Seòmar agus comataidhean

Ms Stafford, does anyone in the Scottish Government advise ministers on their taxation policy? Does anyone, at any point, undertake an analysis of the revenues that are achieved versus what was expected? How are we faring with that? Is the Government, through variation in taxation bands in Scotland, getting the amount of money in tax that it thought that it would? Are we looking only at tax intake, or are we looking at the bigger picture in terms of wider investment, difficulty in recruiting and all the other economic factors that sit around taxation policy, not just the numbers themselves?

Many people have lauded and applauded the decisions that have been made, and others, particularly in the business community, have criticised those decisions. I am trying to unearth how the civil service goes about advising ministers on the right course of action, or, indeed, how it flags up any areas of taxation that it thinks should perhaps be changed in the future.

That is the number of individuals; it does not necessarily equate to higher tax intake in numerical terms. You could be losing people and have more people coming in, but they are paying less tax than the people that you are losing. What does that analysis look like?

My other question is about commercial assets, so I will stop there for now and ask about that later.

You think that it is appropriate and impartial. That is your view?

Yes, but those trade-offs are often quite substantial and will come at the expense of the delivery of other worthy public services. For example, capital investments have been frozen, and there have been shifts from the rural affairs, transport and housing budgets to other portfolios where we simply cannot say no to a funding increase. Benefits have to be paid, but we can pause progress on a road project or a hospital renewal. I appreciate that those decisions are made by ministers, but what advice is given to them by the civil service on which portfolios have to be cut to fund increased expenditure in other portfolios?

Okay—I have quite a lot of ground to cover, so I will move on.

Permanent secretary, we hear frequently from ministers, in a comment or a statement—it is a matter of record in the Official Report—that the Scottish Government needs more borrowing powers. My understanding is that the Scottish Government already has a significant amount of borrowing power. Its outstanding borrowing balance is to the tune of £1.7 billion for capital borrowing and £0.5 billion for resource borrowing, which means that over £2 billion is already on the books. Of course, that amount attracts quite a large amount of interest. I understand that there has already been over £320 million of interest on those two figures combined. In the year 2023-24, borrowing repayments of £217 million were made, which is up from £160 million in the year before.

I am trying to understand where we are at with borrowing, because those sound like pretty hefty figures. Are the levels of borrowing in Scotland sustainable? Are we borrowing enough to fund capital projects, or are we borrowing too much?

Good morning, Auditor General and guests. Thank you for your opening statement.

Your report paints quite a stark picture of the long-term viability of the yard. You mention in points 1 and 2 of your key messages that there are significant risks and uncertainty around the yard’s long-term financial sustainability—a point that you have just reiterated. Could you elaborate on why you have come to that conclusion?

Mr Boyd, one of the things that it would be very helpful for us to understand is whether the draft budget line of £47.9 million includes or excludes any of the additional £14.2 million that was announced separately for investment. That might be a question for ministers rather than for you, but I presume that you looked at that in the whole anyway.

Indeed, and those are questions that we can ask through due process.

You talked a little about the business plan and some of the assumptions that it makes about securing other work. Obviously, none of us wants to prejudice those decisions in any way, but we know that there is that potential, which was very much part of the plan, and investment is relevant to that.

Was there was any evidence of any other business outside of the small vessel replacement programme? Did you, in any of your auditing, come across any presentations or disclosures from the business team at the yard about other business that it was seeking? Was it commercially sensitive and so the team was unable to disclose it? Obviously, as it is a publicly owned and publicly funded business, one would hope that there would be an element of transparency there. Is it the case that all the eggs are simply in the one basket of the small vessel replacement programme? If that were not to go ahead, where would that leave the yard?

The five-year business plan is predicated on the award of the small vessel replacement programme, so a significant risk would be posed to the plan and, de facto, the long-term future of the yard if that award was not granted to Ferguson Marine. If it goes elsewhere, there is very little outside of that to underpin the running costs and keep the yard going at its current rate with the amount of people who work there. Are all the eggs—not all of them, but most of them—in that basket, and does that pose a risk?