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Whenever I have looked at the national performance framework, I have been struck by how it seems to be strongly influenced by the balanced scorecard approach that we see in a lot of modern management thinking. The Kaplan and Norton paper from back in the early 1990s that instituted that thinking highlights four areas: customer perspective; internal perspective, or looking at what the organisation excels at; innovation and learning; and shareholder return. Not all those areas apply to government, but there are analogues such as the citizen’s perspective, and the last one about how we generate revenue, or the economic perspective.

The other critical thing that Kaplan and Norton say is that those measures have to be explicitly linked to goals. The national performance framework seems to be very broad, and it does not appear to have that level of focus. Certainly, those perspectives do not necessarily seem to be preserved down to the level of the national performance goals. On reflection, as we look to improve the national performance framework, I wonder whether greater focus—so that those measures could drive strategy rather than being a broad basket of measures—would be of some advantage.

One of my worries with the national performance framework is that it is very broad, in terms of both how the objectives are framed and the number of measures that sit below those. I wonder whether there is a missing layer. For example, the national outcome for children and young people is:

“We grow up loved, safe and respected so that we realise our full potential”.

I do not think that anyone anywhere would disagree with that as an objective. When we go through the national framework, we then immediately descend into some quite detailed statistics. I wonder whether an intermediate layer is required, on how the overall objective will be achieved and on what measures will drive that. Ultimately, we have to discriminate between different measures, because some measures will essentially be input measures, while others will be output measures. Some measures will trail, and others will be early indicators. Without that strategic emphasis on what is more important and without differentiating between different types of measures, we just have a sea of data, which does not drive change or orient behaviour across government.

I am struggling to zero in on what my follow-up question should be, because so many interesting topics have been raised by the panel. That is a good problem to have.

I will start by examining the issues around inequality that were alluded to by the Fraser of Allander Institute in its submission. Unemployment data that was published today shows that unemployment is down but the number of jobs in the economy is still below pre-pandemic levels, which confirms what was going on before.

With furlough coming to an end, we need to be careful not to put ourselves in a position of false security by thinking that the situation with labour shortages means that there are no problems. In fact, we could have both problems: labour shortages and joblessness. Is that a correct assessment of the real risk? If so, how stubborn a problem could that be? Are there sufficient public policy measures in the programme for government—or possibly in the budget to come—to deal with joblessness and labour shortages in the economy?

I will move on, but I am happy for other witnesses to come back on any of those issues.

I alluded to the idea that we should have a laser focus on growing the number of Scottish taxpayers, but it now strikes me that it is critical to grow the amount of income that each Scottish taxpayer has, because that benefits the Scottish exchequer as well as the individuals themselves, and it should ultimately lead to tackling our productivity issues.

Let us return to Ray Perman’s comments about the levels of spending on enterprise support. We are not spending anything like £600 million any more, which we were spending through Scottish Enterprise alone. We are spending about £530 million, so we are now spending less, despite having created the Scottish National Investment Bank. The question is this. We need to be mission led—we need to have that focus. Should that focus be purely on productivity, which will lead to impacts on earnings? If it is not, what should the mission of the Scottish National Investment Bank and other enterprise agencies be? How do we enhance that laser focus?

With regard to the ring-fenced funding that you are receiving, Gail Macgregor highlighted the commitment to 1,140 hours of free childcare, which we all agree with. Can you give us a bit more detail and clarification on that? Are you saying that the funding that you are getting for that is not sufficient now and will likely not be sufficient in years to come? If so, is the implication that local authorities are having to top up the funding to deliver on the 1,140 hours commitment?

I—and, I am sure, the rest of the committee—would find it helpful to see some data on that. If what you are saying is the case, one would expect the proportion of the total funding for things that are not ring fenced to shrink. We would find any analysis that brings out that sort of detail very useful.

In the interests of time, I will move on. My next question is for Linda Somerville. Before asking it, I remind the committee of my entry in the register of members’ interests, which states that I am a member of the Union of Shop, Distributive and Allied Workers—USDAW.

We are all very much aware that the furlough scheme is coming to an end at the end of this month, but we seem to be seeing some quite contradictory data. We have seen low or reducing levels of unemployment in recent months, but we also know that there are fewer jobs in the economy than there were pre-pandemic. According to the latest set of numbers, more than 100,000 people in Scotland are still on furlough. Does the STUC believe that enough is being done to ensure that there are jobs for people coming off furlough or to address any imbalances in the labour market that we may be about to encounter in the autumn?

My questions follow on from what Gail Macgregor said about the level of funding for local authorities. First, on COSLA’s previous budget submission, you stated that there would be a £500 million shortfall after the budget revisions. Was that the case? If so, I would be interested to know what the consequences were, given what you have said about the difficulties that local authorities face in delivering core, statutory services on the basis of current funding.

Secondly, given that that budget process was undertaken midway through the pandemic and that many of the services that councils provide are fundamental, safety-net services, what is your current assessment of the increase in demand and, therefore, the current shortfall that local government faces?

Are there any final thoughts before I move on?

Do the other witnesses have anything to add?

I would like to follow up the discussion on the operation of the fiscal framework. The 2019-20 budget contained tax proposals that should have raised an additional £500 million, but, because of the block grant adjustment and the fiscal framework, only £148 million of additional funding came to the Scottish Government. My understanding of that is that we did not do such a good job of growing the number of taxpayers in Scotland or their ability to pay tax—in other words, how much money they were earning. Is that correct? If so, what does that tell us about the policies that are being pursued in Scotland to grow the tax base and earnings? Does it tell us something about the Scottish Government’s ability to use the big fiscal lever that it has, or does it, in fact, show that that lever is not really effective? I am trying to remember what I learned in economics in my first year at university on elasticity of demand and the tax rate. Does it tell us that people switch behaviour when we alter tax rates in Scotland?

I ask David Eiser to respond first, but I am interested in hearing from the other witnesses.