���˿���

No, that is not my position. Those are forecasts from the SFC. I believe that the £3.5 billion is actually our figure, which was published in December and which was based on a number of assumptions. The point that I was making in my answer to you, and which was made in the First Minister’s answer, was that we are now working with a resource spending review that is completely balanced. It is factually inaccurate to suggest that the resource spending review is not balanced, because I must balance it by law.

The gap between spending and funding, based on the RSR framework, which was published in December, has come to the fore again in recent days. That projection was based on, for example, inflation at 3.7 per cent and 2 per cent thereafter, and on social care growth in line with the 2018 medium-term financial strategy. It was based on a whole number of assumptions, and, in a sense, the resource spending review is the answer to a lot of those assumptions, and is based on more accurate information.

I am very clear that the suggestion, based on forecasts in advance of the publication of the resource spending review, that there is a deficit in the resource spending review is inaccurate.

We do not use figures in that way. The SFC updates its forecasts in the weeks in advance of the resource spending review publication, and then we have to balance our spending commitments. There has been so much change between December and the SFC finalising its forecasts a few weeks ago that it is just inaccurate to suggest that we go back to December figures.

All decisions around how local government spends its money are for local government to make. As you well know, I do not tell local government how to spend the core budget—that is entirely up to it.

It is across the public sector, and I have not put a figure on it. That is your figure—or other people’s. I have suggested that we need to get back to pre-Covid levels.

However, let us take the expansion of early learning and childcare, which is one area of local government. The policy has seen a workforce expansion in local government and that needs to continue. However, in other areas of the public sector—it is for the public sector to answer this question—as a result of Covid, there might have been an increase in head count that they no longer need. There may be other parts of local government, as in other parts of the public sector, that will need to see increases as we come out of the pandemic. That is why we are being very flexible.

In the discussion around public sector efficiency, local government is unique, because ultimately, it is local government that makes the decisions, rather than me. I set the spending parameters; I do not dictate to local government how to spend that money.

We will work with public sector employers. I have been at pains not to set an arbitrary target—although figures have dominated the press coverage—or to dictate to public bodies what they need to do. Over the next few months, in advance of the upcoming budget, we will engage with them and, most importantly, with trade unions, on where the workforce needs to reset. It is based on a freezing of the pay bill that does not equate to a freezing of pay levels. That is what is driving the need for reform.

I hope that Mr Lumsden will accept that there is a fundamental difference in my relationship with, for example, a public body such as Transport Scotland, and my relationship with local government.

The choice that I have made is to increase employability and skills funding and to protect other budget lines.

No, it is not. However, as I have said, the outlook is very difficult across the public sector. From the local government perspective, we obviously need to do this work hand in hand with the work on the fiscal framework, and we need to recognise that the resource spending review is not a budget. I can well imagine that, in future budgets, local government will, for example, have a significant uplift through the education and social security lines as a bare minimum.

I am not sure that I am advising or advocating that—unless you are quoting something that I said earlier. What we are saying to local government is, “Here are the spending parameters over the next few years”. That allows them to plan, but it will not replace annual budgets; it gives them the parameters, but not all the details. Future budgets will need to update the details.

Incidentally, there is a lot that we can learn from local government, particularly in the way that it works together and the way that COSLA facilitates a lot of sharing of best practice. You are right to say that there is a lot for us to learn. However, to all intents and purposes, local government is fully autonomous. We set the spending parameters, but ultimately, it is for local authorities to determine how they spend that money.

Local authorities have to make choices within the spending parameters that they have. I do not dictate to local government how it uses its funding—that is for local government to determine. All I can do through the resource spending review is to set out the parameters; it is for local government to decide what it does with that core budget. Obviously, there is additional funding on top of that for education and social security, which we have more influence over. However, inside the core spending parameters, it is for local government to determine how that money is spent.

Our immediate priority is to embed fair work. It goes back to questions about poverty and productivity. If you have fair work conditions and people are in secure, well-paid employment and get paid a reasonable wage, that delivers multiple benefits for our economy and the overall cost of the public sector.

Our primary focus right now is to embed fair work principles. Employers also want to focus on that, because, at a time of high demand and more supply, they have to distinguish themselves. Having said that, we are particularly exposed by the fact that a lot of the highest earners are in very few industries. That means that a downturn in oil and gas has a disproportionately large impact on our tax revenues and economic outlook, so there is an argument to make sure that we diversify, while also taking into account the impact that that has.