any further resources that could be deployed to assist those who face hardship in these challenging days. I look forward to addressing any questions that the committee has.

First, I make the general point that the committee will be familiar with the length of my involvement in the public finances. I have been a minister continuously for more than 15 years. I was finance minister for nine years and I have now come back into that role. I therefore have a fair line of sight of the Scottish Government’s finances, and I have never seen financial strain of the order that I am wrestling with just now—not in the aftermath of the financial crash in 2008 and not even in the years of austerity from 2010 onwards.

The situation is of a different order, and it is a product of extreme volatility as a result of the events that I cited—Covid, which led to an increase in the public sector workforce; the enormous disruption that has been created by the unwarranted and illegal invasion of Ukraine; and the impact of inflation. Frankly, and to be blunt, that has been made worse by the backwash of the mini-budget, which has been a disaster for the situation that we face. The pressures are therefore absolutely colossal. That is why I have already had to come to Parliament to announce reductions in public expenditure this year, and I might have to do more of that in the period that remains. The challenges that we face are therefore significant.

I understand clearly the need to give the public sector workforce reassurance about how we intend to tackle that issue. I have already embarked on discussions with trade unions about the strategic approach to that, because we must take the greatest care in building as much confidence as we can around those approaches.

Undoubtedly, the public sector head count will have to reduce in the spending review period and throughout the current parliamentary session. How that is done is crucial, and I want to do it in the spirit of partnership with our workforce. I want to be open about the steps that we are taking to do that. We already have recruitment controls in place, which are tempering rises in employment. Recruitment controls mean that, in some circumstances, vacancies are not being filled, which reduces the public sector head count but in a managed and careful fashion, which is the approach that I want to take.

With each budgetary event that we go through, we must reflect on how we can best address the strategic challenges. That is the approach that I will take throughout the discussions. I welcome the dialogue that we are already having with trade unions, which have a clear and legitimate interest in ensuring that the workforce is dealt with properly and with courtesy and dignity. That will be my approach throughout that challenge.

In general, that should be the case.