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I have a brief question about the current year’s budget before I ask about next year’s draft budget. Given the current uncertainties around public sector pay settlements, for example, at what point should we expect the spring budget revision?

That will be useful.

I turn to next year’s draft budget. What status should we now give the resource spending review? When it was developed and published, there was an acknowledgment that, as each year that is covered by the RSR passed, there would almost certainly be gradual divergence. However, we are now in a position in which there is immediate and significant divergence in year 1. For local government, there is £550 million more than was laid out in the RSR. If I was working in local government and trying to plan ahead for budgets, should I presume that the 2024-25 budget will provide flat cash relative to what is proposed for next year, or should I look back at the numbers for that year that are contained in the RSR?

I have a final question that relates to various members’ questions about behaviour change and tax policy. There have been relatively significant changes in tax policy, such as the 2018 changes to income tax and the changes to council tax—I think that those were in the same year, or it might have been the year before. Was there a significant difference between the outcome of those changes—the revenue that was eventually raised—and the behaviour changes that the SFC assumed would happen? I recognise that there are questions for the commission about methodology in that regard, but can you say whether behaviour change resulted in anything that was significantly different from what had been budgeted for?

Yes. It is usually at the end of January or the start of February, but I presume that it might be somewhat later than that this year.

Thanks. I acknowledge that it will be hard to disaggregate behaviour changes that are specifically the result of a change in tax policy as opposed to wider factors in the economy. However, such disaggregation would be valuable, if it is at all possible, as we scrutinise the future direction of tax policy.

I appreciate that answer, but if I was working in local government or the university sector, which, like local government, will be somewhat better off than it would have been under the plans in the RSR—although I acknowledge that those sectors will continue to feel that they need to ask for more money—on what basis should I use the RSR for forward planning, given that the specific numbers in it are no longer valid? Should I presume that the broad trajectory will continue—for example, the flat-cash trajectory for sectors such as the university sector? Should I assume that there will be flat cash in 2024-25 and 2025-26, based on what is in the 2023-24 budget?

My next question might be best directed at Professor Muscatelli, as our domestic expert. Do you have any views on whether the Government is using its existing capital borrowing powers effectively enough? I acknowledge that they are extremely limited. Have you looked at whether they could be better used?

I will switch to the issue of tax and your recommendation on continuing to make the tax system more progressive. Do you have any views on the papers that were recently published by the Scottish Trades Union Congress and the Institute for Public Policy Research, which largely focus on the introduction of new tax powers? Both papers included proposals on changes to income tax, non-domestic rates and so on, but they focus primarily on creating new powers, particularly around property taxation, which you mentioned, Professor Muscatelli.

I am conscious of the time, so I will roll in a second question specifically on the higher tax band. Is the range in the higher tax band now too large? For example, should we tax people who earn between £45,000 and £60,000 at the same rate for that portion of their income as we tax that portion of income for those who earn between £100,000 and £125,000?

I return to the point about capital powers and your recommendation for the Scottish Government to maintain capital spend. Professor Muscatelli acknowledges the Government’s limitations when it comes to capital borrowing, so I want to understand a little bit better how you think that the Government can maintain capital spend when the capital budget is largely set for it through the settlement from the UK Government. You might think that the limited capital borrowing powers are not being used well enough or that we could increase taxation further to increase the capital budget, or it could be a question of reallocation within capital because there is a belief that some capital spend is not efficient enough and we could get more bang for our buck through reallocation. Could you expand a little bit on how you think the Scottish Government could achieve what you recommended, given the limitations that you have acknowledged?

Given that that change takes place immediately, to avoid a very obvious bit of avoidance that would otherwise have taken place, do you have a projection for what the additional income will now be in quarter 4 of this financial year?