Chamber and committees

One of the many good things about renewables is that the tax base should be much more predictable and reliable, given that they are not a commodity.

Your response to paragraphs 96 to 100 of our report, in which we look at productivity issues, is quite robust, saying that

“We will shortly be publishing our National Strategy for Economic Transformation”

and that

“without full control over economic policy and immigration, we do not have all the powers we need to address these demographic issues and drive growth in the economy and the tax base.”

You also say:

“On the latest data, Scotland’s GDP per capita is the 4th highest of”

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“UK nations and regions; Scotland’s productivity has increased by more than any other nation or region of the UK between 2007 and 2019; and Scotland has been the top destination in the UK for foreign direct investment outside London for the past 6 years.”

I believe that that last bit of information is from the EY annual report—in fact, I had thought that we had held that position for longer than six years.

I also note your comment that

“under the Fiscal Framework ... strong earnings growth in London and the South East means that our budget is being reduced even while earnings growth in Scotland recovers strongly from the pandemic.”

That is quite a strong response, and indeed it is a lot more positive than what we have had from other witnesses. Is it not the case that, although productivity might have improved in relation to other areas and nations of the UK, it is still lagging behind other European countries?

Before I let Michelle Thomson in, I have a question. Right at the start of the stage 1 debate, £120 million was announced. Given what you have said about the spring budget estimates and review, can we expect to have an announcement at the start of the stage 3 budget debate?

That was going to be my final point. During the stage 1 debate, Jackie Baillie said, with regard to her party’s asks:

“We have done the costings and the cabinet secretary knows them. I shared them with her last year and we have shared them with her again this year.”

Those proposals have not been widely shared. I certainly have not seen them. Have they been shared? Did you see those costings?

Agenda item 2 is consideration of the Budget (Scotland) Bill at stage 2. We are joined for this item, again, by the Cabinet Secretary for Finance and the Economy. Her officials remain present for this session but are unable to participate in formal stage 2 proceedings. Members will be aware that three amendments have been lodged. They should have before them the groupings and the marshalled list, which were circulated directly by the legislation team.

Section 1 agreed to.

Schedule 1—The Scottish Administration

That ends stage 2 consideration of the bill. Again, I thank the cabinet secretary for her involvement this morning and for answering our questions earlier.

Thank you. The next question is from Daniel Johnson.

I am glad that you mentioned outcomes. When I asked the SFC about the £764 million likely overspend within three years with regard to social security, I asked whether the spending of that resource on social security now would have an impact on reducing poverty. The SFC did not seem to think that it would have much of an impact on reducing poverty. The outcome needs to focus on that. If we are spending a lot of money on social security, surely that is about trying to lift people out of poverty and back into work.

I have a final point. Obviously, I have taken up quite a bit of time. I would like to be able to take more time, but I realise that I have colleagues who are keen to come in.

We covered preventative spend in paragraphs 126 and 130 of our report. You have given a detailed and robust response on that, which I am sure members of the committee appreciate—I certainly do. You have talked about areas of preventative spend, from youth justice and developing the young workforce to the national care service and keeping the Promise. You have also talked about tackling long-standing and deep-rooted inequalities, including investing at least £500 million over this session of Parliament to create a whole family wellbeing fund, investing £200 million in adult upskilling, and spending in a number of other areas of expenditure.

The question that I want to ask is one that we have often asked over many years. John Mason will remember that we asked it of your predecessor John Swinney during the 2011 to 2016 session of Parliament. In what areas will disinvestment take place in order to fund all that? Some outcomes are clearly not what we would desire and some areas of public expenditure are not delivering as we would wish. Are there any less effective programmes that are, in effect, being discontinued and put to one side in order that the funding that I mentioned—and, indeed, the other funding that is detailed in your response to the report—can be invested as you have suggested?

To a large extent, the issue makes the argument for multiyear funding and multiyear budgeting, too.

You talked about the fiscal framework. On the independent report and review, your letter of 29 January says:

“Scottish Government and UK Treasury officials continue to work closely to finalise the details for commissioning the report, including on the terms of reference and authorship for the report.”

When do you expect that to be concluded?

Some sectors that were doing badly only a few weeks ago are almost booming now, but the difficulty is that a lot of debt has been accrued and some businesses have had to shed staff, for example. Businesses need to replace their reserves, as much as anything else.

I will move on to the specifics of the committee’s report. I refer you to paragraphs 45 and 46. In paragraph 45, we state that the Scottish Government assumes

“that it will receive £620 million in additional sources of income for the resource budget”.

You have talked about that in detail. However, one of the things that you mentioned—it was touched on during last week’s budget debate—was the ScotWind resource. As you will recall, the Cabinet Secretary for Net Zero, Energy and Transport updated Parliament on ScotWind on 18 January. He said that that resource would

“deliver around £700 million in revenues to the public purse for the initial awards alone.”

He went on to say:

“In addition to those revenues, ScotWind promises to deliver billions more in rental revenues once projects become operational.”—[Official Report, 18 January 2022; c 36.]

We would like to pin down how much money that will bring in and over what timescale, as “billions” is an amorphous amount of money—it could mean £2 billion or £20 billion. How much is the Scottish Government expecting to accrue from ScotWind, and over what period? Will that feature in our budget in the next financial year, or will it be some time before that has an impact on our budgeting?

In your response to paragraphs 83 and 84 of the committee’s report, which are on income tax policy, you said:

“It is clear from the SFC’s latest forecasts that wider economic factors continue to affect Income Tax receipts”.

However, you have not really outlined those factors. Can you give us a couple of examples?