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Perhaps you could share your expertise this morning. What are people doing? If there is divergence as a result of either more bands or higher tax rates, what sorts of things do people do? Do they move out of the country? Do they not take pay rises? Do they not do overtime? Do they put more money into their pensions? Is there more tax avoidance or evasion? What are the risks when there is divergence?

Good morning to our guests. I want to get straight into the meat and bones of the content of the HMRC reports. There are more than 100 pages to digest and, as the convener said, we have not had much time to do that, but what is contained therein has been the source of a lot of commentary over the past 24 hours from an analysis point of view, but also from the media and, unfortunately, as is always the case, from a political point of view.

It is important that the committee gets under the skin of the facts and figures, so I ask HMRC to enlighten us on the key findings of the reports. They singularly pick out the year 2018-19, but nothing since then. They give a snapshot—I understand that—but it seems odd that we have had no further analysis of any subsequent years. Maybe you can comment on that. I would also like to know what you found when you analysed the 2018-19 tax year, when Scotland moved to a five-tier system. What is the situation regarding our income tax base? Is it better, worse or indifferent?

Okay. I know that other members have a lot of interest in that issue.

I understand that, but I have a concern that, if we have to wait five or six years for the 50-page reports that contain that data, it is impossible for them to be used to inform Government decisions. They just show what has happened, and not what might happen in the future. What we really need to know is what the trend has looked like over the past few years, particularly when there has been further divergence in tax bands and fiscal drag.

You said that there was a small or moderate loss of income. The analysis in your report says that it was about £60 million in the financial year 2018-19, but that related to a very small number of people. It does not take a lot of behavioural change or a lot of people to drop out of the Scottish tax system for there to be a fairly substantial loss in the income that the Government receives and, therefore, has available to spend on public services. Will you give us an indication of how worrying that figure might be? Table 19 in the report shows that just 60 people coming out of the system at the top rate equated to a loss of almost £38 million of income. That is huge.

It does. Of course, someone does not need to be ultra-rich for divergence to affect them. When someone earns just £50,000, there is a 20 per cent differential between the income tax rates. That could affect a much wider range of people.

Ms Stafford, you are director general of the Scottish exchequer. Is it a concern to the Scottish Government that just 16 per cent of Scottish taxpayers form more than 62 per cent of the tax base? As we see in the report on 2018-19, any change in the number of people in the higher bands, or any behavioural change, will have a huge detrimental effect on the amount of money that the Government has to spend.

It was notable that the Scottish Government was quick to comment publicly on the net migration figure. However, over the past 24 hours, various commentators and analysts whom we often rely heavily on for independent, neutral analysis, such as the Institute of Directors, the Fraser of Allander Institute, Scottish Financial Enterprise and a bunch of others, all say that the numbers themselves are quite meaningless if we look only at the net migration figure and that what matters is how much money is coming into the system and how much money has been lost from it.

That goes back to my original question, which I am not sure was answered. If we lose higher-rate and top-rate taxpayers, that will have a much more substantial impact on the amount of money that comes into the system. We do not have a year-by-year analysis of that, and it is very difficult for the committee or anyone else to take a view on that if we do not have the data.

I think that many people would disagree with that. Anecdotally, we are hearing a number of voices being very vocal maybe not necessarily about the statistical analysis of migration, but the quantitative analysis is that every respected industry body says that it is really struggling to recruit people and that tax divergence is the primary cause of that. I hear what you are saying, but business leaders are saying entirely the opposite.

Yes. Progress in negotiations is always subjective.

What work will you be doing on community justice? Your predecessor produced an initial report on the establishment of Community Justice Scotland by the Community Justice (Scotland) Act 2016, and the Government published a national strategy for community justice in 2022. Will you respond directly to progress against that strategy?

That is helpful. One of the main issues is the importance of following the money. There are so many stakeholders involved in delivery and they have both statutory and non-statutory duties in delivering community justice. It is difficult to find out where the bigger budget goes except where it is directly attributed to a single agency such as Community Justice Scotland. Our committees have struggled with that for many years in looking at outputs.

As you are aware, we have done a lot of work on the input or use of the private sector in justice. I will not go into that today because there will be other opportunities to look at the use of companies such as Serco and GEOAmey. In the interest of time, I will park the other justice questions for now. As I said, my questions are quite meaty, unfortunately.

You will be pleased to hear that the next area is the national care service. Its establishment has been a matter of controversy both politically and among stakeholders but, moving on from that, I am keen to hear what work Audit Scotland will do in auditing the preparations and, potentially, the implementation, particularly from a financial point of view. That is particularly relevant given that the Finance and Public Administration Committee had grave reservations about the financial memorandum for the National Care Service (Scotland) Bill. The matter is of cross-party interest, so I hope that it will feature in your work.

This might be a general worry but, when there is organisational change of this type, and particularly when there is consolidation, we cannot afford to wait a couple of years to see whether things have bedded in and are working. We talked about Police Scotland and the centralisation. You might need to wait five or 10 years to do that piece of work, but care has more immediacy to it because it is a matter of life and death, if you like. There may be a public opinion that we cannot afford to wait four or five years for that analysis.