Felly, sut i'r cyfrwyng i'w gwylliant, Kate Forbes, caffan i'r cysiectriol i'ch gwariaethau. Ms Forbes yn ei gweithio gyrddau SNP a'r dyfrif mlynedd yn Beirion全部llol, a'r Gwelmeich Mannas yw ein minigfairon Ffiscoe honno yn ystod yn cyflaes bwysigol. Ar y dda, nidail yma o hynny, mae yna eu busg yn eu cyfrwyng i'r byw ac mae Ms Forbes I'm sorry that I forgot to be with you in person once again, but I hope that the committee has not started to draw any conclusions that I seem to only self-isolate when I have a finance committee session. I also thank you for your engagement around the budget timetable to date. I know that you asked for a very brief opening remark, but could I set out just but I am happy to be asked to see comments from the committee on scrutiny and I am very grateful that on 9 December we have ju�리 balanced the time for developing our proposals for the budget with the due time for scrutiny. As ever, and the committee will know this, our position is contingent on our settlement from Treasury on 27 October, but at the very least this year, we should have firmer and fuller information for our previous two budget processes. The timing of the UK spending review and the autumn budget seems to be a return to the pre-Brexit and pre-Covid cycle, though I do not have any insights yet into whether that means the Treasury plans an update in the spring. With this budget, the fiscal framework and the wider devolution settlement will continue to be tested with the related volatilities having increased that the levers and the flexibilities remaining and that applies as much to our in-year management with the UK Government repeatedly indicating consequential funding of and I quote up to a provisional amount that is subject to confirmation later in the year by which time the moment has often passed or the need for that funding has passed. So as I always say additional funding is is generally welcome when it comes but the arrangements for confirming it and that's what I wanted to emphasise the arrangements for confirming the funding generally fell well short of what is required especially during a real-time pandemic response. I'll continue to engage positively with the UK Government as we recover from Covid and I had an initial meeting with the new chief secretary last month and I'm a due to attend a finance quadrilateral in the coming days focused on the spending review. We'll of course take our strategic lead from the programme for government and the budget will reflect and fund the government's priorities. As indicated in our recent correspondence we're also continuing to prepare to work in respect of a multi-year resource spending review and we plan to publish a framework for consultation around the time of the budget. Finally I'm also pleased to cover any questions the committee may have on the fiscal framework out-term report and that publication fulfills the government's commitment to transparency in the operation of the fiscal framework providing the Parliament with information to support its scrutiny. The report shows a total provisional reconciliation of negative £14.8 million that will apply to the 2022-23 Scottish budget with final reconciliation confirmed once final out-term data is published later this year. Thank you convener and I look forward to the committee's questions. Thank you very much for that opening statement and in time-honoured fashion I'll start with some questions and we'll go round the table. So we received as a committee some 46 submissions to our call for evidence and the cabinet secretary will not be surprised to learn that amongst those were myriad calls for additional expenditure but the same organisations were much more coy about exactly how much they were calling for and indeed from whom the Scottish Government would or should ask to pay for additional expenditure and often the benefits that were provided in response to questions where that the benefits belong term but the costs would be much more immediate. We've also had Labour politicians seeking a quadrupling of the child payment at a cost of £272 million a year and Conservatives suggesting that the Scottish Government could, if it's so wished, pick up the tab for the £20 a week cut in universal credit at a cost of £461 million so the simple question I want to start off with is how much room does the Scottish Government have for a manoeuvre and what is its priorities in the forthcoming year? Thanks convener and this is a really important context setting question because as I look ahead and I said this at the last committee hearing next year's budget feels like one of the most challenging in devolution now I think every finance secretary has said that since the beginning of devolution but next year's is particularly challenging for three reasons firstly because the costs of mitigating Covid continue with the associated volatility and uncertainty and therefore we need to manage that for example when it comes to self-isolation payments or when it comes to the NHS but secondly we're trying to remobilise all our public services the remobilising the health service remobilising social care remobilising the justice system economic recovery all require financial support but over and above that the final challenge is the funding settlement that we are receiving because obviously there was significantly less but there still was Covid consequentials this year I think it highly unlikely that we will see that additional funding from the UK government to deal with those additional pressures and indeed we're already seeing the UK government pulling back quite significantly for example with the removal of the £20 a week uplift and the end of furlough and so on and so on so I think all in all the costs and the needs are going to continue but the funding available to us is going to significantly decrease and in that you asked well what is the Scottish government's priorities and our priorities are set out in the programme for government and they are quite simply to continue to support families in need who are dealing with the consequences of Covid as well as dealing with some of the inequalities that have been exacerbated by Covid but also to remobilise our public services and to drive economic recovery and those are our three main areas. Just briefly you talked about the Scottish child payment the First Minister has said in the programme for government that we will double the Scottish child payment to £20 as soon as possible and we will outline plans in the budget for how we will do that. I'm so tempted to come back on that last one but I'm going to actually move on because there's a number of issues that I want to touch on so that colleagues can perhaps expand on those. One of the things that we often get at committee and indeed we received it this year was suggestions that more flexibilities provide to for example local government to raise revenue on its own. Has the Scottish government identified additional revenue streams either that it itself could adopt or indeed could be devolved down to local government or will it encourage local government and others to develop their own revenue streams given the financial situation that we're currently in? As you can imagine local government over the last few years in particular has looked quite extensively at ways of generating income. For the most part local authorities have developed their own schemes and we saw that impact acutely during Covid where some local authorities were more exposed to income reduction than others. You'll recall that I put in place funding to cover the fact that some local authorities were no longer generating income during Covid. Local authorities have done that. In terms of additional taxation powers we obviously prior to the pandemic we're in discussion with local government about a number of different local taxes including the tourism levy, which different members in parliament and beyond have different views on. We were looking at the most comprehensive devolution of additional tax raising powers to local authorities since the advent of devolution. Covid has put a stop to some of that temporarily. However, when it comes to additional fiscal flexibilities I am very sympathetic to additional fiscal flexibilities for local government. I think that in calling for fiscal flexibilities for the Scottish Government I think that you'd only right that those are passed on to local authorities and we did manage to secure some temporary additional fiscal flexibilities for local government. In fact we were more successful in securing temporary fiscal flexibilities for local government during the pandemic with the support of Treasury than we were for ourselves. I'm very happy to continue to explore with local government what additional powers they need. I think that I would stress that different authorities have a different balance of income that comes from either different taxes, other fees or charges or income, or from the Scottish Government. I think that that's how it should be that local authorities are able to tailor their income generation approach to local circumstances. Obviously significant multi-billion pounds of consequentials has been received from the UK Government since the start of the pandemic. How much of that is still available to allocate and is there any risk potentially of a clawback? Moving on from that, in terms of the UK health and social care levy, has there been a guarantee of consequentials and when they will be delivered? Thanks. This is a really important question again because last year we obviously had a guarantee, so where money was announced, it was guaranteed to come. Prior to the pandemic, the way in which the UK Government funds the Scottish Government is to make announcements and to confirm that funding at key points in the financial year. In terms of our funding position, we have allocated £980 million of the £1 billion of Covid consequentials in the budget revision, which I imagine you will take evidence on over the next month. The Minister for Public Finance will lead on that. On top of that, we have drawn down £168 million of balances from the Scotland reserve to support the health service and farming in particular. The balance left for formal allocation following this budget revision, which you will take evidence on, is £328 million, of which £250 million relates to capital and financial transactions that are being deployed across a range of pressures for capital budgets such as health, transport, energy and education. Obviously, there is a difference between funding that is allocated formally through the budget revision and our on-going budget management internally in the Scottish Government. Every single penny has been earmarked or has been allocated. It is supporting our in-ear budget position, but where we have not formally allocated funding, we will do so once we have had the reassurances from the UK Government at the supplementary estimate. I cannot confidently allocate every penny without the Barnett guarantee until that funding has been formally guaranteed for me by the UK Government. We expect Treasury to provide an update on additional funding for 2021-22, alongside the spending review in late October. Often, that formal confirmation from the UK Government happens in the days after the spending review, and we will be in discussion with them to get that formal confirmation of our spending so that we can then ensure that the Parliament through the budget revision has a formal allocation of every penny. I will ask a couple of questions on the impact