Chamber and committees

That is fine. I was just looking for clarification on that.

Does anyone want to comment on taxation at all, for or against, or to talk about the Scottish Government’s capital priorities? I touched on housing, which was discussed at some length in the previous evidence session. Where can capital be spent? For example, I mentioned previously that the police are getting a 12.4 per cent increase in capital, whereas there is a 30 per cent decrease for housing. It would be interesting to hear what people have to say about that.

Okay, who wants to go first with their final comments?

Yes, I am sure that we all look forward to the spring and autumn revisions. Stacey Dingwall, I will give you the final word.

In your submission, you say that Scotland is now spending £1,092 million a year in benefits and welfare payments over and above what was devolved. The Scottish Parliament information centre has said that, based on current projections, that will rise to £1,502 million by 2029. How sustainable do you think that is?

Good morning, and welcome to the first meeting in 2024 of the Finance and Public Administration Committee. I wish you all a happy new year, and I congratulate Liz Smith, who is a member of the committee, on the award of a well-deserved CBE in the new year’s honours list.

There is a single item on our agenda, which is to take evidence on the 2024-25 Scottish budget from two panels of witnesses. First, we will hear from João Sousa, deputy director of the Fraser of Allander Institute; Chris Birt, associate director for Scotland at the Joseph Rowntree Foundation; and Professor David Bell, professor of economics at the University of Stirling. I welcome all of you to the meeting and thank you for your written submissions.

We will move straight to questions. If I ask an individual member of the panel a question, other witnesses can chip in. However, I might put questions to all members of the panel. We will suck it and see, so to speak.

The Scottish Government has said that it will prioritise spending on three missions, which are:

“Equality: Tackling poverty and protecting people from harm

Opportunity: A fair, green and growing economy

Community: Prioritising our public services”.

How is the Scottish Government doing that in the budget? We will start with Mr Birt.

I read your submission in detail, and I noticed that it did not set any context on where the Scottish Government finds itself on the finances and the economics. You have talked about the need to increase the Scottish child payment to £30 and about reversing the reduction in the affordable housing supply budget, for example. You referred to that reduction as “brutal”. Given that the Scottish Government has a £484 million cut in its capital budget next year and that the resource budget has been increased by only 2.6 per cent, how would you do that? The Scottish child payment has been increased by 6.7 per cent, which is in line with the United Kingdom’s increases in benefits. How would you square the circle?

You have made a valid point about the choice that you would make—you would prefer the money that is being spent on the council tax freeze to be spent on addressing child poverty. Perhaps I or one of my colleagues can put that to the cabinet secretary.

On the capital front, you have said that we should reverse the reduction to the affordable housing budget, but how do you do that in the context of a £484 million reduction in capital?

It is easy to come along and say, “You should spend this amount on that and that amount on this,” but when you use words such as “brutal” to describe reductions in housing budgets and say that such reductions should be reversed, it is incumbent on you to say how they can be reversed. What should the Scottish Government not spend its capital funding on in order to fund the housing that you believe should be prioritised?

Fair enough. Basically, you are saying that you could take the money from the roads budget. Is that correct?

In your paper, you talk a lot about taxation, including the Scottish Government’s decision to increase taxation for higher earners. For example, you say that the marginal rate for people earning £100,000 to £125,000 a year—69.5 per cent—is

“possibly the highest ... in any OECD country”.

The highest marginal rate is 55.5 per cent in Denmark, 42.2 per cent in France and 55.2 per cent in Sweden. Will the impact of that high rate in Scotland be positive, negative or a mix of the two?