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There is no black hole in public finances.

If we get it right, it will have a huge and hugely positive impact. The resource spending review covers the period that is just short of half way to the national strategy for economic transformation outcomes, which we aim to deliver over 10 years. If we get that right and invest our funding in achieving outcomes and objectives, rather than in maintaining the status quo, we can shift the dial on those things. If we just defend the status quo, we will get the same outcomes, but I think that all of us have an aspiration and ambition to actually deliver what the resource spending review sets out in relation to economic growth, resilient public services and tackling child poverty.

I have been quite open and honest about the need to freeze the pay bill, but not pay levels. I do not think that there is anyone who does not accept that there has been a lot of change in the public sector over the past two, difficult, years. Inevitably, some areas have had significant and rapid increases in head count because of Covid that are no longer required. Indeed, there were initial teething challenges around Brexit that resulted in spikes.

It is about having a general reset rather than setting arbitrary targets, which is what the UK Government has done. Your questions stemmed from a local government perspective. I am saying, loudly and clearly, that I do not tell local government what to do, and nor should I, in the way that I can work more effectively with other public sector employers.

I am saying that the resource spending review is not a budget. We have used what the SFC called reasonable assumptions to set our budget. However, we are setting a budget based predominantly on the UK Government spending review of autumn last year, which is completely out of date—it has not been updated to reflect inflation. Therefore, the numbers will fluctuate further.

To clarify, I was saying that, in the finance and economy portfolio, the budget for some areas will go up, but that cannot happen for all areas. For example, the budget for training and employability is going up.

The national strategy for economic transformation calls on all parts of the enterprise and skills landscape to focus on fewer objectives and to do them really well. For example, it calls for a focus on productivity, some of the new markets and entrepreneurship. I like to think that focusing on those key objectives means that enterprise and skills organisations will align all their spend and workforce to achieving them.

Looking across the board, some public bodies will be better at some things than others. For example, the Scottish National Investment Bank has an important role to play in scale-ups and Scottish Enterprise has a great track record when it comes to start-ups. Scottish Enterprise focusing on start-ups, the Scottish National Investment Bank focusing on scale-ups and both of them trying to ensure that they do not just duplicate each other’s efforts would be an example of aligning to NSET and to the agencies’ track records of success. Scottish Enterprise has generated significant revenues for the public purse as a result of very attractive investments.

A second example is something that I have already talked about, which is a recurring theme when it comes to business grants. Where does a business go first for grant support? Does it go to Business Gateway, SE, Highlands and Islands Enterprise, VisitScotland if it is in the tourism community or the Scottish Government? Right now, it is confusing for businesses but, in each of those organisations, there are teams that do similar things. The question is how, through collaboration and discussion, we make a more effective relationship for business. There is good practice on that already. The enterprise agencies are completely on board and have already started some of that work.

The way that we are doing the former is through embedding conditionality. Businesses should not, for example, be able to access grant support without signing up to fair work principles. Rather than being a particular focus, it should be the status quo and the norm that businesses can access Government support only if they adhere to fair work principles.

It is not an easy either/or situation, because we also know, from the NSET work that was done, that Scotland has some of the greatest potential in the high-growth sectors—for example, in the areas of technology and renewables. I do not think that we can neglect some of our core industries, although they should expect to receive support only if they meet those conditions. With regard to future growth ambitions, which is where we maybe have a slight difference of opinion—

With regard to our growth ambitions, we want to see far greater rates of successful scale-ups, because we know that that is where a lot of jobs are created.

The question is hugely important, because it goes right to the heart of how we build a budget or a resource spending review. The notion that I would base a May publication on December figures, considering all that has changed since then, is flawed.

I will go through the assumptions that underpinned our budget in December and the resource spending review framework in December. They included SFC forecasts for social security in December 2021; assumptions around pay growth; assumptions around health growth and social care growth; and assumptions around inflation. All those forecasts have been updated—not by me, because it is not my job to forecast; it is the SFC’s job to forecast. In order to build a budget or a resource spending review, we use the latest figures that the SFC provides me with, which it has now published, and I must balance my budget based on that. Forecasts change constantly.

There is no black hole. These are the basics of the budget that the Scottish Government sets—

We should bear in mind that, in cash terms, we are trying to protect as much of the public sector as possible, including universities. You have quoted 8 per cent, which is a real-terms figure based on the fact that inflation is at a 40-year high and is eating into our spending power. In the same way as I have given a commitment in relation to the employability and training lines, my commitment to universities is that we will protect them as far as possible. I say “as far as possible” because the overall block grant that I receive will not increase significantly over the next few years, and inflation is currently at 9 per cent. If there is not real-terms growth in the funding that you have available, by necessity, you can go only so far when it comes to allocating funding. Like many other spending lines, universities are hugely important, and we will protect them as far as possible. If you want funding in any part of the public sector to increase, you need to either take it from elsewhere or increase the pot.