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The graphs in the report are helpful for understanding something that is quite complex.

Auditor General, the current Scottish Government was elected in 2021. In advance of that election, it made the following statement—a promise, I suppose—to the public. It said that it would

“freeze income tax rates and bands and increase thresholds by a maximum of inflation”.

Based on your analysis of the Scottish budget over the past couple of years, has that been the case?

My original question was whether it is Audit Scotland’s understanding that changes have occurred to tax bands, rates and thresholds since 2021. My understanding is that that has happened.

A key element of your report is about transparency and accuracy for the public. The statement was repeated last week during First Minister’s questions, so it is an issue that comes up regularly at the forefront of political debate. Not for the sake of political debate but for the sake of transparency with the public, if the person in charge of the country is making statements about taxation and the state of Scotland’s finances, surely, in terms of accuracy and transparency, they have to be 100 per cent open, honest and clear.

Indeed. As I said at the beginning, it was in a sector that Scotland could benefit from massively if it was to grow and be invested in.

I will move on. You have had your fair share of questions this morning about what happened on the budget, so there is no merit in rehashing any of that. I believe that you have answered as openly and frankly as you can in the circumstances. I am not yet 100 per cent convinced that I see appropriate levels of contrition, but I understand the circumstances that you have been in. I also understand the circumstances of the college financially and the wider sector, all of which I believe are perhaps mitigating factors in what happened and the need for a section 22 report.

Nonetheless, it is very unusual for Audit Scotland to produce a report of this nature. It is quite a short report. I do not mean this in any combative way, Dr Cook, but, at the beginning, you were asked a very straightforward question about whether you accept the content of the report. There are only 41 paragraphs and nine pages, so it is not the biggest report that the committee has considered. The answer to that question really is yes or no. If the answer is yes—that you accept all of it—that is fine. If the answer is no—that you accept none of it—that is equally fine. If you are somewhere in the middle, what I want to know is: which bits of it do you not accept?

I am not reflecting on anything that was said at the beginning; I am just reflecting on the fact that, for whatever reason, you could not genuinely accept the 41 paragraphs in the report. I was trying to unearth which elements of the report you felt do not reflect the true nature of what happened and what was going on. During the meeting, you have listed quite a lot of background that is not in the report—I say that with no disrespect to the Auditor General.

I should also say that we often have reports of this nature across quite a wide range of sectors and public sector bodies, and we have invited former members of staff and board chairs to appear, but they have not done so. The fact that you are here speaks volumes, and I would like to thank you for that.

However, there are one or two unanswered questions. Those are around signing off the accounts and, presumably, what would have been the signing off of a budget, had it been produced. Mr Watson, you said that you, as a director, could not and would not sign off UHI Perth as a going concern, because at the time it simply was not. Did you sign off the accounts in that financial year, though, for audit purposes? There is a bit of a conflict there.

Is there a fundamental issue with the model of the University of the Highlands and Islands? Colleges—providing HE, to be fair, as well as further education—are somehow umbilically linked to it and by default UHI top slices their revenue for whichever purpose, to contribute to its own revenue as a university. Does that model work? At what point could UHI Perth simply have said, “The model is not working. We would prefer to be a stand-alone college, an entity with a direct relationship with the SFC, providing college courses that meet the skills needs of our local community,” and cut that cord with UHI? Was that discussed? Would that have been of any benefit? Is that a model that could exist?

Thank you, convener. Good morning. The report highlights the perilous state of Scotland’s finances in relation to devolved taxes. In your opening statement, you said that the Scottish Government is not being transparent and clear enough with the public about additional taxes paid in Scotland relative to the net benefit to the Scottish Government. Indeed, you said that the contribution of devolved taxes, or additional taxes paid by Scots, is constrained. Why is that the case?

Thank you for those answers.

We know that tax is complex, but the public out there are trying to make sense of what is going on with the Scottish Government’s finances. The key takeaway from the report seems to be that the Scottish Government might claim that the tax decisions that it makes are raising huge amounts of cash, to the tune of £1.7 billion in a single year, which is more than what people would normally pay in tax if Scotland followed the rest of the UK’s tax bands and rates. That gives the impression that there is more money sloshing around the Scottish treasury to spend on public services for example, but the reality is that, for every £1.70 raised, 61p is available to the Government. There is a huge disparity in what people think the Government is raising from people paying more tax—and people will have a view on that—and the reality is that people are not getting back what they are paying into the system.

Your report seems to highlight some worrying reasons for that: people in Scotland have weaker earnings; we have lower economic growth; there are behavioural changes in response to increased taxes; and, as we know from this week, some sectors are dying before our eyes, such as the oil and gas sector in the north-east. All of that is having an effect on the Scottish economy.

What does the Scottish Government need to do to restore public trust and confidence in the statistics that it is using?

That is interesting, because on 13 November, the current First Minister said to Parliament:

“We have maintained our manifesto commitments in relation to taxation.”—[Official Report, 13 November 2025; c 19.]

Those commitments were to

“freeze income tax rates and bands”

for the duration of the parliamentary session, and to

“increase thresholds by a maximum of inflation”.

In your judgment, was the First Minister being accurate and transparent in making that statement?

Thank you. I will let others come in, convener.