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That is a helpful and important answer. If we are looking forward to a comprehensive spending review halfway through the next calendar year, that gives a picture of the overall envelope that it will have to work within.

The next key question touches on the point around the net tax position. Why is Scotland performing less favourably compared with the rest of the UK? For me, the big change is that that comparison is not only with London and the south-east—as the cabinet secretary has alluded to—but with every other region across the UK.

I said to committee members during our private session before the meeting that my rough rule of thumb is to assume that we will always be behind London and the south-east, that we will be somewhere around the south-west, and normally a bit better than places such as Wales and Northern Ireland. However, that is not the case when we look at our net income tax position; indeed, every single Scottish region is lagging behind pretty much every single region in the rest of the UK. Why are those impacts so much more significant in Scotland in comparison with places such as the north-east of England or the midlands that might—one would suppose—have comparable demographics to Scotland?

It strikes me that this area requires much more attention from the Government and, indeed, the Parliament. I include in that the specific point about labour market participation, but I struggle to understand how that explains the issue in its entirety, given that you would have thought that the demographic challenges would appear in other UK regions. Scotland is not so different from places such as the north of England or Wales. Where should we look for that explanation, or should further analysis be done so that we can adopt the right policies to address the issue?

It does—the example is quite useful in itself. We know that the increase in health spending is about £2 billion, which means that there is about £2 billion to find elsewhere. If the Government is saying—not unreasonably—that there are still on-going costs from Covid across the board, it should be more straightforward to identify that spend in the non-health budget lines. However, it is not entirely clear where that is in the budget, outside health.

I wanted to follow up on David Eiser’s point about whether the budget is seven point something up or seven point something down. I will confound you both by saying that I can recognise both figures and not be rigid about my view on it.

I recognise that, in the total figure, because of Covid there is approximately £5 billion resource funding in the current financial year. However, to my mind, the key point is that throughout the debate around Covid spend, the Government has been pretty clear both publicly and privately that that money cannot be used for non-recurring budget items. We can all accept that Covid has not completely gone away, so the costs that we incur have not disappeared, which is why we end up in that fuzzy middle position. Is there an issue around transparency and about the clarity on how that £5 billion has been allocated, whether it has been allocated, strictly speaking, on non-recurring Covid items, and what in the current budget is Covid related?

This budget is particularly difficult to track. Several items are jumping between budget lines and it is not entirely clear what in the budget is directed at Covid. Is that a fair assessment of why we find ourselves in this position?

That is fascinating. I think that we need a committee session on that topic alone.

Does David Eiser have anything to add?

Thank you. I do not know whether Graeme Roy wants to add anything.

It is also important so that Government can manage.

The Scottish Fiscal Commission’s document is important in providing a medium-term outlook on fiscal pressures. I think that we were all surprised by the pessimistic outlook on tax and the implications in that regard; there is also the potential growth in social security spending.

I want to test a bit of logic that I put to the SFC. If we take the broad assumptions—and I freely accept that we are talking about forecasts, which are liable to error—about a negative net tax position of around £355 million, coupled with additional social security spend of around £764 million, does that mean that a deficit of about a billion pounds will need to be addressed in the Scottish budget over the next four to five years?

I will follow on from the convener’s line of questioning on income tax forecasts.

It is of critical importance that since the introduction of the fiscal framework, income tax is a large component of what we have available to spend in Scotland. I am interested to understand why the OBR projects growth in income tax receipts being slower in Scotland than in the rest of the UK. If that is the case, mitigating that should be a real focus of public policy in Scotland. Can you explain the underlying assumptions behind that forecast?

Bearing in mind what Mr Hughes said regarding the attempts of the OBR and the SFC to reconcile their methodologies, I note from your paper that it looks as though there will be a £380 million difference between what you and the SFC forecast for income tax receipts. Will you provide a summary of that difference of opinion? I assume that the SFC is looking at the same demographic figures.

In the interests of time, I will hand over the questioning, but I hope that one of my colleagues will pick up on that interesting insight.