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One of the issues that we have with this budget is the plethora of different figures. For example, the Scottish Government is saying one thing about figures and the Scottish Fiscal Commission is saying something slightly different. Of course, the UK Government is probably saying something different again, depending on whether Covid figures are included.

Where do you and the Fraser of Allander Institute stand on the figures that we are dealing with? On page 2 of the budget document, which you have seen, the Scottish Government says:

“In practical terms, between 2021-22 and 2022-23, resource funding is 7.1% less in real terms.”

The key words are “In practical terms”. It goes on to say:

“The equivalent reduction for Scotland’s capital budget grant funding is a 9.7% real terms cut between 2021-22 and 2022-23.”

From the figures that others have presented, the second figure appears to be less controversial. Where do you feel that we are on those figures? Obviously, when we scrutinise the budget, we have to look at the figures and see where we are and what room for manoeuvre the Scottish Government has.

Is it not the case that the capital budget is declining quite significantly—by about 9.7 per cent in real terms—in the next financial year?

Is one productivity issue not that much of the Scottish budget is demand led? Given our ageing population, we need more care workers and more people in the national health service, and it is harder to increase productivity in those areas. Much of that work is highly people focused and labour intensive. We cannot just decide to reduce the number of people who are seen by a certain doctor, nurse or carer in a shift. It is much more difficult than increasing productivity through technological change in manufacturing, for instance.

Good morning and welcome to the 14th meeting in 2021 of the Finance and Public Administration Committee. Today, with the Scottish Parliamentary Corporate Body’s agreement, we are meeting in hybrid format due to the timing and nature of our budget scrutiny. Additional mitigations are in place, with fewer people attending the meeting.

The only item on our agenda today is evidence from two panels of witnesses as part of our scrutiny of the Scottish budget for 2022-23. First, we will hear from the Scottish Fiscal Commission, and we will then hear from David Eiser from the Fraser of Allander Institute and Professor Graeme Roy from the University of Glasgow.

Our first panel is from the Scottish Fiscal Commission. We are joined remotely by Dame Susan Rice, chair; John Ireland, chief executive; and Professor Alasdair Smith and Professor Francis Breedon, who are commissioners. We have up to 90 minutes for this discussion. I remind members that our broadcasting team will operate their microphones.

I would now like to hear an opening statement from Dame Susan Rice.

I thank the Scottish Fiscal Commission for its evidence and for producing such an excellent and detailed report.

That concludes this section of our evidence taking. We will reassemble at 11.37.

For our second panel on the Scottish budget 2022-23, we are joined by David Eiser, senior knowledge exchange fellow at the Fraser of Allander Institute, and Professor Graeme Roy, dean of external engagement and professor of economics in the college of social sciences at the University of Glasgow. I welcome you both to the meeting.

I remind members and witnesses that our broadcasting team will operate the microphones. We have up to 90 minutes for this session.

Before I open up the discussion, I ask Professor Roy to start us off with some opening remarks.

Yes. It is significantly lower than what the OBR and the Bank of England anticipate. I will be interested to follow that and see what happens.

In the weeks ahead, MSPs will no doubt battle over the numbers in the chamber. In your report, you say that, overall,

“the Scottish Budget in 2022-23 is 2.6 per cent lower than in 2021-22”,

or 5.2 per cent allowing for inflation, assuming a deflator of 2.6 per cent.

We have been bombarded with a plethora of figures. For example, the Scottish Government’s budget says:

“In practical terms, between 2021-22 and 2022-23, resource funding is 7.1% less in real terms.”

It goes on to say that

“The equivalent reduction for Scotland’s capital budget grant funding”,

which seems to be a less controversial figure,

“is a 9.7% real terms cut between 2021-22 and 2022-23.”

Why did you come to your conclusions on those figures as distinct from figures that, for example, include Covid spend and predict a real-terms increase in the budget? Will you talk us through the figures?

Page 22 of the budget document mentions that poundage is below the rate of inflation for the next year. However, your assessment suggests that non-domestic rates income will increase by 25 per cent from 2022-23 to 2026-27, to more than £3.5 billion, when the economy is expected to grow by about half that amount. What is the reason for that? Is it just inflation, or are there other reasons why you expect that income to grow?

Let us be a bit more optimistic than that.

Michelle Thomson is next.

It is 2-1 on, rather than 2-1 against, so to speak.

Thank you for that. I will bring in committee members who want to ask questions.