³ÉÈË¿ìÊÖ

There is a lot in those questions. I noted the committee’s recommendation that covered some of the points that the member has raised.

The Scottish Government absolutely wants more disaggregated data to be published. We cannot deliver change unless we understand what the problems are, and the problems can be understood only if we have the data. We absolutely need to understand the data.

Some good work has been done. The Scottish Government has paid for or invested in studies and the provision of information on gender disaggregation, but we need to do more. We are planning for how we can capture and publish more information, particularly on gender, for future published analysis of businesses and their employees. I would like to come back to the committee and perhaps take your views on how we can do that as effectively as possible.

We are also working on how we can capture data on women-owned businesses and their participation in public procurement. That is an example of a specific issue.

I will focus on the young persons guarantee, and Helena Gray, who is attending the meeting, will probably be able to provide a bit more information.

We have allocated funding to the young persons guarantee and I think that it is progressing very well. We are working well with partners and with private and public sector employers to ensure that there are opportunities for young people. In the early parts of the pandemic, we were concerned that there would be a significant impact on young people’s employability. Substantial funding has been made available and the ambitions have not changed. I will not overspeak on that, because I think that Helena Gray can flesh that out.

I will give the figures again. The investment of £370.5 million for next year is an increase of almost 7 per cent for the enterprise agencies from this year. What I find startling about this conversation is that, in a budget with lots of difficult choices, the enterprise agencies have been protected. I understand the focused scrutiny on the enterprise agencies, but we have already talked about some of the difficult choices that we have had to make. Those difficult choices are largely as a result of where I have prioritised funding. I have prioritised funding for the enterprise agencies and for the Scottish National Investment Bank to deal with and tackle some of the economic challenges. I understand the scrutiny, but the enterprise agencies have received what they need.

My bottom line is that, if the member thinks that the enterprise agencies should receive more than has been allocated, he should tell me where in the portfolio to take it from. There are other areas that are probably facing greater challenges than the enterprise agencies’ budgets are.

At the moment, the straightforward answer is that we are embedding the programme for government commitment, which is that by the summer of 2022 we will have introduced, for public sector grants, a requirement that companies pay at least the real living wage. The focus right now is very much on fair work.

I am sure that many people would like to see us expand conditionality, but there is a tension, in that having too many requirements and conditions attached would mean quite a lot of hoops for businesses to jump through at a time when we want them to access support to grow and develop.

The situation is less clear cut in relation to net zero—which is not in any way to underplay it. We have had discussions about that with businesses that need support, but at the moment the requirement is about the real living wage.

I am not conscious of an interim target. I can pause to see whether officials want to correct me. We can get back to you on that.

On mainstreaming, I might have responded to the committee’s recommendation, so forgive me if I repeat myself. We promote use of the co-operative model; it is not just about supporting those who proactively seek support. How do we promote the model, provide advice and information to those who are considering it and provide training in co-operative business skills? If the committee has ideas about alternative models for mainstreaming the activity further, I am open to that. There is probably more that we can do to ensure that we meet the target.

I would argue that they are not cuts. I would argue strongly that we have protected the enterprise agencies in particular. For example, we have protected the budget of Highlands and Islands Enterprise. Its spending power has been maintained. I know that there was dispute in the press about HIE’s budget falling, but that relates to its non-cash allocation. That is about budgetary cover for a depreciation of assets and accounting standards, so it is not about spending power. That was based on what HIE identified that it needed to cover the non-cash basis.

HIE’s budget has been protected. I have already talked about VisitScotland’s budget being protected. You also mentioned local authorities. There is a debate taking place this afternoon that will allow us all to air the issues in that regard, but we have protected the local government budget.

However, I concede the point that protecting spending in flat cash terms does not take into account the significant challenges around inflation. This morning, we had the announcement that, last month, the consumer prices index rose to 5.4 per cent. That is significant and substantial. I cannot inflation proof any part of the budget, because my budget is not inflation proof and these are challenging times.

I will not go into details now but, on top of that, I could cite the city growth deals for Moray, Inverness, the Highlands and the islands, all of which are contributing to economic development in one of the best bits of Scotland.

I remind members—Jamie Halcro Johnston will know this—that that question relates to this year’s budget rather than next year’s budget, which is what the committee is taking evidence on now.

