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If I may ask a very specific question, are you as nervous as I am that we are on the precipice of a major problem with fentanyl in Scotland? We have seen what has been happening in other countries. If that arrives on our doorstep and the serious organised criminal gangs find a cheap and easy pathway to get that drug on to our streets, we will not be talking about 1,100 people dying—we will be talking about 10,000 or 11,000 people dying of drugs in Scotland.

Okay. I presume that any underspend on people costs at the end of the financial year is set. There is no rolling over of budget for people, for example.

Audit firms will incur increased national insurance costs for their own staff. Is that factored into the increase that you have agreed with them for the work that they undertake, or will there have to be an NIC increase over and above what you have agreed?

Good—so they should be.

That is very helpful. I appreciate that there are a number of moving parts, and that complexity makes it difficult to take a snapshot in relation to a budget ask and present it in that way. For future years, it might be helpful to get a snapshot of those moving parts in order to see, for example, how the average salary is changing and to get a feel for the number of people that you have and, relatively, how much that costs.

In effect, year on year, you come back to ask for more money for people. That seems to be off the back of annual pay rises as opposed to fluctuations in the types or number of people that you have. The other side of that is marrying that up with the type of work that you are doing and the implementation of automation and AI, for example. I am looking for more of a medium-term strategy, rather than this annual snapshot that we seem to get. However, perhaps that is for another session on another day.

I am glad that modernisation has been mentioned a few times, because I want to talk about that. I have a specific question on this year’s budget ask. Apart from national insurance contributions, the biggest chunk of your 10 per cent year-on-year increase relates to your request for £672,000 for audit modernisation. Why is that a people cost? The commission assumed that that would be a cost for consultancy, an agency, software or development work or some form of pre-implementation cost, but that budget line seems to be a cost for people. Why is that?

How reliable is that estimate? With the greatest respect, public bodies do not have the best track record in forecasting budgets for software and modernisation projects. I am concerned that, although £672,000 this year is a big chunk, you might be loading the costs towards the end of the project and that, in a year or two, we will find that you come back to ask for £2 million or £3 million, because the cost of the whole thing has just ballooned.

That follows on nicely from the chair’s line of questioning with regard to your passing on the uplift in fees, which is much lower than what you are being charged by external companies. What is the strategy in that respect? For example, given that a small handful of very big companies perform the lion’s share of such audit work, is there a risk that, in future, they might simply not bid for it in light of the relatively low margins for such work or the nature of the bodies that they are required to audit?

Sorry to interrupt, but when you answer, I would really like to hear why you have chosen not to go down the fee increase route.

Good morning. You will be relieved to hear that I will ask my questions in two tranches and I will come back in later with the second tranche.

The first area that I will cover is basically about people. At the end of the day, audit work is about people, as much as we talk about automation and software. Let us look at some of your numbers. On page 12 of your budget proposal, you summarise the position on costs and you propose that your people costs will be £25.8 million for 2025-26. To give me an idea of how you perform against budget expectations, can you let me know what the result of last year’s budget is likely to be for people costs? What I am looking for is what you thought you would spend on people in 2024-25 versus what you expect to spend, just to give me an idea of how on track you are with the budget.

When was the £24.6 million adjusted? How does it match up with what you forecast at the beginning of the financial year that you would spend on people?

In your opening statement, Auditor General, you said that you audit 300 public bodies. Half a million pounds spread across hundreds of bodies would not be a huge cost increase for them, would it? Is that not a fairer approach? Ultimately, it is a pass-on cost. Again, there is a slight domino effect to all of this, and we do not really know where all those things will land in the next couple of months. However, it is not as if you are turning up at a public authority and asking for hundreds of thousands of pounds per authority, for example.