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That is a good point. When we are looking at the financial position of an organisation, we cannot ignore it reserves. For example, Strathclyde Passenger Transport’s very significant reserves were a point that was taken into account when it came to looking at its budget settlement. Money is money. If organisations are sitting on large reserves, that should be seen as part of the public purse.

We would be sympathetic to an organisation that has built up reserves for a purpose. An organisation might be taking forward a considerable piece of work or undergoing reform and is going to use reserves for that purpose, or it might have an investment plan that is going to spike and it has reserves that will be part of its investment plan for that particular period. All those things will be taken into consideration when it comes to a decision on whether the organisation should be required to use reserves.

If the point of reserves is that they are there to be deployed in times of budgetary constraint, this is such a time when they need to be brought into the picture. The short answer to your question is that, yes, reserves are being considered. The individual discussions with public bodies around their size and shape, their function and their investment plans will include the level of their reserve.

Part of that is SFC work, and it is important that it puts that through its analysis before giving us the figures for any tax take. It is already based on the potential for behaviour change, which is important. However, it is not just SFC work. HMRC’s work will also be important in that external analysis. It is looking at two separate pieces of analysis. The first is a data set that covers the incomes and locations of UK taxpayers over a 12-year period up to 2021-22. That looks at historic trends of intra-UK migration of taxpayers at different income levels and whether any obvious factors have impacted trends. The second expands on its 2021 empirical study on taxable income elasticities by considering responses in labour market participation and intra-UK migration to the 2018-19 income tax reform. Both pieces of work will make an important contribution to the debate.

There will always be an element of uncertainty about the impact that past policy changes have had. No evidence of substantial behavioural change has been presented to us, but that independent analysis is important work. As I mentioned, there is still a net in-migration of taxpayers to Scotland from elsewhere in the UK, which is positive. We need to drill down more to see whether there is any differential in the levels of earnings that people have and so on. We will keep that under review, and we look forward to HMRC publishing its work.

I guess that that is recognition that, if there are fewer places for university students, that could pose a risk to those from less well-off backgrounds. It is therefore important that we maintain opportunities for access to university and the non-traditional routes that support students from less well-off backgrounds, in order to ensure that, through our policies, the risks that have been identified do not necessarily come to fruition.

Part of the challenge of having a hybrid system and incomplete devolution of tax powers is that anomalies will exist. The Fraser of Allander Institute said that addressing the specific point that you have made would require significant changes to the basic and intermediate rates. The process around that, let alone the impact, will be brought into sharp focus if further tax changes are made in the spring budget, for example. Changes at that very advanced point in our budget process inevitably impact on the tax and spend decisions of the Scottish Parliament.

To say that it is not an ideal system is probably the understatement of the year. It is far from ideal. Among all that complexity, we have tried to carve out a more progressive system, but there are areas that rub up against the UK system in a way that is not ideal. There is no getting away from that.

Some errors always occur, which is regrettable. Discussions have taken place with Clyde Gateway over the Christmas and new year period to ensure that it understands the budgetary position. The volume of information and the changes that are inevitably made can sometimes lead to errors such as that.

We will, of course, continue to consider such things. The difficulty is that, if I was sitting here with £350 million unallocated in a certain fund, I imagine that there would, understandably, be calls for that money to be deployed in order to avoid some difficult decisions. Given our constraints and lack of fiscal levers, we are in a tight fiscal position. Our preference would, of course, be for that position to change, so that we could build capacity in a reserve or fund for infrastructure investment or particular projects in future years. However, I cannot guarantee that that will be the case, given the outlook that you have described. Whether it is the current UK Government continuing with its fiscal priorities or an alternative Government sticking to similar spending plans, as looks likely, that does not bode well for the Scottish budget being anything other than fiscally tight for some time to come. However, in principle, I do not disagree with what you have said.

We always keep the position under review. Free tuition is important so that tuition fees are not a barrier to those entering into higher education. We talked earlier about those from a more deprived background going to university and the gap has closed—there are more students from more deprived communities going to university. That is partly due to the fact that we have free tuition and that people will not be taking on the levels of debt that are seen elsewhere in these islands. If you are asking me whether we are reviewing the position of free tuition, I would say no, that is not something that we are reviewing.

It is not us putting additional money into student support, albeit that that would not be a bad thing to do. It is because of that AME.

Given the current climate, it is challenging to disaggregate what the factors are.

Not so far.