Chamber and committees

Good morning, and welcome to the 34th meeting in 2023 of the Finance and Public Administration Committee.

The first item on our agenda is an evidence session with the Scottish Fiscal Commission to discuss the Scottish Budget 2024-25 and the commission’s December 2023 economic and fiscal forecasts, which were both published yesterday. We are joined by witnesses from the Scottish Fiscal Commission: Professor Graeme Roy, who is the chair and Professor David Ulph, who is a commissioner. Claire Murdoch, who joins us online, is head of fiscal sustainability and public funding. She is joining us remotely, sadly, due to Covid. However, I am glad that she is able to participate in the meeting. Welcome, everyone. I invite Professor Roy to make a brief opening statement.

It is always worth flying these kites, but Graeme Roy is switched on, even when such questions are coming in his direction.

Yes—and interest rates are predicted to stay higher for longer.

Finally, we will have the same 6.7 per cent increase in benefits as the UK is applying to its own portfolio of benefits. Obviously, that is good news for people who are in receipt of the Scottish child payment, which will be going up to £26.70. However, if there is a tipping point in tax, where is the tipping point in relation to social security and labour market participation? Has any work been done on that?

Thank you very much for responding to our questions so succinctly and directly; I really appreciate that. We will have a two-minute break so that we can bring in a weird and wonderful collection of individuals known as the Scottish Fiscal Commission, who will be giving evidence very shortly.

Our second agenda item is to take evidence from the Scottish Fiscal Commission on how it delivers its functions. We are joined by Professor Graeme Roy, chair, and John Ireland, chief executive, both of the Scottish Fiscal Commission. I welcome back Professor Roy, and I know that John Ireland was listening to our earlier session in the background. I invite Professor Roy to make a brief opening statement.

Thank you for that opening statement, Professor Roy. You and I have spoken privately about the work that you would like to do. I have read your report and cannot see anything on which I would want to criticise you. You have laid out, in detail, the potential principal risks, which do not appear to have arisen. What additional areas would you like to focus on if, for example, the review were to allow for additional resources for staff?

It clashed with the Scottish National Party group meeting, which is why a lot of us were not there. However, the early morning, bacon-roll-type seminars are very useful, not only for MSPs but for staff. I am keen that they should continue.

I know that John Mason has to rush to the chamber to be there for 2 o’clock, and of course we cannot meet after 2 o’clock. It is 5 to 2 now, so unless anyone has further questions, I will call the meeting to a halt.

Thank you again for your evidence, Professor Roy and John Ireland. It has been very helpful in our deliberations. I close the meeting and wish everyone a very merry Christmas and a happy and peaceful new year.

Obviously, I know that it is standard practice. It is frustrating that the figure is not based as much in reality as one would wish, certainly in these difficult times.

In the fiscal overview, on page 3, you talk about resource funding rising by 8 per cent by 2028-29. However, on page 5, unless my arithmetic is wrong, you say that the funding will increase in real terms from £52,449 million to £54,691 million, which is actually an increase of 4.2 per cent rather than 8 per cent.

It is interesting that, in her statement yesterday, the Deputy First Minister talked about a 10 per cent reduction over five years, rather than a 20 per cent reduction. That seems odd, given the figures that you have used. I did not see your figures until after the statement; if I had seen them, I would have asked the Deputy First Minister about that.

One of the issues that has been very much to the forefront has been the new additional rate of income tax, which starts at £75,000 a year. You have assumed that that will produce £82 million net, but the gross figure is £200 million. Basically, you are saying that the £200 million that, on paper, is being levied by that change will bring in only 41 per cent of that estimate, or £82 million. Would that be right?

How accurate are your predictions likely to be in that regard? What are the margins of error? I would have thought that they could be quite wide.