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I turn to the ScotWind moneys. The Government plans to use £300 million of that for capital expenditure on renewables next year, but there is nothing planned for 2026-27. Given the Government’s push for net zero and expanding Scotland’s renewables base, is there a particular reason for using £300 million one year and nothing the next?

My next question probably strays into the realm of policy choice but, given the scale of private sector investment in renewables—for example, SSE is investing £24 billion and Scottish Power is investing £20 billion—and the strong pipeline of work in the private sector, would there be merit in the state using its capital resource in areas where it is difficult to leverage private sector capital investment?

I have one final question about rates relief for hospitality. Initially, I think that the sector had an expectation that the relief that was granted might have been a bit more generous than it ended up being once the numbers had been crunched.

Remote hospitality venues and those on islands will still get 100 per cent rates relief, whereas other hospitality businesses will get 40 per cent relief, up to a rateable value of £51,000. However, the retail and leisure sectors have been excluded. Has the Government given any indication as to why there is a special need for remote and island hospitality businesses to get that relief, but not those in urban or other rural areas?

You note that the increase in take over the two years is significant, so I presume that a canny finance minister would look at that and think that that is quite a good way of plugging any gap.

We touched on it earlier, but the behavioural impact seems to rise proportionately. There must be a tipping point. How difficult is it, from a forecasting and modelling point of view, to look at what the behavioural impact of tax will be? Is it, in effect, a Donald Rumsfeld unknown unknown, and you just have to pluck a number out of the air?

Thank you very much.

You have pre-empted my next question. You said that you want the UK Government to provide a more coherent tax strategy. At this point in time, are you looking to the Scottish Government simply to provide a tax strategy, coherent or otherwise?

Finally, in relation to the future sustainability of Scottish universities, you identify a heavy reliance in the Scottish higher education system on overseas students, the numbers of whom are falling. At the same time, there has been no increase for 15 years in the tuition fees that are paid for Scottish students, which is leading to a looming cash crisis in Scottish higher education. What needs to change in the system to put it on a more sustainable footing?

I will close by asking about two issues that you have identified—sustainability of the NHS in Scotland and sustainability of Scottish universities and higher education. You said that the inputs into the English health service might be slightly higher than those in Scotland. However, this year, at the autumn budget revision, there was a significant resource increase of £1.1 billion for the Scottish health service. From today’s Audit Scotland report on the NHS, it is clear that the Scottish health service continues to be in crisis and is underperforming, compared with the service in the rest of the UK. That implies that money alone will not solve the NHS’s ills.

How clear would you be in suggesting that urgent reform is now required to the Scottish NHS, particularly given the concern that public sector pay, including NHS pay, is absorbing a greater proportion of the overall budget?

Yes. There is perhaps an element of smoke and mirrors at play.

You identify that the Scottish Government faces a challenging situation in future years, partly because of the projections in relation to public sector pay and the social security bill, and potentially also because of its income tax policies. You have recommended that the Scottish Government should set out its plans in a spending review next year and that it should

“evaluate key policies that increasingly differentiate it from the rest of the UK—including its higher public sector pay and income tax policies and wider tax strategy.”

I would probably add social security to that list. Should those three or four issues be cause for concern with regard to the long-term sustainability of the Scottish public finances?

Good morning. I will jump around a bit, because some of the questions that I was going to ask have already been asked. On the back of what has been said, I have some follow-up questions that go to the heart of the sustainability of Scotland’s finances and tax system.

In your report, you identify a substantial uplift in the block grant in-year and next year. However, the Scottish Government says that the additional £1.4 billion that it is set to receive this year is already committed and that only about £300 million of the £3.4 billion that it will receive next year is additional new money that can be spent. We would say that it should be spent on tax cuts, but the Government might have other priorities in the budget. What does it tell us about the underlying health of the public finances when sums of that amount do not appear to touch the sides in relation to the Government’s expenditure?