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I have a feeling that Mr Hepburn’s recollection will differ and that recollections may vary about whether he gave a non-answer.

The £26 million is a welcome addition to what the sector perhaps expected before the budget was announced. The Funding Council has a role to work with Colleges Scotland and with the colleges to ensure that allocations are provided and that that supports colleges in the best way that we can.

I do not in any way decry the concerns from principals that this is an exceptionally tight time for them and that colleges may need to take difficult decisions. In the budget process, we have increased the funding—that was not expected when we set out the resource spending review, but we have done that.

We will work closely with colleges. The point about flexibilities is important. Colleges often say that they are hampered in taking budgetary decisions by how allocations are made and by the funding settlement. If we can assist them in the process by giving them more flexibility and allowing them to use funding more innovatively than they perhaps could under our tighter—or more rigid, I should say—controls in the past, we are really keen to look at that. As I said to Mr Kerr, that work is on-going.

I will broaden out the question from that very hypothetical situation.

I take the point. It is important that we have deadlines to drive that forward, but I also hear clearly from those in the system that there is a real need for us to look at how much change the system can cope with at once.

A lot of consultation is going on at the moment, following the completion of the national discussion, which was an important factor in forming an understanding of where Hayward and other parts of the reform process might go. For example, there is no point in defining the way that we do qualifications and assessments before we look at what we want from Scottish education.

The other aspect, which I will stick closely to, is that I have absolutely no problem in defending something taking a bit more time if what I get as part of the reform process is not as radical a reform as I want. If material comes back that does not deliver on what I want to see, I will be up front and say that we will take more time, because it must be genuine reform. If I am not happy with some of the proposals, it is better that I do that rather than accept what comes from the first round of proposals, knowing that it does not deliver the reform that I want.

There is a real urgency for us to get on with the reforms, but there is also a need for us to do it in a timely manner and to bear in mind how much is going on in the education system as we ask it to consult on the national discussion, the Hayward review and other aspects.

There is what the Government can do and there is what institutions can do, but I absolutely assure you that we are very cognisant of the risks that might come from, for example, a reduction in the number of Chinese students. As I said, the situation varies quite dramatically from institution to institution.

We have ensured that the budget settlement that we have given allows the money that comes from the Scottish Government to be protected. Some research money comes from outwith the Scottish Government, from UK funding, and that is obviously not for the Scottish Government to direct or influence. Clearly, we keep close contact with universities so that we have an understanding of what we can do to support research.

The fact that we have been able to uplift Scottish Government funding for research is a testament to the fact that we are very keen to ensure we protect the well-respected research that happens in universities.

Those decisions are taken by—

I will happily leave that to the minister.

—we need lean delivery in the Scottish Government. It is a real challenge to our agencies, under difficult financial circumstances, to take part in and assist with the reform process, but that must be done in as lean a fashion as possible. In the meantime, they will get on with business as usual and carry out their functions to ensure that they continue to deliver. Yes, it is challenging—there is no doubt about that—but there is a challenging budget settlement overall. That will ensure that we deliver on a number of commitments.

With regard to the reform package, I am glad that Mr Kerr said that lean is not a bad thing, because we need to get maximum value out of this.

I am extremely concerned about the lack of progress on teacher numbers. As you mentioned, the £145.5 million was baselined in the local government settlement because I had been told by local authorities that one of the main challenges in moving from temporary to permanent contracts or, indeed, in increasing teacher numbers was the fact that some of our funding had been on a temporary basis, so local authorities were unwilling—quite understandably—to move to permanent contracts for teachers. Therefore, an agreement was reached with local authorities. We had an understanding within the Scottish Government—and I thought that we had an understanding with local government—that the money was to assist with teacher numbers and to assist with the move from temporary to permanent contracts.

I was therefore exceptionally disappointed when there was not only no real improvement in the balance between temporary and permanent contracts but a small decrease in the number of teachers. What the Government can do in relation to that is quite limited in some ways, because local authorities are the employers. I cannot instruct a local authority to employ a certain number of teachers on a particular type of contract.

However, what I certainly would expect—and what we are now moving into detailed discussions with local authorities for the forthcoming year on—is that, when money is given with an understanding that it is to pay for something, it is actually used to fulfil those requirements. I will be holding meetings with COSLA spokespeople to discuss that specific issue, and I think that there is a genuine wish from all parties to see an improvement in the picture on this.

There is work that local authorities can do and should be doing to ensure that they are providing permanent contracts where possible. Human resources responses will vary from local authority to local authority—local authorities are the employers and, quite rightly, they should have the freedom to do what they need to do in an HR and recruitment setting. However, I would hope that we have a general agreement that permanent contracts are better for teachers and that they make the most sense.

I very much hope to see an improvement in that picture this year, so that there is an agreement between us and local authorities to deliver on the money that we have for recruitment. The £145.5 million remains in the budget. We are providing greater flexibility to councils to use that funding, because I appreciate that there are recruitment and retention issues and challenges. We are trying to be as flexible as possible, but, to be blunt, if we have an agreement at the start of the year that the money should be used for recruitment, my expectation is that it will be. I am very keen to see whether we can reset and see some shared understanding following the meetings that will take place on the matter.