on economic growth of a couple of issues, which are very prominent in the news at the moment. I saw the Prime Minister answer questions on the news this morning, which is skills shortages. We had a significant discussion on that in the hour prior to this meeting with our budget adviser. Skills shortages are acute in many sectors and there is huge divergence across Scotland, as I think we acknowledge. What additional resources will the Scottish Government invest in addressing those shortages and which sectors are being prioritised? Is there a specific focus on geographic areas of the economy? In some areas, there is a surplus labour pool, whereas in others, there is a chronic shortage. There is always a question on economics of demove the people to the jobs of the people. What is the Scottish Government's view of that, given the fact that, when we look at the demographic future of Scotland even over the next decade, some local authorities will have significant population growth, for example, an 8 per cent projected growth for middle-oathing, but a 4 per cent reduction in the Western Isles. What is the Scottish Government's approach to that key issue? I should say at the outset that we, of course, brak Scotland's economic performance very closely because of the implications that it has for not only our revenue position, but also because it is important that we track our performance in relation to the rest of the UK because of the operation of the fiscal framework. Although Scotland's GDP is still obviously below pre-pandemic levels, it is gradually recovering and it is continuing to broadly track the UK as a whole. As you said, convener, the pace of recovery is not just different across different geographies but also different across sectors. Quite clearly, some sectors are more exposed to the bottlenecks in supply chains and recruitment. If you take food and drink, for example, a particularly important Scottish industry is facing severe challenges with rising prices and labour market shortages. On what the Scottish Government can do, we obviously stand ready to do whatever we need to do and can do. That includes close engagement with the UK Government. Richard Lochhead is leading on the labour market shortages working very closely hand in glove with industry to try and intervene where we can. One of our most obvious interventions is around the skills system. However, I strongly emphasise that I do not believe that the shortages and challenges can in any way be resolved through the Scottish Government's budget alone. We have a role to play and we take our responsibility seriously. However, when it comes to labour market shortages, it is well documented that the acute shortages that we are facing right now are largely to do with immigration policy over which we have no control. We can intervene. Some of those interventions may look small but we are doing what we can. For example, funding a marketing campaign in the hospitality industry to try and recruit more people. I am sure that industry will say that that is small fry compared to what they really need, which is the ability to access visas and bring in far more people to work in those sectors. The same goes with supply chains. We engage closely. I have regular meetings with UK Government counterparts, not least on some of the challenges around gas prices. When we have the CO2 shortage, which has been temporarily fixed or resolved, but has not been resolved for the long term, there are two issues. I guess that what I am trying to say is that we can intervene. We absolutely will, but I do not think that anybody is suggesting that the Scottish Government can resolve it. Certainly, from our budget perspective, those issues are much bigger than just financial support. I think that financial support will only go so far. Immigration is obviously one factor, but surely we have to do more to upskill the 4 to 5 per cent of the population that we have who are currently unemployed, particularly at a time when there are a huge number of vacancies in the economy. That is an issue that I would be keen for the Scottish Government to address more. However, gas is touched on and the Scottish Government has a national collaborative framework for the supply of natural gas, and that means that there has been no increase in the wholesale cost of gas since April 2021, and there will not be during this financial year. However, I am just wondering what the impact is likely to be on the Scottish Government next year, because I imagine that we will have to be renegotiated in view of prices and will have a significant impact on the Scottish Government. Secondly, the impact on the private sector, particularly fuel-intensive industries—I have got a number in my own constituency, I am sure that colleagues do too. What, if anything, can the Scottish Government do to try and assist with that particular issue at this time? I guess that you talked about the reskilling that is required, and that is absolutely vital and important. It will not help in the short term, but we need to ensure that the money is going to the people that most need it. In terms of energy costs and fuel shortages, we again engage closely with industry. I guess that the big tool that I have at my disposal right now that I am giving you evidence on is on budget. Industry repeatedly is telling us that they are not looking for necessarily financial support. They want to be able to trade. The economy is recovering. Trade is available. Markets are there, but they cannot meet demand. The difficulty is supply, not demand. When it comes to prices, energy costs and shortages, in our close engagement with industry, they are repeatedly telling us that the solutions to that do not lie with financial grants necessarily. They lie with enabling them to access what they need, which is adequate and affordable supplies. When it comes to what we can do, we will repeatedly engage with the UK Government, but I certainly do not have currently unallocated budget this year to meet the shortages in fuel, because we do not have either consequential funding for that, nor do we have any headroom to provide additional financial support. A couple more questions remain and we will open out to the committee. The first of the two questions is what the level of engagement has been with the UK Government prior to announcing that it will set out a multi-year spending review given the impact that it will have on Scotland's finances? I am very hopeful that I will be able to build a very constructive relationship with the new chief secretary. I had a good first conversation with him just over a week ago and I am due to see him on 14 October for a quadrilateral on the spending review. I will perhaps be able to answer that question better after that meeting on 14 October. I am very happy to provide the finance committee with a rough outline and update of how that meeting goes. I was very pleased that you invited myself, the deputy convener and the convener of social security to a meeting last week to discuss issues around the fiscal framework. I am just going to put on the record the one question on that particular issue, which is that the fiscal framework has helped us through Covid-19 and early months of Brexit, but what weaknesses have been identified in the fiscal framework and how can it be improved and made more flexible? What engagement has there been with the UK Government on the scope of their view and when it will commence? The predecessor finance committee was very helpful in this regard with its report on the fiscal framework, which I know was supported on a cross-party basis. It identified some of the benefits of the fiscal framework, particularly during a year or two of volatility, but also identified some of the shortcomings. We are due to work with the UK Government to commission an independent report of the fiscal framework. I am keen that that report captures all the points that the predecessor finance committee highlighted, and that independent stakeholders have highlighted, like Fraser Vallander. In no particular order, it demonstrates that arbitrary caps on borrowing for both the forecast error and spend are not keeping pace with inflation or the size of the budget or, indeed, the potential size of the forecast error. Secondly, it suggests that our ability to carry forward and manage budget across years is limited. Thirdly, the challenge is when it comes to managing the levels of volatility and risk that we should consider additional levers to help the Scottish Government to manage it. I know that it is a very technical area, and I would be very grateful for the finance committee to continue to consider what it believes should be done on the fiscal framework. I certainly think that we should not make the review or report so narrow that we are not cognisant of what the pandemic has taught us about the operation of Scottish Government finances. I will open up to colleagues around the table, and the first person to ask questions will be Liz. Good morning, cabinet secretary. I will take you back to the programme for government, which you mentioned earlier when the convener was questioning some issues. One of the other things that you said in your speech about the programme for government in terms of trying to encourage economic growth was that the Scottish Government's mission is to create the best conditions for entrepreneurs to see the opportunities to increase production, increase innovation and create jobs. In light of the statistics that you have seen from the Scottish Fiscal Commission, and I am sure that in light of the advice that you have had from your new council of economic advisers, which I think is at July to the autumn that they are providing some evidence, you are not going to tell us the detail of the budget. I would not expect that, but could you tell us where they are trying to focus your attention on the priorities for that economic growth? Thanks. In no number of different points, the first is a real focus on innovation leading to productivity. You will be mindful of that, and we have heard a lot about productivity challenges in the media over the past few days that are UK-wide, but we have a real challenge when it comes to increasing levels of productivity. Those are being highlighted by the population shortages right now. If we are going to be living in an environment where we are unable to access additional labour from outwith the country, it is even more imperative that we are investing in innovation. We are investing in tech, and we are improving productivity levels across the country. That has been a point that has been repeated for a number of years by the CBI and others. We focus on how we incentivise innovation, invest in productivity, and that includes investing in our people. That takes me to the second point, which is our real focus on skills, making sure that we have the right skills in the right places for the right jobs. We have seen not that we are through the pandemic, but that unemployment is much lower than originally forecast. However, it means that there are acute labour shortages in certain sectors, so we need to make sure that, through young persons guarantee and our other interventions such as the national transition training fund, we are reskilling people with the right skills that are required. Those would be two areas that are coming through loud and clear of the conversations that we are having around the advisory council that I am hearing regularly from business organisations and that I would like to see prioritised