Chamber and committees

One issue that has come to the fore in evidence and in submissions is the impact of the income tax changes. I have in front of me the Scottish Retail Consortium’s submission, which says that the tax changes, which have a marginal rate of some 69.5 per cent—Professor Bell said last week that that is the highest marginal rate in Europe—for people who will be paying the new tax rate at £75,000—make

“it potentially more expensive and challenging for employers in Scotland to attract and retain the specialist and senior talent they need.”

The Scottish Fiscal Commission has said that, on paper, it expects about £144 million to be collected from that £75,000 to £125,140 tax band. However, of that £144 million, it expects about £70 million—nearly half—to be lost to behavioural change. However, in the rate above £125,140, it says that, in reality, only £8 million will be collected out of the £56 million because of behavioural change.

Is there more focus on raising tax from the best-paid people in our society than on broadening the tax base? What message does that send to people outside Scotland about coming to Scotland and about Scotland being a place in which to live, work and invest?

The Scottish tax system is clearly progressive, but it is layered on top of the UK system, with all the anomalies that you have touched on. For example, national insurance is to go down by 2 percentage points to 10 per cent, we have the impact of child benefit withdrawals and the tax-free element of the first £14,800 that is earned is being taken away from some people.

It almost seems as though the Scottish Government is saying, “This is a progressive system and we’re not going to take the UK system into account at all.” It seems as though the Scottish system is just added on top. The Scottish Government does not say, “People in Scotland who earn £X should pay Y per cent in tax.” Are there going to be any attempts to smooth that out? For example, at the moment, people in Scotland who earn £44,000 a year will pay a marginal tax rate of 52 per cent, with the higher rate of national insurance, but if they earn £54,000, they will have a marginal rate of 44 per cent.

That is because you keep increasing the number of staff. If every other cost is fixed and you increase the staff budget—as the Scottish Public Sector Ombudsman has done by £700,000—that will increase the percentage of the budget that goes on staffing.

I suppose that that is fair enough.

Your letter talks about considering whether you

“need to adapt any services/contracts at Holyrood in light of changes to footfall and usage post pandemic to ensure”

operating efficiency.

Why is that process taking so long? I would have thought that such changes would have been implemented long before now.

I notice that property costs have gone up by 13 per cent to just over £9.8 million. What is the reason for that?

Good morning, and welcome to the second meeting in 2024 of the Finance and Public Administration Committee.

The first item on today’s agenda is evidence taking from two panels of witnesses on the Scottish budget 2024-25. First, we will hear from the Scottish Parliamentary Corporate Body on its own budget bid, before taking evidence from the Deputy First Minister and Cabinet Secretary for Finance.

On our first panel of witnesses, Jackson Carlaw, MSP and member of the Scottish Parliamentary Corporate Body, is joined by the following Scottish Parliament officials: David McGill, clerk and chief executive, and Sara Glass, group head of financial governance. I welcome you all to this morning’s meeting, and I intend to allow an hour for this evidence session.

I invite Mr Carlaw to make a short opening statement.

Thank you very much. I will try to keep my questions fairly short, given that we have only about an hour and other members will no doubt wish to come in.

You talked about a submission that is “fair and affordable”—that is also mentioned in your submission. Do you think that it is fair and affordable for the Scottish Parliament’s budget to go up by 7.6 per cent when the Scottish Government’s budget for everything that it is responsible for is going up by only 2.6 per cent in terms of resource over the next financial year?

The allocation that MSPs are given to employ staff is to go up to £156,900 per member. What is the utilisation of that? On average, how much do list and constituency members use that budget?

Last year—and this is from memory—the Ethical Standards Commissioner got an additional 7.4 members of staff. They are on an average salary of £57,700, which is going up by 14.2 per cent. Are all those folk who started last year getting promoted?

The figure sticks out when we are looking at all the other areas that the Scottish budget has to fund with a 2.6 per cent increase in resource. As I am sure that you see, that figure looks way out of kilter.

You said earlier that there are some people to whom you have said “Nyet”. To whom have you said, “No, hold on—we do not actually think that that salary or budget increase is justified”?