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Thank you. I call this meeting to a close.

Thank you for that opening statement. I will kick off with a few questions, and then I will let colleagues in from around the table.

One of the key issues with the whole levelling up agenda is the actual volume of cash that has been allocated. When I refer to that agenda, I am also talking about the other funding streams that you mentioned. Colleagues will go into some of those in a bit more depth, but how does the money that has been not only allocated to, but actually spent in, Scotland in the past three years compare to what it would have been had Scotland remained in the European Union?

You talked about an increase in investment, but I did not hear any actual figures for what has been spent in the past three years.

The Institute for Fiscal Studies says that UK departmental budgets in the forthcoming financial year will be less than they were in 2010. That surely does not help that levelling up agenda.

It has to be said that there seems to be quite a plethora of funds. It is about trying to get a grip on where they all are and how much is actually being spent on the ground, as opposed to being allocated.

One area in which there is no dispute is the significant reduction in the amount of capital that will be available to the Scottish Government for the next five years. According to the Scottish Fiscal Commission, it will reduce by up to 20 per cent. The Deputy First Minister has said that, in real terms, it is more likely to reduce by 11 per cent. Whichever of those figures you accept, capital budgets declining surely works against what you are trying to do with levelling up. In Scotland, we are talking about much more of a reduction in capital than money that is being spent on levelling up.

You are right that the resource budget has gone up by above inflation, if we accept the gross domestic product deflator at 1.7 per cent. However, even with that, capital allocation from the UK Government is declining significantly. That is beyond dispute.

You talked initially about inflationary pressures, which is an important issue. As you know, in October 2021, in my area, we were delighted to be awarded £23.7 million for the upgrade of the B714 in North Ayrshire. That will make a significant difference to the North Ayrshire economy and it was welcomed across the board. I and the local MP both supported it, as did all parties in the local authority.

Since then, inflationary pressures have hit that project hard, and the cost has now increased by more than £5 million. When you came to the committee two years ago and I raised the issue of inflation, you said that the matter would be considered in relation to those projects.

My understanding is that the local authority has been advised that it will not get an increase in funding. Only about 10 per cent has been spent so far, because of all the work that has to be done before such projects are started. In effect, the project has seen a £5 million shortfall. If the UK Government wants—as I am sure that it does—such projects to succeed in cases in which the recipients of levelling up funding have no control over costings because of the construction inflation that we are all well aware of, it should surely step up to the plate and provide the additional funding to ensure that those projects are delivered as originally intended.

I certainly do not think that accusations of overgenerosity would come from any source, but there certainly could be accusations of a lack of flexibility.

I have to say that, unlike in England, as has been pointed out by academics on the cross-party group on life sciences, which Michael Marra and I are members of, all the Scottish universities work together in partnership, but the English ones do not.

It would be helpful to know that, because there are real concerns that local authorities would then have to allocate money from other capital funds, which are already under pressure, to ensure that those levelling up projects are completed.

I will move on. The Scottish Local Authorities Economic Development Group—SLAED, which is not to be confused with the 1970s pop group—has submitted information to us and raised a number of issues. For example, with regard to how funding was allocated, SLAED was concerned that no local authority that had been successful in round 1 was successful in round 2 and that that was

“a consequence of a UK Government decision, taken at a late stage in the process, not to approve any bids submitted by a local authority that had been successful in round 1. This gives rise to doubts that the bids selected were not necessarily the best submitted in terms of quality.”

Why did the Government decide to do that? Some authorities are a lot bigger than others, and Glasgow is an obvious example. Glasgow had a number of projects that it wanted to submit because it has a disproportionate number of deprived areas.

However, Clackmannanshire, which is one of the smallest local authorities—and the smallest mainland local authority, with about 50,000 people—had real difficulties with the timescales for submitting allocations, so it was unable to bid. Clackmannanshire Council said that it is disadvantaged because of its size and the lack of staffing capacity within the local authority. Those kinds of projects do not come up all the time, so the council does not necessarily have officers sitting there hoping that they will.

With regard to other local authorities that have not received funding, some local authorities might, on paper, seem prosperous across the board. East Lothian is an obvious example, because much of East Lothian is very prosperous, but parts of East Lothian are not prosperous at all and the area includes some of the most deprived areas of Scotland. East Lothian Council therefore feels that the metrics that the UK Government is using do not take account of some of those issues.

Thank you very much. I will open up the questioning to colleagues. The first to ask questions will be Liz Smith.