in the forthcoming budget. That is very helpful indeed. In terms of the reskilling issue, I have heard people like Sandy Bebgy talking very much about the young persons guarantee and working from the perspective that many young people have particular issues at this time. However, there are many other issues about reskilling people who have been in the economy in a job and perhaps who are still on furlough, not necessarily going back to the job that was there before the pandemic. Can I press you a little bit on what priorities you feel need to be taking our attention when it comes to upskilling those who will probably find it very difficult to get back into the labour force? That is a very fair point. Although interventions among young people are important, some of the real challenges are with those who are either facing redundancy because their industries are changing or they have been made redundant. That is where the national transition training fund really comes in, because what it is trying to do is to provide funding within particular sectors to help their people transition. For example, if I take you back to the tourism recovery plan, so bear in mind that was the response to recommendations as established by the tourism recovery task force, which was predominantly industry leaders, they asked very specifically for the need for help for reskilling and retraining. An element of the national transition training fund has gone specifically to help the tourism industry and the hospitality industry to reskill, upskill their staff. They are obviously facing labour market shortages, so it is important that they have the right skills there. When it comes to people who are moving between sectors—it is not a case of upskilling within their sector, but between sectors—we also have support in place and perhaps need to review that support and make sure that it is fit for purpose as we progress through the pandemic, but support to help to take people from where they are just now to where they want to be. The most obvious example of that would be, I suggest, in oil and gas, where not through decisions made by Governments in this country, but through the global reduction in demand for oil and gas, where people have, unfortunately, faced redundancy and providing support for them. It is within industries and across industries that support needs to be made available. The last point that I will make before I stop is that we do, through PACE, which is the wraparound support that is available to employees who are facing redundancy, have specific and targeted training available to help. However, it is a huge challenge to try and equip people with the skills that they need to either transition to a new job or a different job in their own industry. I have a couple more questions. First, I will take you back to the tourist sector. I am told by a lot of tourism bodies in Pershar particularly that it is difficult to get people to take up jobs that are there because they do not actually want the jobs, and that is slightly different from not having the right skills. I wonder what the Scottish Government is doing to address the problem of a latent workforce out there, because if you look at the statistics for employment and unemployment, there are people out there, but, in many cases, they do not actually want to have the particular jobs that are on offer, and that is from the skills agenda. Can I ask you what the Scottish Government is doing about that problem? Yes, thanks very much. It is a really difficult problem to solve, because you quite clearly cannot force people into particular occupations. I think that what we can do, though, and there was a real focus on that in the tourism recovery task forces work, there was a real focus on how to make those jobs more attractive. I previously referenced some of the short-term urgent work that we did with the tourism industry, which was to specifically try to help to recruit to those roles and to present them as an attractive industry to work in. We were happy to do that, but a lot of the tourism recovery task forces work was looking at how to make it a more attractive career option. Rather than just assuming that it is a filler job until you get something else, how do you make it more attractive? The tourism recovery task force, again predominantly industry-based, has a number of suggestions for how to do that, and we have provided initial support, particularly around the skills and training. I know that I am talking about skills and training, but it is also part of the attractive package within the tourism industry, where you feel like you are being invested in and therefore, hopefully, have more of a sense of loyalty and responsibility to the job. I think that terms and conditions go alongside that. Pay goes alongside that as well. Trying to ensure that the living wage is being paid is one small example. It is a huge area and where we can provide support we will, whether that is financial support or working with the industry to implement their recommendations. That work is very much being industry-led and I think that that is important. My last question is very much about tax revenues. We have heard from many witnesses before this committee that there are demographic issues in Scotland's ageing population, therefore working population being squeezed. In terms of the overall perspective of the budget, where do you see, from a Scottish perspective, the greatest possibility of raising tax revenues, which would help in terms of Government spending? There are two parts to that. First, we need a growing economy to ensure that there are tax revenues. I am a firm believer in the notion that if businesses are doing well, they are trading well and they are paying their taxes, we have a secure source of revenue. That was the reason why we extended non-domestic rates for a full year. We could have implemented non-domestic rates perhaps halfway through the year when signs of recovery were obvious. I wanted to extend it to a full year to maximise the time for industry to recover. We will be cognisant of that as we go into the budget. How do we ensure that our taxation enables businesses to fully recover and clearly, since the pandemic, there have been other challenges facing business, not least the shortages, which perhaps have hindered their ability to trade fully? The second point is to continue to use the mix of tax that we have. We obviously have limited income tax, we have non-domestic rates, which is often considered as the primary business tax, although it is a property tax. It does not allow for much room for manoeuvre, to be honest. From that perspective, we know too that it is our relative performance to the rest of the UK that really matters when it comes to income tax. On both of those taxes, I do not see huge room for manoeuvre just now, not least because we do not have allowances, we do not have incentives when it comes to income tax, and we have to be mindful of how it interacts, for example, with non-national insurance contributions and on non-domestic rates, because it is a property tax, not really a business tax. In economic growth will be my first answer, and my second answer is that there is no room for manoeuvre on tax policy. John Finch-Ros. Thank you very much, convener, and good morning, cabinet secretary. There are just so many areas here, but to take up something that has been mentioned before would be inflation, and we had a bit of a discussion with our advisers previously about what is short-term inflation, just because people had savings and they have all rushed out and bought the same kind of car, so there is a shortage of cars and the price goes up, but presumably that will come down. However, other things such as the gas price could be staying higher for longer. The whole thing with wages, if we are short of staff, does that inevitably lead to inflation? Therefore, what impact would that have on Scotland and the Scottish budget? Presumably, if the hospitals or the shops all start paying more wages, we would have to pay nurses and everybody else more wages. Do you have any thoughts about inflation as to whether you feel that it is a major problem or is it quite minor? It is a very significant consideration in our budgeting. You have mentioned a number of ways in which it has an impact on our budget. Perhaps the most obvious one is when it comes to pay, because a significant percentage of our budget is spent on people—staff in our NHS, local government and public bodies. That means that public sector pay is an important element of our budget setting, and it has been a big focus of previous budgets. You have to be mindful of inflation when it comes to public sector pay policy. Obviously, there are other implications when it comes to inflation, but I suppose that, as you will know, it has an impact on costs. Therefore, to achieve our policy aims or to build the infrastructure that we want to build, we cannot escape the impact of inflation. I wonder whether it is an area without putting it on the spot that Dougie might want to come in on, if you would like to hear from him. Not too much to add. Clearly, we and others look very closely at the Bank of England's outlook, and they have been projecting that CPI inflation will rise to at least 4 per cent at the end of this calendar year and continue into the new year. Just in the context of public sector pay, it is clearly a time when many, most indeed almost all, workforces will be looking to renegotiate new deals that are fair, sustainable and affordable. With the devolved public sector pay bill being such a significant part of the Scottish Government's resource budget, that is a really important issue for the budget. Last point is that we will wait and see what, if anything, the Chancellor says later this month on his underlying public sector pay assumptions for his spending review. He might say very little, but we might get some insights and, of course, we will ask. However, the way that the Whitehall departments pay remit cycle tends to go is that they tend to negotiate their respective pay deals a bit later in the year than we do, and we kind of have to go first with the settlement that we have, so we will be watching that very, very closely. Okay, well thanks both very much for that. If I can move on to a different subject, that would be capital expenditure and borrowing. Now the fiscal framework out on report shows that we are increasingly nearing our limit on borrowing, which I think is £3 billion, and the forecast is that it would be 82 per cent by the end of 2023-24. I just wonder if that is going to cause us problems. Assuming that the fiscal framework does not get revised, which is a separate question, but if we are going to hit this limit, what happens then? Well, I suppose that the short answer is that we won't, if we continue on the trajectory of that was set out in the medium-term financial strategy, because we can't. We have to allow for headroom, we obviously have to manage our budget in a way that allows for unforeseen circumstances, and the medium-term financial strategy set out our approach to borrowing, and clearly the next medium-term financial strategy will set that out as well. That doesn't mean to say that we couldn't use additional borrowing powers if the cap was higher. I believe that our borrowing powers should more be in line with what local government has around borrowing powers, which is based on affordability rather than on an arbitrary cap, because arbitrary caps don't take into account the changing nature of the