I think that the First Minister has been quite open about the fact that that budget was largely identified from an overall figure of £375 million. The Scottish Government identified £200 million that could be taken largely from health consequentials, understanding that there is a health implication of us keeping Covid transmission low and that, to do that, we need to compensate businesses for being closed. There is a health element to that.

In our management of budgets, particularly in the run-up to year end, we try to ensure that every part of the Scottish Government’s budget comes in on balance—on budget—so an intensive piece of work is being done right now to manage every budget line. Within that, we have identified funding across the board—I cannot go through a list with you at the moment, beyond citing the health consequentials—that we are using to manage that £100 million impact. It will not impact specific lines that I can reference now beyond health, because that is just the nature of our budget management.

That is a good point. Gordon MacDonald will know that the enterprise agencies have their own revenue streams, although that is perhaps less the case with South of Scotland Enterprise, as it is fairly new. The agencies have portfolios that they manage and that supplement their budget positions. We are discussing what is allocated by the Scottish Government. The agencies are constantly on a journey of trying to improve the way in which they operate, support businesses, create greater business and community resilience, protect and create jobs and deliver a fair and green economy.

When the economic strategy is published—it will be soon—I want it to galvanise the enterprise agencies and provide clarity on what they should be doing. I am of the view that we cannot do everything as an economy. We need to identify our strengths, back those strengths and ensure that we have competitive international advantages rather than try to do everything moderately well.

You will have seen that the enterprise agencies have developed their own performance management frameworks. They are working together to make sure that they are better aligned. In their annual business plans, which are approved by Scottish Government ministers, set out their commitments to meeting agreed targets and milestones. Every penny that is spent on enterprise agencies has to deliver benefit to the Scottish economy. I want the enterprise agencies to perform as well as possible and to be clear in their ambitions and approach.

I do not know whether the member would like me to bring in Richard Rollison to speak about some of the other things that the agencies are doing, but otherwise I have probably covered it.

No. That absolutely needs to happen. I would like to see it happen, and I would like to work with the Scottish National Investment Bank to enable it to raise third-party funds. You will know that it is undergoing a process as part of the bank becoming Financial Conduct Authority regulated, which is a key stepping stone on the road to it being able to raise and manage third-party funds. The bank is on that journey.

The chair said a few months ago, although I think that the comment was taken somewhat out of context, that the £2 billion overall capitalisation was never enough to meet the huge opportunities. I agree, and it was never intended that the bank would manage only £2 billion. The point was that it would be able to leverage and crowd in additional funding, and that is where we need to end up.

Thank you very much, convener. I thank the committee for inviting me to the meeting.

In general terms, the finance and economy portfolio budget for next year provides £1.75 billion in total to strengthen Scotland’s economic recovery, with a firm commitment to build a net zero wellbeing economy and to protect and create good-quality jobs across Scotland. Obviously, overall Scottish Government funding for next year is significantly less than that for the current year, with Covid funding having been removed at a time when we undeniably need to invest in the economy and help public services to recover. I think that committee members will want to touch on the on-going Covid impact without our necessarily having the Covid funding to cover that. We also have on-going challenges that are presented by the European Union exit, particularly for our labour market. That means that some really tough choices have been made in the budget, because it cannot deliver the resources that all our partners need in full.

The budget will invest £635 million across our enterprise agencies, the Scottish National Investment Bank and VisitScotland to support economic recovery and transformation. We are providing £124.6 million in total for employability support for those who are most impacted by Covid and we are contributing to our national mission to eradicate child poverty. We hope that that will help businesses to tackle the skills shortages that they are experiencing particularly acutely now.

To accelerate the potential contribution that digital technology can make to the Scottish economy, we have allocated £192 million to improve connectivity and boost the digital economy. That is an increase of £48 million from this financial year, and it includes targeted support for small and medium-sized businesses.

Those are just some of the headlines. The budget is progressive, but it is also transitional, as we are working towards finalising the 10-year national strategy for economic transformation, while we do all that we can to mitigate the immediate impact of Covid uncertainty on the economy.

Alongside the budget, we have published a consultation on the resource spending review. We will publish a full resource spending review in May 2022. I look forward to engaging with the committee on the review in a way that suits it. It will be the first time in a number of years that we are able to embark on multiyear budgeting. I know that multiyear budgeting has long been a request of this committee and others to provide certainty for our public bodies, businesses and taxpayers.