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I appreciate that, but the document says that

“controlling the public sector paybill through managing pay growth and the devolved public sector workforce”

is important, along with “workforce planning”.

Over the past five years, the public sector workforce has increased annually by 1.6 per cent on average, but pay has never really been kept within the set parameters. How can you plan a workforce if you do not have the ability to bring in compulsory redundancies? For example, you might have people whose skills are no longer appropriate, but despite being on redeployment, they might ultimately not even be redeployed. It means that you cannot keep people whom you want to keep, because you have to cut the budget, and they end up getting voluntary redundancy when you do not really want them to. It seems to me that a lot of what is being set out in the plan is laudable, but there is no precedent from recent years of such aims being deliverable, and there is no evidence that they will be.

The public sector still contains more than 22 per cent of the workforce, compared to 17 per cent down south, and salaries are still cumulatively about £1.3 billion higher than the equivalent figure down south.

I will ask about just one more area. Page 4 of the fiscal sustainability delivery plan document says:

“The MTFS sets out a number of significant risks facing the public finances over the medium term, which need to be managed.”

One of the four risks listed is

“persistent inflation, impacting public spending in a number of ways, including on pay, which is exacerbated by a proportionately larger public sector workforce than the rest of the UK”.

Much of that is surely the responsibility of the Scottish Government, which has presided over the increase in that workforce, and comes from the fact that people working in the public sector in Scotland are paid better than their equivalents down south.

You have said that the growth in resources in real terms will be about 0.8 per cent rather than the 1.2 per cent for UK departments. That is a difference of 0.4 percentage points, which is very significant—about £200 million or £300 million a year. What are the long-term implications of that for the budget?

Thank you. There is a huge area of potential questions, some of which I will probably leave for the Cabinet Secretary for Finance and Local Government, who will be here after you.

You spoke about achieving a reduction in workforce, which your fiscal update report notes would require

“a significant departure from recent trends.”

I understand that, since 2019, the public sector workforce in Scotland has increased by 47,100, of which around 20,000 are health and social care workers. How can that reduction be achieved? The Scottish Government is talking about a reduction of 0.5 per cent a year. That does not sound like much, but it amounts to about 12,000 people.

Thank you for that. I should say that in section 4.22 of the fiscal update, on adult disability payment applications, you

“forecast the caseload to rise from 529,000 in 2025-26 to 703,000 in 2030-31”.

In a mere five years, the case load will increase by 174,000—that is about 30-odd per cent. The financial implication is that spending will rise from £3.6 billion in 2025-26 to £5.4 billion in 2030-31. That is a 50 per cent increase over five years, which the committee and the Government will have to take cognisance of.

The last thing that I will ask about before we move to colleagues around the table is capital allocation. Interestingly, the forecast shortfall in resource and capital is not that different—for capital funding, it is about £1 billion-odd over the next financial year or so, which will rise over the next five years to about £2.1 billion, compared to a shortfall of about £2.56 billion for resource spending.

What has the inflationary impact been on the capital budget relative to the allocation over the past five years? My understanding is that the allocation over the past five years has declined while inflation has been about 27 per cent, and that that is the root of the gap.

In paragraphs 5.9 and 5.11 you talk about that issue in relation to social care. That is helpful, as it aligns with the committee’s view.

The issue of national insurance contributions is of significant interest to us. You have said that the UK Government provided £339 million to ameliorate the impact of national insurance contribution increases in the current financial year, and that the gap in terms of what the Scottish Government will have to pay to meet those increases amounts to between £200 million and £400 million—I do not know whether you have any further detail on what the actual sum is. I take it that the £339 million that the UK Government has put in is Barnettised, so that it will be part of the budget as we go forward. Is that correct?

The resource budget is set to grow by about 0.8 per cent a year over the next few years, which Scottish ministers say is somewhat less than the figure of 1.2 per cent across the UK. However, given that the welfare budget is set to increase such that it will be 6 per cent higher as a share of the Scottish budget, would I be right in saying that, as things stand, that means that there will be less for every other department?

Yes, I think that we are aware of that. The issue is around the seven additional social security payments that are available in Scotland and so on.

I know that 58 per cent of people on universal credit work, so your point about low-paid workers is well made. Obviously, when we have to mitigate the impact of UK decisions, whether it is the bedroom tax or the two-child cap, that money is in effect lost to devolved services, because we cannot spend it twice. Has any work been done to look at whether the unilateral abolition of the two-child cap in Scotland will have an impact on, for example, housing benefit for recipients or council tax relief? My understanding is that the Convention of Scottish Local Authorities is saying that there will be an impact.

You will always be criticised, but to govern is to choose. One area in which the Government has chosen to spend a higher proportion of its budget is in welfare. You say on page 45 of the MTFS report that

“Social Security is an investment in the people of Scotland.”

A number of ministers have been saying that for a number of months. What is the return on that investment and what is the opportunity cost of it? In other words, what areas cannot be funded because of decisions that have been taken to introduce additional benefits, for example? The abolition of the two-child cap in Scotland, which is understandable, will cost £194 million by 2029-30.