challenges, the economic imperatives to invest or to not invest, and local government's prudential borrowing scheme is based on affordability rather than on arbitrary caps. I think that it's an argument for something that is more akin to what local government has than on arbitrary caps. That's certainly something that I'm very much in favour of the prudential framework as well. Have we any indication from Westminster that that's the kind of thing that they would be willing to discuss when the fiscal framework is reviewed? I'm certainly hoping to discuss it. We're not getting a huge appetite, as it were, for change. I've certainly not had much evidence of an appetite for change during the pandemic when we looked for temporary fiscal flexibilities. I think that that's unlikely, but I think that there's an opportunity for civic Scotland, if I could say it like that, on a close party basis to come to a position on borrowing, which is actually good for Scottish businesses and the Scottish economy, and it isn't new because local government already has it. I should say that, obviously, the Scottish Fiscal Commission has to judge our projections of capital borrowing and their most recent report said that they thought that capital borrowing was reasonable. Thanks again very much for that. To move to a different part of the fiscal framework out on report, social security, if I'm understanding the figures correctly, some of it is quite complex, I can confess. The forecast in the 2020 budget was expenditure of £3.212 billion, the outturn was £3.262 billion, which is £49 million more. Is social security so early on that we can't really say what's happening with it? There's been a lot of changes, some things we didn't take on quite as quickly as I think we'd hoped. Covid must have had an impact. Or do you think that we are going to struggle going forward to stay within our budget on social security? Discussions about the fiscal framework have often focused on the volatility inherent in tax forecasts, and perhaps we've focused less on the inherent volatilities in social security demand. I think that there are two reasons for forecast error when it comes to social security. One is that we've been through quite an uncertain 18 months with Covid, so it would make sense that getting a grasp of what demand truly is has been challenging. Secondly, it's likely, and I think that the SFC's forecast illustrated that as well, that demand for social security is going to increase. That bearing in mind that revenue borrowing for forecast error is capped £300 million. That needs to cover not only tax volatility but also social security volatility. Because it's a demand-led budget, we must fund it. We have an obligation to fund it. There are two challenges. One is that, from a fixed budget, I've got to fund what is quite a significant demand-led budget line. Secondly, when there are errors in the forecast, the limits on our revenue borrowing for forecast error are quite low. It is an area of concern in ensuring that we can continue to meet that demand-led, which we are obliged to do and which we must do. Secondly, if we don't have any capacity in the revenue borrowing limits, then we have to fund that forecast error from within our budgets. I think that there's quite a lot in there. We could explore that further, but I'll move on, just because I've got one other point that I wanted to raise, which was the recent national insurance increase at Westminster level, or I believe that it's called the health and social care levy, or we'll be called that. Are we clear now as to exactly what Scotland is going to be getting from that or how that's going to work for us? Yes and no. I wrote to the UK Government in the immediate aftermath of the announcement on the health and social care levy to seek some clarity on various points. I must confess that the answer that I got didn't give me any of those answers. The big question for us remains what will we get in additional consequentials? In the past, when there have been announcements about increased spend in health and social care, which have generated consequentials, we have later on discovered that it's netted off funding that was due to come anyway, so it's not all additional. We have what the UK Government has publicly announced for Scotland that the big question on 27 October is will that all be additional, or will some of it be netted off decreases in other health and social care lines, so it's not, for example, a net additional billion pounds? Okay, that's great. Thanks very much. Thanks very much. Ross, do we follow by Douglas? Thanks, convener. Morning, Cabinet Secretary. I was keen to discuss with you the effect of the arbitrary cash terms limits on the fiscal framework, but I think you've covered that with Mr Mason. Moving on to the issue of non-domestic rates that you touched on in your answer to Liz Smith, the total value of non-domestic rates relief through the various schemes that are on offer in Scotland comes to something in the region of £700 million. That was expanded during the pandemic, for example, to the newspaper industry for obvious reasons. That was an issue that was twice unanimously supported by Parliament. Given the range of options for non-domestic rates relief, what evaluation has the Government done on the effectiveness of those various schemes? It's a very good question. We have commissioned work from the Fraser Rounder to review the effectiveness of the small business bonus scheme in particular, and that work is on going to review how effective it is in meeting its policy objective, which is obviously to help small businesses and has a huge role to play, particularly in local economies and on our high streets. That would be the primary review that is on-going, but we are asked on a regular basis for additional reliefs. We have reliefs in place for hydro, for new buildings, for recent occupied buildings, and all of them have to be reviewed on their own terms. For example, the business growth accelerator, which incentivises new bills or the fresh start scheme, which incentivises tenants to occupy previously unoccupied buildings, needs to be reviewed on their own merits. We consider every budget period again whether that is the best use for our limited funds or whether there is another way to meet those policy aims, which I think that we would all agree on through other use of the funding. That regular review is really important. I will check when the Fraser Vounder review is due to report. That is a good question. I might have to write to you. It was due a number of months ago but was delayed because of Covid in that we wanted to make sure that the reviewers were getting access to small businesses and ensuring that they had comprehensive data. I do not know if any of my officials know when we have confirmed an updated timetable, but, if not, I will come back to you in writing on what the latest deadline is. Excellent. That is appreciated. You mentioned the regular requests that are made for additional rate relief, which is absolutely the case. Recently, there have been more requests than I have noticed in previous years for additional conditions to be placed on rate relief. For example, in the SDUC's evidence to the committee, they have proposed conditions around fair work, living wage, etc. Alcohol-focused Scotland has proposed a public health condition that is levied against licence premises. Without commenting on any of the specific proposals that have been made, although you are welcome to, if you wish to, does the Government have a position to make on the principle of additional conditionality on rates relief, particularly given the challenging fiscal situation that we are looking at overall in the coming years? Let me answer that in two parts. One is that I am very supportive of the principle of conditionality across all Government spend. I think that we should look more carefully and we have committed to doing so as part of the co-operation agreement to consider where we can embed conditionality in a proportionate fashion. The second part is perhaps more disappointing, which is that I have looked at non-domestic rates through every lens for how we can expand conditionality. It is extremely challenging, if not impossible, in places. I think that we put a huge burden on non-domestic rates, which, bear in mind, is a property tax because we do not actually have any other form of business taxation in Scotland. Non-domestic rates, which is a property tax and is not a business tax, is very difficult to use conditionality in non-domestic rates for any other reason than conditions related to the property itself. Non-domestic rates are based entirely on the rental value of a property, what that property might get in the open market and then that supply to the poundage. Therefore, non-domestic rates were never established to take into account income generation. It was never based on employees. All those other conditions that you might want to attach to reliefs are almost impossible for a property tax. That is not to say that we have not looked at that. During the pandemic in particular, I was very keen to see if there were any other conditions that we could attach. Right now, the methodology for non-domestic rates, the way in which it is collected, the whole principle underlying non-domestic rates means that it is almost impossible to attach conditions that are not specifically related to the actual property. People might argue that overhaul non-domestic rates set up a taxation regime that is based on income, it is based on other factors and that is a perfectly legitimate argument to make. However, because it is a property tax, I think that we looked at non-domestic rates to do more than it was ever set up to do or that indeed it is capable of doing because it is the only form of semi-business taxation that we have in Scotland. The second coronavirus act that Parliament passed last year included conditions around the awarding of businesses of Covid relief grants, specifically in relation to tax avoidance, which is timely this week, given the Pandora paper's revelations. Accepting that is a particularly challenging area to review the effectiveness of because you would hope that the net effect is such businesses would not bother trying to apply in the first place. Has any attempt been made at evaluating the impact of attaching a tax avoidance condition on government grants? Yes, in short, and indeed to non-domestic rates as well, just to link in with your previous question, because the Barkley review of non-domestic rates specifically talked about what powers in Scotland we might have to crack down on tax avoidance. That was incorporated and again, happy to send the committee more information about non-domestic rates in relation to a general tax avoidance provision. However, when it comes to our own—and you will remember when it came to the discussion about tax havens—there was a lot of public debate as to whether the Scottish Government actually had the powers to do it or not. Where we have powers are where we have softer means of cracking down on tax avoidance, we will. However, they are ultimately reserved. When it comes to having real teeth to crack down on tax avoidance, those powers are still reserved to the UK Government. I was pleased to hear what you mentioned earlier about potential increased flexibilities for local government when it comes to raising revenue. Just wondering if you could expand a little bit more on when we might see that, whether that would be part of the budget-setting