Seòmar agus comataidhean

I take on board what you are saying, but at the time of the resource spending review last May, we were advised that a package of reforms would be presented with the budget, and that has not happened. Now, it is being presented as a kind of on-going situation—almost a mañana approach. That is how it seems. The committee would prefer that, when we are told that something will happen in eight months’ time, it actually happens in eight months. If that is not possible—I realise that there has been huge turmoil in the past year—we should be told that you have not been able to present the package of reforms by the time of the budget but that you will do that in March, May or whenever. It seems that we are now being presented with almost a rolling reform thing, which it is difficult to get a grip of. It is hard for us to grasp it fully and to scrutinise and analyse it.

Okay. In evidence to the committee, Dr Brewer of the Resolution Foundation said that UK Government cuts of £185 million to Scotland’s capital allocation were not “a sensible action”. He added:

“We are pointing the finger of blame principally at the UK Government”.—[Official Report, Finance and Public Administration Committee, 20 December 2022; c 6.]

He had said previously that the decision not to enhance capital funding, given the high levels of inflation,

“will lead to a steep decline in the purchasing power of Scottish Government investments ... this may hamper the Scottish Government’s ability to meet its net zero targets and damage the economic recovery”.

To what extent is that the case? How is the Scottish Government trying to mitigate the damage?

Obviously, if there are significant increases, the money would, understandably, have to be found from elsewhere.

Colleagues will be glad to know that I have only a couple of questions more, and then I will open out the session. I am not going to ask all the juicy questions, but I want to ask about one important issue that has gone back and forth.

In evidence to the committee, Professor Roy of the Scottish Fiscal Commission said, in talking about higher rate and additional taxes:

“the Government has to be careful when it thinks about how much additional revenue might come in, just because of people’s potential behavioural responses.”

He added that, although on paper the extra penny on the additional rate would bring in a further £30 million of taxation,

“that is without behavioural change”,

and he went on to say:

“When you add in the behavioural change, we think that the totality of that is only £3 million.”—[Official Report, Finance and Public Administration Committee, 20 December 2022; c 30, 38.]

Other organisations and groups might have different views on that, but that is what the Scottish Fiscal Commission is basically saying.

Is it worth the bother of adding an extra penny on tax if 90 per cent will be lost to behavioural change? How concerned are you that the level of behavioural change restricts your room to manoeuvre and that, if tax went up further, you might end up with a negative tax-raising situation?

While I am on taxation, I will ask more about that. Is the Scottish Government worried about an increase in people incorporating to avoid paying taxes? Is it worried about the image that is presented to other parts of the UK—wrongly, in my view—that Scotland is a high-tax country?

There is, of course, an argument for additional taxation that is being made by some people. The difficulty is that that does not seem to take behavioural change into account at all. People seem to think that, if tax is increased by X amount, the revenue to the Scottish Government will indeed be X although , in fact, that is not the case.

Point taken.

Finally from me, when we debate the budget in the chamber, we will no doubt have the usual demands for vast increases in expenditure across every portfolio accompanied either by tax cuts or—who knows?—possibly tax rises. In the 26 days since your budget statement, which political parties have approached you asking to meet to discuss alternative proposals? Of those that do, will you insist that demands for increased spending in one area of the budget are met by identified reductions elsewhere or by specific tax rises in order to meet them, to ensure a balanced budget?

I just wanted to know if you had been approached by them. I would not expect them to turn up at your house on new year’s day to first foot you.

We will move on from that. You have raised really interesting points. I will certainly take them up with other people.

There is a 6.7 per cent increase in the general staffing budget. You have explained some of that, but the SPCB’s submission says:

“Staff pay including use of contractors is budgeted at £37.3m, a net increase of £2.3m … in cash terms”.

What is the breakdown between contractors and our own staff?

What developments do you expect from that to enhance public engagement? If you are employing three staff to enhance public engagement, what improvements in it do you envisage?

It is okay—that is a sound explanation. I should have thought of the national insurance issue, because you mention it in the document in relation to the overall budget. Thank you for explaining that.

I am going to ask about the annual survey of hours and earnings—the ASHE index. Given that the GDP deflator is 3.2 per cent, and consumer prices index inflation is 10 or 11 per cent, how do you arrive at that ASHE figure? I take it that it is about a year out of date. Is that right?

What is the point in that? No one would say to any other group of workers—including in the Scottish Parliament—that they were just going to use the inflation rate as it was in late 2021 for calculating pay. How has that figure been calculated and why has that approach been adopted? Who was consulted on that? It seems an anomaly.

The letter says, with regard to staff provision, that

“Based on the recent ASHE publication this derived an index of 4.1%”.

However, recognising current inflation figures, the SPCB has opted to use only the average weekly earnings index of 5.6 per cent in order to uplift the general staff provision for members. Why is that not being used for MSPs but it is being used for everyone else? You said that there was no virtue signalling, but it is clear that there is.

I add another point. If the ASHE index says that because inflation is 11 per cent—although by the same time next year inflation might be 3 or 4 per cent, or possibly even lower—MSPs should get a 5 or 6 per cent pay rise, we will just end up with lots of headlines about it being an inflation-busting pay rise, which, by that time, no one else in the public sector will be getting. That seems daft to me from a public relations or practical point of view—or indeed any point of view.