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Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 5 May 2021
  6. Current session: 12 May 2021 to 4 April 2025
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Displaying 749 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

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.

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

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?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

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

Does David Eiser have anything to add?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

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

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

It is also important so that Government can manage.

The Scottish Fiscal Commission’s document is important in providing a medium-term outlook on fiscal pressures. I think that we were all surprised by the pessimistic outlook on tax and the implications in that regard; there is also the potential growth in social security spending.

I want to test a bit of logic that I put to the SFC. If we take the broad assumptions—and I freely accept that we are talking about forecasts, which are liable to error—about a negative net tax position of around £355 million, coupled with additional social security spend of around £764 million, does that mean that a deficit of about a billion pounds will need to be addressed in the Scottish budget over the next four to five years?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

One of the explanations is to do with relative performance of the financial services sector in the rest of the UK compared with that in Scotland. My understanding has always been that we have a strong financial services sector in Scotland. Why would the financial services sector in Scotland be underperforming that in the rest of the UK?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

“Doldrums” might not be a technical economic term, but it is a good descriptive one.

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

I think that that is relatively straightforward. We see the increase and we know what the consequentials are when it comes to health. However, if we are saying that there is, in essence, a 7 per cent cut, and we still have all that Covid cost, which extends beyond health, then there is £1 billion to £2 billion to be found in other budget lines, which is legacy Covid spend, but it is not clear where that is.

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

Do you agree with that, David Eiser? Of course, the other question is whether I am looking at the right numbers here.

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 14 December 2021

Daniel Johnson

My final question is about the really interesting points that Graeme Roy made about Scotland’s relative economic performance. In a sense, that is what is driving all of this, and according to the oversimplified rules of thumb in my head, I have always assumed that Scotland will do a little bit less well than London and the south-east but better than pretty much the rest of the UK. However, the analysis suggests that that is not correct any more and that we are actually trailing most of the rest of the UK.

I have also always assumed that Scotland is not that different from certain other parts of the UK, whether it be the south-west in some ways and the north-east in others. What is so particular about Scotland with regard to lower participation and slower income-tax growth?

Professor Roy, you also made an interesting point about our companies being less productive, but what is driving that? You suggested that we have not been as good at adopting technology and so on, and I wonder whether you can go into that in a bit more detail, as I find it really interesting.