process or whether that would be part of the local government fiscal framework that I think is still in development. Could one of those flexibilities be the removal of the council tax 3 per cent cap? I think that your question highlights that there are some areas that can be actioned in budgets from year to year. You talked about council tax, but a fuller conversation about the right mix of powers and flexibilities are rightly for the fiscal framework discussions in collaboration with COSLA. Perhaps they have not moved at the speed that either party would have liked largely due to Covid, but I am certainly committed to getting them back on track. In terms of council tax, our position on council tax specifically will be set out in the upcoming budget, but I can absolutely assure you that that budget will only be set after extensive consultation with COSLA's finance spokesperson, Gail MacGregor. It's a good idea to pick a little bit more on the back to the timetable, because it was something that I raised at COSLA a couple of years ago and it still hasn't progressed. To get your opinion, when you might think that that might come back to be approved by the Scottish Government and COSLA? Yes, because there are two parties involved and you'll be conscious that there is quite a lot of change of food for local government over the next year, I think that we could make some progress prior to local government elections, but I imagine that it will be one of the first areas to pick up post-local government election. We are absolutely committed to undertaking the work with COSLA to develop that rules-based fiscal framework to support future funding settlements. I think that the other part of this, which is not a cop-out, is that one of the big asks that local government want and need is the ability to set multi-year budgets. Along with the additional flexibilities is the ability to know what is in a budget from year to year. I sincerely hope that the resource spending review that we will set out will allow local government to look three years ahead from year to year. Sorry, we seem to have lost the cabinet secretary there. He back, Kate? Sorry, I didn't quite catch that, I'm afraid. No, sorry, cabinet secretary, you broke up there. I don't know if it's just me or whether those others, but I'm struggling to hear the committee. Okay, I'll try to move on anyway. In the framework out-turn report, it talks about air passenger duty. There was obviously a consultation done between March and June. It was really just to get some idea when that may progress or not. Yeah, so you'll recall that air passenger duty was—we're all set to devolve it when we discovered a pretty major issue around subsidy control in relation to the Highlands and Islands air discount scheme and the exemption there. We were in extensive conversation with the UK Government as to where that would sit and couldn't expose our finances to the potential liability before that issue was resolved. It had to be resolved with the EU. Clearly, in the last six to nine months, that fundamental issue has slightly moved because of Brexit. In terms of progress, it will be something that we want to progress as part of the discussions about the fiscal framework. Ultimately, the challenge was to do with the Highlands and Islands exemption and the need to resolve that before air passenger duty was devolved. I guess that the answer is that it will be part of the next fiscal framework and dealt with in that. Yeah, it doesn't need to wait for that. Conversations continue with the UK Government. We are still fully committed to devolving it. I think that the two issues would be, first of all, we were making quite good progress on trying to resolve the Highlands and Islands exemption and then not to keep using Covid as an excuse, but Covid did strike. A lot of those areas that were being progressed at pace prior to Covid are now being picked up on, but because we have a wider conversation about the fiscal framework, it makes sense to have those conversations in that context. The next question that I had was that we have had many witnesses come to committee and tell us that to meet our ambitious net zero targets that we have set will require a huge amount of investment. Would it just come out in the budget about commitments that are already in place? Would some of them have to be removed to meet that new commitment? Thankfully, when it comes to our commitments to net zero, there are two areas that are already highly visible. One is the capital spending review. That was completed last year and published alongside the infrastructure investment plan. That gives the long-term, multi-year view of investment in infrastructure. I do not know whether that came through in your committee evidence or not, but one of the primary drivers when it comes to that shift to net zero will be investment in low-carbon infrastructure. We talk at length about the need for a transition in transport that requires public sector and private sector investment in transport systems, the same with heating and power. That capital spending review stands prior to the budget, and the budget will action the next year in that capital spending review when it comes to investment in low-carbon infrastructure. That was accompanied by a £2 billion low-carbon fund to try and accelerate investment in low-carbon infrastructure. The next thing is the programme for government and the green co-operation agreement, which is quite clear about where we need to make those shifts. The budget is just the power behind the programme for government. It enacts the programme for government with real money out of a challenging settlement. Do we see commitments such as the dualling of the A96, for example, having to give way to meet those other new commitments? No. As a Highlander, who knows how important those roads are and who drives up and down that A9 far too often to count, it is really important that we continue to invest in Highland and Northern and North-East communities. Just perhaps following up from one of the themes that Ross was following up around tax avoidance, my understanding is that the historical dispute that goes back to the further devolution concerning proceeds of crime that the 30 million figure that was originally assumed to remain with the Scottish Government and now is assumed by the UK Government to go back to them, resulting in a dispute. Is that still the case? What further insights can you give us to any discussions that you have had with the UK Government on that issue? Can I confirm further that, even if you invested in moving resources from Police Scotland into finding more financial crime, none of the benefit of that would accrue to the Scottish Government budget? That is me just clarifying my understanding. You are right that this is primarily a justice issue. Ultimately, when it comes to policing, the responsibility lies with HMRC and companies house, which are reserved under UK Government competence. Police Scotland has a role when it comes to any suspected criminality, but on funding itself, where it is a reserved matter, it will be funded on a UK-wide basis, rather than consequential funding being generated for the Scottish Government. Come back to me if I have misunderstood any element of your question. I am trying to make the point that, given the dispute that is in place at the moment around no detriment, where the Scottish Government to discover more crime, even if it was able to, which is many areas that it is not able to, it would not get the benefit of that increased funding from proceeds of crime, because it would all be offset in terms of the overall budget. I am just clarifying whether that is my understanding correct. We currently believe that, when it comes to the application of block grant adjustments for the proceeds of crime act revenues of £4 million per annum, it breaches the Smith's commission no detriment principle. That is because we think that funding should come to the Scottish Government, but in terms of how we are going to resolve it, I previously wrote to the chief secretary for the Treasury to try and progress a resolution of that issue. We have agreed that it should be resolved as part of the fiscal framework review, so it is still an outstanding issue. It is obviously quite a highly technical area. I wonder whether Clare McManus wants to come in with any further information that I have missed out. I think that you have covered everything. As the member mentioned, prior to the fiscal framework agreement, there was a £30 million cap on revenues that were never breached. That is the basis of the current dispute. As you have mentioned, both Governments have agreed with the ST to consider that as part of the fiscal framework review. I wonder whether, following on from that and perhaps picking up what Ross was talking about in terms of tax avoidance, it is not just tax avoidance, it is unintended consequences. We know that there are huge issues with the likes of many umbrella companies, particularly we have seen coming off the back of the Covid pandemic. We know that there are huge issues with Scottish limited partnerships being used for money laundering. My understanding is that none of those areas reside under something that the Scottish Government can do, even though, clearly, if you take an international perspective, it affects our international brand as a place to do business. If people can freely use very loose arrangements such as Scottish limited partnerships, can you confirm my understanding is correct? Also, would there be other vehicles, even in the form of soft power, to use things such as Scottish limited partnerships, such as the Law Society of Scotland, for example? I appreciate that this is straying into justice, so you might want to decline answering that, but just to give a sense of that, if you could. In short, your characterisation is accurate. We have, where we can, used softer powers to try and crack down on tax avoidance. I would say that what we have seen from Revenue Scotland, since it was established, is a firm and effective approach to tax avoidance, because it is working collaboratively with other public bodies, for example SEPA, when it comes to landfill. Those taxes are small in the grand scheme of things, although they are important for the Scottish Government. However, we have seen from the beginning of Revenue Scotland's time and other devolved taxation that we have taken a much more robust approach to tax avoidance. However, you are right in saying that that will only be based on soft powers rather than on actual legislation, because, ultimately, tax avoidance is a reserved matter. My last question is about the difference between accountability and responsibility. If you look at things such as the national performance framework, the Scottish Government takes accountability for many of the outcomes and is very outcome driven, but all the discussion today has been about the areas where the Scottish Government has responsibility and has no responsibility despite having accountability for a whole range of areas. We have also got the reverse situation where the UK Government is accountable for many areas but is not responsible to the Scottish Government and the Scottish Parliament in terms of scrutiny. Just for the record, if you were to have a choice over those areas that responsibility was aligned with accountability, what top three areas would you pick, given the considerable challenges that we have economically, which should be explored extensively today, near-term and