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I begin by asking the big question. Covid-19 has clearly disrupted life over the past 18 months, but it strikes me, and has been alluded to by Professor Alexander and Stephen Boyle, that it has had a fundamental impact on how Audit Scotland conducts an audit. I always think of auditing as requiring some level of being able to eyeball and assure that what is on the accounts is actually there. If you are working remotely, it strikes me that that is fundamentally disrupted. In broad terms, how has that impacted your ability to conduct an audit?

More important, we are all aware that Covid-19’s impact is not just temporary, but is likely to alter how we work in long-lasting ways. Which of the changes that you have made this year do you see persisting? What impact will that have on the way that Audit Scotland organises itself in the future?

Thank you. I will end my questions there, chair.

Undoubtedly.

To follow up that point, I challenge what was said about businesses having figured out how to operate through Covid. The businesses that I speak to have managed to get through Covid but, although they are trading, their trade is significantly down from where it would have been. For a lot of consumer-facing businesses, 60 to 80 per cent is not unusual and it is not sustainable for them. Furthermore, most of those businesses have got to that point by accumulating significant sums of debt, whether that is through Government schemes, deferred payment of rent to landlords or other arrangements. It has even been reported that small business owners have cashed in their pensions. I am told that a lot. It strikes me that those businesses are operating under a very different set of circumstances from those that existed pre-Covid, and that, too, must imply a degree of fiscal headwind when you start looking at those figures, or certainly the overall economic performance of the country.

No.

Following on from the convener’s remarks at the beginning of the meeting, we can agree that we both have excellent diction and enunciation.

I want to follow up on some points that have already been raised. I am clear that you have read the SPICe report and the Fraser of Allander Institute piece looking at the outturn reports and comparing them with the tax plans. In the 2019-20 budget, the Scottish Government expected its tax plans to raise an additional £500 million, but, based on the outturn, they have raised only £148 million. I understand what you were hinting at with regard to the block grant mechanism. However, it is clear from both of those bodies that what that difference fundamentally tells us is that income tax per capita has not grown as much in Scotland as it has in the rest of the UK.

First, do you agree with that assessment? More importantly, and given what you were just saying about the need to expand the income tax base and to make sure that people are earning more within that, what does that say about the policies that you have been pursuing? What policies will you pursue to ensure that people are earning more so that they pay more tax, which we can all agree would be a good thing?

I want to return to the block grant, income tax revenues and the SPICe paper that the convener mentioned. I recognise what was said about not wanting to get into the hypotheticals of previous regimes. However, as I understand it, the paper sets out that the current fiscal framework relies on income tax growth, which seems to point to the fundamental issue that income tax receipts per capita in Scotland have grown more slowly than those in the rest of the UK. Is that conclusion supported by the data that you have? If so, what are the reasons behind that?

I ask those questions because we are all mindful that the fiscal framework is being renegotiated. Understanding the fundamentals of how the framework works and what we benefit from—as I understand it, income tax growth is critical in the current regime—is clearly important as the framework is renegotiated. Will you elaborate on the insight that you have on the growth of income tax receipts per capita in Scotland compared with that in the rest of the UK?

The fundamental point is that we want productivity to go up so that people are paid more and they pay more tax. That is the fundamental of what we are discussing, in broad terms.

Exactly so.

I agree that we need to get into the detail of the fiscal framework, but I do not think we have time for that this morning. However, there is clear agreement that we need to increase income tax on a per capita basis. Fundamentally, that would tell us that people in Scotland are earning more money, which is a good thing. Indeed, you summed it up earlier as more people participating in the economy and earning more money, underpinned by productivity.

In relation to some of the things that the convener was raising, my concern is that that sounds a lot like economic growth. I am very clear that economic growth is a good thing, especially when it is underpinned by growth in productivity, because it means that people are better off and are leading better lives. However, certain people who are about to join your Government think that economic growth is a bad thing. What is the Scottish Government’s view on economic growth?