Chamber and committees

When the Scottish Government has so few levers, how easy is it to take into account how many children there are in a family and all that kind of stuff?

Chris Birt, in the second-last paragraph of your written submission, you said:

“Economic growth will not solve poverty—government decisions to facilitate poverty reduction will.”

Surely we need economic growth to generate revenue in order to invest in anti-poverty programmes.

For the second part of our evidence session on scrutiny of the Scottish budget for 2024-25, I welcome Richard Robinson, senior manager, performance audit and best value, Audit Scotland; Dr Jenny Peachey, senior policy advocate, Carnegie UK; Shona Struthers, chief executive officer, Colleges Scotland; Stacey Dingwall, head of policy and external affairs in Scotland, Federation of Small Businesses; Martin Booth, executive director of finance, Glasgow City Council; Keir Greenaway, senior organiser for public services, GMB Scotland; Francesca Osowska, chief executive, NatureScot; and Kirsten Hogg, head of policy and research, Scottish Council for Voluntary Organisations.

This is not going to be a case of me asking you all a load of questions. I will ask just one question to start with, which is for Stacey Dingwall first of all, after which people can come in with any comments either on what Stacey has said or to take the discussion in a different direction. We will not go through this with some kind of stultified theme approach; people can come in when they so wish on the issues that they wish to comment on. If we get stuck, I will drag somebody in to keep things moving.

Let us fire away. The first question is about something that we did not really touch on during the evidence session with the first panel of witnesses. The Deputy First Minister told the chamber that prioritising health spending has meant that the Government is less able to support the business sector. Stacey, what is the Federation of Small Businesses’ view on that?

I suppose that the issue for the Scottish Government is where it could find the proportion of the £360 million. It already gives £685 million in non-domestic rates relief. Indeed—I am a member who represents islands—it increased rates relief for businesses on Scottish islands to 100 per cent, up to £110,000.

I am talking about the numbers, not the policy.

I think that there is consensus on the need for prevention. The difficulty lies in deciding which expenditure we should reduce now in order to put money into prevention. We would struggle to get people to volunteer and say, “You know what? Maybe this segment of our budget shouldn’t be spent this year so that we can invest it for the future.” We have been debating this since at least 2011, and that has always been the difficulty.

There has been a £484 million cut in capital. Where should that cut fall?

I think that people do want that, but the issue is whether, if the tax threshold is increased to a certain degree, it ends up bringing in less than it would have done if it was not increased because of the behavioural changes that people would make. SPICe, the Fraser of Allander Institute and the Scottish Fiscal Commission have all said that the £125,140 rate would bring in less than 15 per cent of the money that, on paper, it should bring in because people will say that they will not work an extra day this week because it will all go on tax anyway.

I am asking whether the STUC and GMB are looking at that particular issue. It is not a zero-sum game. It is not a situation whereby increasing tax by 5 per cent means that we get that extra money, because it will be lost through behavioural change. Will the STUC and GMB go back and look at that and say that, if we pitch it too high, we will end up getting less and there will be lower productivity, sluggish economic growth and we will not have the money for public services? What are your views on that behavioural issue?

There are different prioritisations.

I asked Keir Greenaway about additional taxation or additional grant from the UK. The UK grant situation is obviously important. The UK Government has cut our capital budget by £484 million, which will have a huge impact. In the previous evidence session, we talked about, for example, the impact on housing, which is facing a 30 per cent cut in the year ahead. Does the GMB not feel that the UK Government should have increased the grant to Scotland this year?