longer-term? What would be the three things that you would like to put on the record? That is a great question. From a technical perspective, being able to have a wider mix of tax powers would be far more effective in managing our budget and managing the economy. Right now, when it comes to business support, we have spent a number of minutes talking about non-domestic rates, despite the fact that it is not a business tax, it is a property tax. Having a broader mix of tax powers, having all the powers associated with income tax, as well as a wealth tax, perhaps capital gains, understanding the interactions and having responsibility over the interactions with things such as national insurance contributions between that and income tax. My first ask would be to have a far more comprehensive toolbox at our disposal when it comes to tax powers, so that we are not basing all our action on a few narrow taxes that cannot bear the weight of what we are asking them to do. That is certainly true of income tax, and that position is pretty universally shared amongst tax professionals. The second thing is to manage volatility and manage our budget from year to year. The notion of having an arbitrary cap of £300 million purely for forecast error is hugely detrimental. It reduces our ability to plan ahead, and it also means that, where there is forecast error that exceeds that £300 million, as we have seen in previous years, we have to use actual money that could otherwise be used for public services to deal with that forecast error. The ability to manage our budget in year and from year to year needs to be considered. The final point would be a prudential borrowing scheme that is based on affordability. We already have to base capital borrowing decisions on affordability. I have to deal with the revenue consequences of capital borrowing in future years. I know that the medium-term financial strategy sets out how we are managing it. The notion that, if we had borrowing powers for some reason, we would not use it prudently, does not bear up to scrutiny, because we have had to do that in part with capital borrowing. All that we are asking for is something similar to what local government has around prudential borrowing. Those would be my three items on the wish list. In some ways, I would like to pick up some of the points that you were just touching on. I am very interested in ensuring that we develop the fiscal framework and the budget processes around block grant, because I believe that that is the way in which we strengthen the devolution settlement. That is certainly my overarching objective. However, I was just wondering whether I could test some of your assumptions and assertions. Stepping through what you have just asked for, the prudential borrowing makes a bit of straightforward sense, but, stepping back, income tax revenues are approximately £12 billion to the Scottish Exchequer. Your ability to borrow against that forecast error is around £300 million, so that is about 2 per cent. If I am looking at the forecast errors in the recent forecast, they have been a little bit less than that. Is that a real issue or is it a notional one? If it is real, could you give some examples of where you have essentially hit your headroom on that borrowing limit? I am just bringing the issue to life for me is what I am asking. I bear in mind that the forecast error—I may ask officials to come in on that as well—is to give a straight back technical answer. Our Scottish Fiscal Commission analysis shows that income tax reconciliations could exceed Scottish Government borrowing powers up to four times every 10 years. That might not feel as tangible as you need it to do. Our analysis suggests that there is up to a one-in-six chance that funding volatility as a result of income tax forecast error would breach the current limits of our resource borrowing powers. However, you have got to also remember that those borrowing limits have also got to cover forecast error for other devolved taxes and also for social security benefits. You cannot just look at income tax when it comes to forecast error. Governments around the world have got to manage their budgets within fiscal rules, and that is right and proper. However, the difficulty for us is that we are dealing with a fixed budget. We would still have to take a prudent approach to how we spend our money, but what we are talking about here is the ability to use our spending power for public services rather than trying to resolve errors through no fault of our own from previous years. When it comes to this year, the reconciliation applying to the 2021-22 budget is higher than the current borrowing powers. It is from memory—although somebody can correct me— I think about £319 million. That is higher than £300 million. It does not get more tangible than that. The only reason why it has not breached borrowing powers this year is because of the Scotland-specific shock due to a timing difference between our forecast and the UK Government's forecast, allowing that resource borrowing limit to be increased on a temporary basis. Perhaps if anything, this year's position demonstrates why it was essential that we see the borrowing limit increase on a temporary basis, and that increase should be made permanent.  I would like to see the analysis. I understand the fundamental point. It stands to reason that, when your revenue is based on forecasting, any forecaster is going to have a margin for error, and that, essentially, the borrowing power should be in line with what that margin of error is. That is the fundamental point. I guess that what I am interested in is the hard analysis of the quantum of that and how far away the Scottish Government is seeing that borrowing power. I mean, just take it as red. I understand that having it as a hard nominal limit does not make sense to me, but it is just a question of what order of magnitude should that be. However, if I could move on to the associated point—and I think that this is in a sense almost more important—again, you were stating that one of the issues that has been faced over last year is understanding that once announcements have been made, forgive the shorthand when you can bank them. Again, I recognise that it is an exceptional year, but sometimes exceptions come along. I have two questions. First of all, how indicative of that is that of a general issue that you have in terms of funding coming through the block grant and the predictability that you have? What is the actual substance of that issue? Is it simply that the Scottish Government takes a very cautious approach and wants to see the ink dried on the bit of paper before it actually starts actioning that funding? Or is it actually that you do not know until the cash hits your bank account that you are definitely going to get it from the Treasury? I am guessing that there is a range of possibilities in between those two points. Again, if you have any specific examples of where that has caused a problem and the money has been less than you were anticipating, that would be quite useful to have on the record. In short, we are not cautious when it comes to getting money out to the people and the services that need it as soon as we can. Where that issue has been exacerbated during the year is because of the level of volatility. Again, just stating the basics, which you will forgive me for, but to build up the argument, we cannot overspend our budget. At the end of the financial year, I have got to bring a budget to Parliament through the out-turn statement, which does not overspend and the Treasury would not look kindly on us if we overspend. In your budget management, it is all about trying to maximise the spending power for the services that need it or to meet the asks. Every day in Parliament, there will probably be another ask for where we need to spend more money. To maximise our spending power on where the budget is required, but at the same time, to come in on budget. The difficulty is, during the year, with volatility, if the UK Government announces, let's take the announcement of the health and social care spend. We were told that it is up to £520 million. It will confirm that at the main estimates. The final confirmed position will probably be January, February and March. If all that £520 million is already spent on the important services that it needs to be spent on, and we will spend that, we do not reach into what I am saying is a lack of commitment to spending the money that needs to be spent. In January or February, we are told that we are going to get £400 million in consequentials because the UK Government equivalent departments have not spent the full amount that would generate the full £520 million or because it is recycled funding. I suddenly have a shortfall of £120 million, which I need to find with only a matter of weeks to go before the end of the financial year to ensure that our budget comes in on balance. That is the level of risk. Knowing that that will be the position, we are managing our budget in the year on a daily basis to try to maximise the spending power, while at the same time being cognisant that, once it is spent, it is very challenging to meet that shortfall. A real example was £25 million for education, so there was an announcement by the UK Government of Funding for Education, which is very welcome, and we passed on that funding to education. At the May estimate, we discovered that the position on that funding was £25 million less. That means that that is £25 million that I actually will not receive that I have already passed on. It is not a complaint, it is just a request for more levers to manage that level of volatility to ensure that we come in on balance. Last year, the Barnett guarantee said that there will not be negative consequentials, we are not going to claw back what we have announced. That meant that I had total reassurance that, when £25 million was announced, that £25 million could be passed on without the fear that it may be less than that. That Barnett guarantee has been taken away this year because the UK Government's volatility is such that it cannot predict with any degree of certainty what UK departments will spend. That is where the increased volatility this year has made it very difficult. We managed that volatility internally, but it makes it more challenging. For any Government in this role, I think that there would be huge value in more tools to manage the volatility. I guess that any budget process will be volatility that is external and internal. One of the corollaries of what you are saying is that you would find it useful if the UK Government was more transparent and predictable in terms of the way that it followed through on its spending. I wonder if that is correct whether or not the same is true for the Scottish Government. I am just thinking about some of the recent comments that were made by Audit Scotland about transparency. I was in particular interested by some of the things that they said in their recent report about those matters, saying that budget revisions are managed across Government, which means that it is not always possible to establish the details of reprioritisations within directrits. To my mind, that sounds a little bit like the situation that you were pointing to with the UK Government. I am just wondering whether there is an issue there about the need to track budget changes within directrits, whether there is an opportunity to improve the systems that you have in place. Again, one of the suppositions that Audit Scotland was