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Given the various factors that can impact on capital projects, including some that are geopolitical, as we have touched on, I would not be in a position to say where things will be a year, two years or five years from now. I would defer to the broad suite of independent forecasts and assumptions that are freely and publicly available on these matters.

I appreciate that the role of the financial transactions budget has been a matter of some interest. I think that the notification of the financial transactions reduction was fairly late and that the Treasury agreed to defer that to the following year, given the lateness of the notice. My officials can correct me if I am wrong about that.

I ask Scott Mackay to talk about the engagement that takes place in Government to identify priority spend areas.

On unallocated funds, that ultimately arises from the fact that we do not have certainty on what our final position will be this year. There can be material movements up to the end and, indeed, beyond the end of the financial year. That is just a reflection of the inherent uncertainty in how our fiscal framework operates. Do you want to come in, Scott Mackay?

Again, it is not something that impacts upon discretionary spend but is a technical aspect. I will ask Scott Mackay to comment.

That is what we hope we have achieved so far. I know that there is a strong interest in local government in exploring how we can go further. As part of the Verity house process and the commitment to a fiscal framework, we are committed to that engagement and to having those discussions.

Capital projects have been impacted by what we have been through over the past four years, since the onset of the pandemic. We came out of the pandemic into a cost crisis. It is remarkable to think about the last four years: we had a global pandemic—the worst, in fact, for a century; a cost of living crisis; inflation at its highest level since the 1970s; and major conflict on the European continent. Moreover—and you will correct me if I am wrong—we had the Prime Minister whose tenure, the shortest of any in British history, ended with a catastrophic mini-budget. That is the environment that we are operating in.

Some of those factors are global and macroeconomic and not in the gift of any one Government; some are a consequence of situations that have been exacerbated by or which are directly attributable to decisions that the UK Government has taken. That is the context for all capital projects and all investment decisions that have been taken over the last four years. I think that it is extremely challenging, but we are seeking to work our way through that and to be very transparent about how we are doing so.

Perhaps I can clarify this—indeed, I sought to provide an answer to the convener earlier. That increase came about as a result of pay awards, an increase to appointee costs, inflation elements and other operational costs. In other words, it was all about pay and operational expenditure.

Yes, it is something that we monitor carefully. The forecasts are produced by the SFC. We monitor the position carefully both for our end-of-year management and in looking at the longer-term trends.

On the broader point, the issue of those who are not in work due to ill health is topical and was covered in the press today, but it is also something that the Cabinet Secretary for Wellbeing Economy, Net Zero and Energy, Màiri McAllan, touched on recently in a speech in which she recognised the challenge and considered the role that we all have to play right across Government in supporting more people back into the workplace. The social security aspect is something that we monitor in-year and pay very careful attention to. We focus as well on the longer-term trends, and I know that the cabinet secretary is keen to engage on the broader point about labour market activity.

In saying that we are aware of it, I was just addressing the point that we recognise that issue. Of course, we are considering how the Government responds to those trends going forward. The system that we have in Scotland is still quite young. Of course, we will collectively develop our understanding the longer the system is in place and the further it embeds. We appreciate the points that you articulate about long-term sustainability and resource.

Again, this is something that we are carefully considering that will inform decisions that we take on the budget, but it is important to recognise that the support that has been provided through the social security system is invaluable to the individuals who receive it. It is an investment in the people of Scotland as well. It is important when discussing this matter that we recognise the impact for the individuals who receive that support and do not ever allow that to be lost when talking at a high level about numbers. The point that you make ultimately is that we need to be able to meet this expenditure on an on-going basis. That is something that we take very seriously, both from the perspective of public finances and from the perspective of the administration of the social security system directly.