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I would not call it that, Mr Carlaw, but you get the broad theme.

I rather suspect that, if Douglas Lumsden was asking questions after me, he would reflect that local government would like multiyear budgets and predictability just as much as the Scottish Government would, but I will move on.

On the point about growth, and especially income tax, the big surprise from the Fiscal Commission’s report, in a sense, is that the reconciliations were a lot more detrimental than expected. Many of us were expecting them to be positive, rather than negative. Figures 3.16, 3.18 and 3.19 in the commission’s report deal with income tax changes. This was touched on by Liz Smith, but it is worthy of further interrogation. I am looking at the change in pay as you earn—PAYE—in terms of mean pay and of total pay. It strikes me that there is more going on than has been alluded to.

Some of the analysis that was presented by the Government was that, as ever, Scotland is lagging behind London and the south-east, but the analysis that is presented in the report would suggest that the situation is actually significantly worse than that—the comparison is not just with London and the south-east. Critically, one would expect some of the points that you made about upper pay bands to apply equally to other regions, such as the north-east and north-west of England and Wales, yet Scotland is lagging behind on most of those measures. I would be interested to hear your analysis of that.

Professor Graeme Roy and others have highlighted the issue of labour participation rates for younger and older cohorts. Is that not a big problem? Should we not pay much more attention to labour participation and ensure that we are putting people into the right sectors, especially at a time when there are labour shortages? A glass-half-full view is that that is an opportunity to get people into better paid jobs.

Yes but, frankly, you can look at the other cuts as well. The two other perspectives that the SFC provides show roughly the same picture.

Before I ask about regional comparisons across the UK, I wonder whether we can get some extrapolations with regard to the implications for the funding envelope in the medium term. What took most people by surprise was that the net tax position reduced available funding by £190 million instead of adding to the funds, and a deeper look at your report suggests that the issues that that has caused the Scottish budget are only going to increase.

What are you actually saying the implication will be? According to figures 2.1, 2.3 and 2.4 in chapter 2 of the report, you seem to be saying that the block grant is essentially going to stay flat over the next five years and that, by 2026-27, there will be a negative net tax position of -£355 million and—critically—new social security spend and other additional spending will have resulted in a negative position of -£764 million. Is the implication that, in the next five years, £1.119 billion will have to be found in the Scottish budget to cover that? Is that the correct analysis of the trends with regard to the block grant, the net tax position and social security spend?

That is a helpful and important answer. If we are looking forward to a comprehensive spending review halfway through the next calendar year, that gives a picture of the overall envelope that it will have to work within.

The next key question touches on the point around the net tax position. Why is Scotland performing less favourably compared with the rest of the UK? For me, the big change is that that comparison is not only with London and the south-east—as the cabinet secretary has alluded to—but with every other region across the UK.

I said to committee members during our private session before the meeting that my rough rule of thumb is to assume that we will always be behind London and the south-east, that we will be somewhere around the south-west, and normally a bit better than places such as Wales and Northern Ireland. However, that is not the case when we look at our net income tax position; indeed, every single Scottish region is lagging behind pretty much every single region in the rest of the UK. Why are those impacts so much more significant in Scotland in comparison with places such as the north-east of England or the midlands that might—one would suppose—have comparable demographics to Scotland?

It strikes me that this area requires much more attention from the Government and, indeed, the Parliament. I include in that the specific point about labour market participation, but I struggle to understand how that explains the issue in its entirety, given that you would have thought that the demographic challenges would appear in other UK regions. Scotland is not so different from places such as the north of England or Wales. Where should we look for that explanation, or should further analysis be done so that we can adopt the right policies to address the issue?

It does—the example is quite useful in itself. We know that the increase in health spending is about £2 billion, which means that there is about £2 billion to find elsewhere. If the Government is saying—not unreasonably—that there are still on-going costs from Covid across the board, it should be more straightforward to identify that spend in the non-health budget lines. However, it is not entirely clear where that is in the budget, outside health.

I wanted to follow up on David Eiser’s point about whether the budget is seven point something up or seven point something down. I will confound you both by saying that I can recognise both figures and not be rigid about my view on it.

I recognise that, in the total figure, because of Covid there is approximately £5 billion resource funding in the current financial year. However, to my mind, the key point is that throughout the debate around Covid spend, the Government has been pretty clear both publicly and privately that that money cannot be used for non-recurring budget items. We can all accept that Covid has not completely gone away, so the costs that we incur have not disappeared, which is why we end up in that fuzzy middle position. Is there an issue around transparency and about the clarity on how that £5 billion has been allocated, whether it has been allocated, strictly speaking, on non-recurring Covid items, and what in the current budget is Covid related?

This budget is particularly difficult to track. Several items are jumping between budget lines and it is not entirely clear what in the budget is directed at Covid. Is that a fair assessment of why we find ourselves in this position?

That is fascinating. I think that we need a committee session on that topic alone.

Does David Eiser have anything to add?

Thank you. I do not know whether Graeme Roy wants to add anything.