making was that the data is there, but you are not able to report on it. Thinking about your relationship with the UK Government and your own practice, do you think that there is scope along those lines to improve transparency and disciplines regarding budget reporting? I am certainly open to any suggestions, and we will give this more thought about how we can be more publicly transparent in the budget. What is required is probably more of a mature debate about the realities of budgeting, because, quite clearly, a lot of our budget is demand-led. We saw, if you take some of the business support, where budgets were demand-led. For example, we announced £50 million, and only £40 million was spent, because that exhausted demand, and there were accusations of underspending the budget. That is the nature of budgets, where it is demand-led. Sometimes, a demand-led budget can exceed the budget that is allocated, and we have to manage that. Sometimes it can be less than forecast. Budgets are a very movable feast, and budget revisions, which are usually twice a year, with the exception of Covid when it was three times a year, are just a snapshot in time. It is a snapshot in time, and therefore it requires as much certainty as possible when we publicly publish that. Reflecting just finally before I stop on your point around the UK Government, I am actually quite sympathetic to the UK Government's position, which is that you cannot say to the penny how much you are definitely going to spend over a year at the beginning of a year, or even at any point in a year, because who knows what might happen. Fuel shortages might happen, or there are other decisions that you need to respond to. Budgets are always going to be slightly movable feasts. I think that my difficulty is not the nature of the movable feast, because it is a fixed budget that must balance. It therefore means that you are managing a very volatile situation with very limited levers. To go back to your question, if there is more that we can do around transparency, I am open to that. If there is more transparency that we can build into the budget revision process, I am open to that. I know that you will be taking scrutiny off. You will scrutinise it in the coming weeks, so perhaps there is some feedback from what you will scrutinise that could inform future budget revisions. Just to follow up on that first, my final question, I guess what I am speculating is whether or not, both for the UK Government and the Scottish Government, by the more robust, regular and detailed reporting on budget and spend through the year, might help matters along with—I totally accept that much of Government is demand-led, and you cannot guarantee that you will spend a certain amount, but what helps you to manage a situation is by having robust reporting and tracking. That is true in the private sector. When your business is being dictated by whether or not customers spend money with you, that is much less predictable than anything that the Government does, I would suggest. It is just a question of whether or not that is an avenue for improving things for both Governments. That is explaining where I am coming from on that. My final question comes back to some of the questions that we have been having in recent weeks about outcome-led budgeting and thinking about where we are 10 years on from Christy. Given that the medium-term financial plan is being developed and published, I wonder whether that is an opportunity to recast what the Government is intending to do in the medium term around those outcomes and objectives. Given that much of the commentary that we have been receiving in terms of written and oral evidence, it is that unless you bake those objectives into the way that the Government budgets and organises it, you are essentially providing commentary rather than driving change towards those objectives. Is that going to be your approach? Is there more that can be done both in the MTFS and beyond it to bake those objectives into the way that Government budgets and organises it? In short, if I were to summarise what you are saying, our budget choices need to be aligned to the national performance framework. That will require difficult decisions as to where we put the money, so that, for example, the big debate about preventative spend, putting more investment upstream to change the outcomes is important. I think that there is an opportunity to do that with the resource spending review in quite a significant way, because that will be multi-year. Most of the outcomes that we are talking about will not be delivered in the space of a year. Changing health and social outcomes, for example, is a multi-year initiative. The resource spending review allows us to do that by looking at how the compounding effect of multiple years delivers that change. However, the challenge that I put back—I cannot recall whether I did it at this committee or the local government committee—is that the nature of our debate in the Parliament needs to reflect the magnitude of those choices. For example, if you are to spend more money in active travel, it has to come from somewhere. If you are trying to recycle money from, say, acute healthcare to active travel—I am just using that as an example—we have to have a mature debate. Opposition has to scrutinise in this fashion and the Government has to present a more mature debate about where that penny is best spent. There are not unlimited supplies of funding, which I know that we all know. If we think that it is important to invest in prevention, rather than in pure, then that will require money to be shifted. Every time I stand up to present a budget that displays any reductions at all, those are immediately latched on to and criticised. I think that we need a mature debate. We certainly need to be pushed, as it were, by the Opposition to contend with those issues, and I think that the Opposition needs to reflect that too. That might be why I was asking questions about medium-term spending plans. Thank you very much for that. Disinvestment is always the key issue in terms of prevention, and we will look into that in the months ahead. I have some short questions from me, cabinet secretary, to finish off. One is with regard to the fiscal framework. We have obviously touched a lot on issues in relation to borrowing, et cetera. Five years ago, when the fiscal framework was agreed at the 11th hour, the budgets were set in stone at the limits. Since then, there has been a 9.2 per cent erosion in terms of inflation. One of the asks to take it in terms of the review from the Scottish Government is that any limits that are set should be indexed linked to inflation, would you be right? At the very least, but basing limits on affordability, rather than arbitrary caps, would be my default position. Indeed, thank you very much. We talked about demographics, skills and jobs, but the Scottish Government has a young person's guarantee in facing a reduction of 60,000 workers in the 16 to 64 age group between 2020 and 2026. What does the Scottish Government do to focus on, for example, the 55 to 67-year-old age group that has a lot of skills and experience? Many of them are very reliable. How will the Scottish Government work to try to get some of those people back into the workforce, or, indeed, retrain? I think that the primary means, but not the only means, is the national transition training fund. That is supporting those who are unemployed at risk of redundancy or who need to upskill or retrain. That would be the primary means of reaching that age group. There are other schemes, so that no one left behind is about trying to support people who are furthest from the job market for a whole host of reasons that we could go into to help them into work. There are a number of different schemes, but the one that I point you to is the national transition training fund. National insurance will impact on the public sector in Scotland to the tune of around £151 million, with £67 million, national insurance on the NHS and £31 million on local government. The UK Government, I believe, is going to guarantee that. Have you had any guarantees that those consequentials of £151 million will come through? Also, can you advise what impact you feel that the national insurance levy will have on the private sector in terms of economic growth and jobs growth in Scotland? On the guarantee, the UK Government has announced what it believes will be generated and what will come in consequentials. However, where I encourage the committee to scrutinise what is finally announced is to make sure that that, if it is a billion, is all additional and it is not netted off elsewhere. That remains my concern. We will not know that until 27 October. It has been well documented that, in terms of the impact on private and the public sector employers, there will be no doubt that there will be an increase in taxation. I think that our job is to make sure that the money is used as wisely and carefully. That would be my answer. I promised an update on the small business bonus scheme in relation to Ross Greer's question. Dougie McLaren has said that he is happy to answer that question now to save on a letter, but it is entirely at your discretion. Once I have finished this question, what I was asking was not about the money that the levy is being raised towards, i.e. spending on health and social care, but the impact that the national insurance levy will have on local government, for example, which collectively will raise some £31 million towards the Treasury. My understanding is that the UK Government has agreed, certainly in terms of the south of the border, that it will provide the consequentials for that. Has that been guaranteed for Scotland so that, for example, the money that is allocated out of the billion that you talked about does not then have to be fired back into local government, police, fire services and so on? That is what I was trying to get at. I apologise if I did not explain that clearly enough. It was definitely my apology for not grasping that. Can I ask Dougie to come in? We have had a lot of engagement with the UK Government on those points and he might be able to give a brief update on whether there will be full compensation. It is about compensation for public sector employer contribution increases, as you alluded to, convener. We have not had the assurance yet, and we are trying to test that with Treasury. The prevailing answer to all our questions around that is that we will get the detail and the update at their spending review later this month. If things stand, it looks like what would come through would be a consequential funding increase related to the spend in the Westminster budgets. However, the question for us will be whether that truly compensates the UK Government's parlance, the need across public sector employers in Scotland. We do not have quite the assurance or the detail on that yet, but we will be testing it with the Treasury. The second part of my question was on the national insurance increase. What are the implications for economic growth and employment growth in Scotland? We are still trying to fully comprehend what the impact will be, particularly on economic growth. A lot of our attention has focused on the impact of employees rather than on the employers. However, quite clearly, let's take a hotel on the Isle of Skye, who has most recently been in the press over the weekend, who is lamenting the fact that the AT is increasing the fact that they cannot secure labour, that prices are increasing across the supply chain. That is another issue for them to contend with, on top of quite a number of pressures that they are already facing. Are you now going to answer the question that you were going to answer with regard to Ross? Yes, thank you, convener. I was just checking my notes on this. The Barclay review asked for the small business bonus scheme review to be concluded by 2022. As the cabinet secretary said, Covid interrupted. I think that some of the practical problem is that the Fraser of Allander needs physical access on the university premises and some of the materials. I think that that works picked picking back up again, but we don't have an exact ETA. If there's anything more to add that I find out from colleagues or from Fraser of Allander themselves, I'm happy to update the committee. Thank you very much for that, and that has exhausted our questions for this morning. I'd like to thank the cabinet secretary for answering so many questions so comprehensively. I'd also like to wish her a speedy recovery and also apologise for some of the glitches in broadcasting that we had this morning. The cabinet secretary valiantly managed to get through those and we were able to ask the questions that we wished to ask. Without further ado, I'd like to end this public session of the committee. I will now have a five minute break and then we'll go back into private session.


