Chamber and committees

Thank you. Before I bring in other members, I have some opening questions—that approach will be the norm for future committee meetings.

You talked about taxation, which is of great interest not just to the committee and the Parliament but to the wider public. Can you tell us a wee bit about the impact of fiscal drag inflation on taxation and whether the Fiscal Commission can specifically quantify its impact in comparison to the increased output as a result of the reduction in Covid pressures?

You mention in your letter that

“the Chancellor has publicly asked the Office for Budget Responsibility to produce forecasts on 27 October”.

Does that mean that you believe there is likely to be a budget in mid-November or soon after?

Thank you. I have a final question before we open up to questions from committee members. The Scottish Fiscal Commission noted that the Government has not guaranteed any additional funding for Covid-19 for 2021-22, and that there are currently no arrangements for deferred funding. It has said:

“Large changes in COVID-19 funding late in the financial year may create difficulties for the Scottish Government’s management of its budget.”

I asked the SFC about that, but can you also say what kind of difficulties that could create for the Scottish budget?

The committee received a letter from you earlier this morning regarding a number of matters. The letter’s heading is “Process and timetable around Scottish Budget 2022-23”. In it, you touch on the delayed medium-term financial strategy and say:

“There is logic for publishing the MTFS alongside the Scottish Budget and thereby basing it on the updated SFC and OBR forecasts. Publishing it before the OBR October forecasts would mean having to use OBR forecasts from March, the effect of which would be to give a misleading sense of the fiscal outlook.”

When I raised the matter with Scottish Fiscal Commission representatives, they agreed with that.

Where are we in terms of the MTFS? Are we going to see it alongside the budget? Can you give us any further thoughts on the timing of the budget, given all the stramash that you outlined in your letter regarding the difficulty of not having confirmed timings for UK fiscal events?

We still have time, so I will let colleagues come back in again, but I will ask some more questions first. The first one is a follow-up to John Mason’s question about the uncertainty index. Where does the co-operation agreement between the Greens and the Scottish Government sit on the uncertainty index? Does it make the Scottish Fiscal Commission’s ability to forecast more or less certain?

No, but the deal contains financial detail and specific components—for example, £500 million for the north-east and Moray and 110,000 more affordable homes by 2032.

So in that regard, there will be a reduction of uncertainty.

You have talked about social security a couple of times, but no committee member has yet asked about it. Your figures predict a £1.5 billion increase over the next five years in social security spend, of which the adult disability payment will be a major component. Given the fact that that increase has been mentioned a couple of times, is that a cause for concern for the Scottish Fiscal Commission, or do you just want to ensure that we do not omit it in our deliberations?

The child payment could be £163 million a year. I think that you said in your opening statement and your report that about £0.5 billion extra would have to be found from the resource budget by 2026-27. Is that correct?

I have a final question before I call this evidence session to a halt. Regarding the fiscal overview, the Scottish Fiscal Commission notes that the UK Government has not guaranteed any additional funding for Covid-19 for 2021-22 and that there are currently no arrangements for deferred funding. Given the Scottish Government’s requirement to maintain a balanced budget,

“large changes in COVID-19 funding late in the financial year may create difficulties for the Scottish Government’s management of its budget.”

Can you talk us through one or two of those difficulties?