What's up ladies and gentlemen today. I'm going to be teaching you a brand new technique Okay, this is the writing in juice looted dreaming technique the riled so it's not the wild as in the waking juice This is to do with writing. Okay, and this might sound a bit unusual to you And this is nothing to do with dream diaries either. Okay, so this is a brand new technique And for those of you who are not a fan of my longer videos You may want to click away now because this is probably going to be a fairly long bit not that long But it you know, I need to explain this stuff. Okay, so the writing in juice lucid dreaming technique involves writing a set mantra Over and over again until it becomes so ingrained in your mind that you you believe it, okay So this is very similar to the mnemonic induced lucid dream the mild In the sense that you're going to pick a phrase say say let's let's say the phrase that you want to choose is I will become a lucid dreamer or I can control my dreams Okay, that's the statement that you want to make and that's the belief that you want to put into your subconscious mind. Okay Let's go there as an example. I am a lucid dreamer or let's go the better one. I can control my dreams That's the mantra. Okay, so what you do as the name suggests is you would write down this mantra several times in a notebook pieces of paper or whatever until it becomes so You know, you repeat it so many times in your mind that you believe it Okay, and it's only reworks if you do repeat it Several times and I'm not just talking about writing it down ten times. I mean like at least 50. Okay Very similar to back in the old days in school whether you should make you write out lines if you misbehaved This isn't a punishment, but it's the same Principle, okay, the idea that back then was if you wrote something enough times like I will not throw things in class Eventually you would have such a memory of that phrase in your mind that you would it always Remember it. It would always be in your mind. So the next time you were about to throw something you would think Oh, hang on. I remember that time when I was You know when I got caught out and I had to write down.  We're just using the technique to put something put an idea Put a belief into our subconscious mind so that the next time we go to sleep We're very likely to Remember it and to actually have a lucid dream because of it. So it's similar to the mild technique But it involves physically writing the thing down. Okay, so you may be wondering, you know, when do I actually do this? Well, that's fairly straightforward before you go to sleep about two hours or so Just when you would start your new night time routine Maybe you'd meditate read a book that sort of thing get a notepad out and write down your chosen mantra I'm gonna go through a few of them in a second like some examples Just write it down again and again one underneath the other constantly until Either till the ten minute timer runs out set a time ten minute time on your phone or until you've written say fifty a hundred times You'll get the feel of how many times you need to write it before the words will start to become like a bit of a blur And it will start to be Something that's just constantly repeated again and again in your mind. You'll hear yourself saying again and again So in this case, I am a lucid dreamer or I can control my dreams tonight. I'll realize I'm lucid dreaming Dreaming effect so that you get the idea pick something and here are a few examples So you could say tonight. I will control my dreams. I am aware of the fact. I'm dreaming tonight I'll be aware that I am dreaming I Will recognize that I'm dreaming tonight You could say I am a lucid dreamer. I can control my dreams Anything that's going to reaffirm the belief that you can control your dreams and become aware while you're sleeping is what you should use as the mantra Okay, so pick one of those Give it a 30-day trial. Okay, so every night before you go to sleep maybe an hour or two. Just write this thing down over and over again Excuse me, and it will really cement that in your mind and you will find that you will have a natural lucid dream Now the way this is going to work is it's not going to instantly to do so lucid dream What it's going to do is over a few days It's going to sink into your subconscious mind so that there's a higher chance of it appearing in your dreams And it's going to hopefully trigger your memory to wake you up while you're dreaming and at that point You'll hopefully realize something strange. Maybe you'll do a reality check. Maybe you'll look around Whatever the case may be and you'll become lucid that way. Okay, so it's really more of like a foundation technique instead of a direct induction So there are some techniques like for example the wild where you you directly induce a lucid dream This is more of like a framework think of this is just like Like the background work that you can do To make lucid dream and more likely so this goes alongside meditation It goes alongside reading about lucid dreaming it goes alongside, you know Believing in yourself and learning and educating yourself in how to lucid dream This is one of those techniques as opposed to the way back to bed or the wild Okay, so that being said it's very effective. Okay, it really does work like several of the techniques I teach you here if they really do work if you try them and try them properly and try them long enough for you to see results Okay, so I got a lot of comments on this video that I did a few weeks ago Which was how to induce a lucid dream in nine seconds? So the the file the finger induced lucid dream and this is Again an effective technique if you learn how to do it and if you actually do it properly And if you actually do follow the steps of the technique lots of people will just pick up on one thing And they'll pinpoint that and they'll try that and it won't really work because they're not doing the whole thing Okay, so this technique the writing induced lucid dreaming technique You need to think pick a mantra that will reaffirm your ability to lucid dream write it down every night for about 10 to 20 minutes and Then you will naturally have more chance of becoming lucid this should be done Alongside everything else. So alongside your reality checks. You still need to do those at least 10 times a day Okay alongside meditation in the mornings and alongside having a healthy sleep pattern Going to sleep and waking up at roughly the same time every day depend regardless of whether it's a weekend or not Okay, so even if you want to go out or whatever and have a drink try and try and get back Roughly 11 12 and then wake up at the same time Obviously this can't always happen because sometimes, you know, you'll have a party whatever But it will make lucid dream much more likely for you. Okay, so I hope this you found this useful You can use it in combination with the way back to bed the wild pretty much any technique because this is a like I said, it's a background technique. So go ahead try it out. Let me know how you get on If you're new to this channel, I've had a lot of subscribers recently because of the inducing a lucid dreaming in nine seconds video Welcome. It's good to see you here. It's good to see the channel growing If you do enjoy these videos, please go ahead and actually comment because I want to build up some sort of community where As well as me replying to comments You guys can sort of help each other and and learn from each other's experiences as well And I really feel that that'd be a good idea going forward. So yeah, go ahead and give this video a like You know comment share it around whatever you want to do and I'll see you in the next one


Recently, many Zika virus outbreaks have been occurring. But what is a Zika virus and why does it pose a threat to us? First things first, Zika virus does not usually kill its infected hosts. Instead it causes symptoms like headaches, red eyes, low-grade fever, soreness and bodily rashes. But still, why are people making a big deal out of a virus that is non-life-threatening and causes such minor symptoms? That's because a Zika virus could be linked to a genetic disorder called microcephaly in which an infant is born with a smaller head circumference resulting in severe neurological defects. In order to fully understand the Zika virus, we have to take a look at its structure and function. The Zika virus is a flabby virus which enters in the host cell via endocytosis or the infolding of the cell membrane to take in food, metabolites, etc. Then through a long and complicated process, the virus turns the cell into a virus factory. Now the virus's hosts primarily include mammals such as humans, but also replication vectors such as mosquitoes and ticks. In fact, the Zika virus currently is being transmitted by mosquitoes. And finally, how does the Zika virus cause microcephaly and can it be prevented? In 2015, two fetuses had traces of the Zika virus's RNA detected in their animatic layer which is the protective fluid surrounding the fetus indicating the virus crossed over the placenta and came into contact with the fetuses causing a mother to child infection. However, despite the evidence from the two fetuses, major scientific organizations like the World Health Organization are still unsure about the link between microcephaly and Zika virus. In fact, they themselves stated that there is no scientific proof. And last but not least, treatment. Unfortunately, there is no definite cure for the virus. Now there are some self-treatment drugs like Advil, Benadryl and Tylenol. However though, just like the saying goes, prevention is better than cure. If you are traveling to an area where the Zika virus is spreading then be sure to wear long pants and shirts and also put on mosquito spray. Also if you are currently infected and you are planning to get pregnant or already are pregnant then consult a doctor immediately. Also don't be scared with modern medical technology a cure may soon be found. Anyway, don't forget to subscribe for more weekly science videos and also you can now support the interesting universe on patreon.com.