Chamber and committees

Minister, you said earlier that an effective tax structure is one that delivers what it says on the tin, and you cited the four principles of Adam Smith in relation to what is good about the Scottish tin.

An effective tax structure must also deliver the effective revenue that we need, specifically when it comes to addressing productivity and economic growth. As you know, that has been flagged up by the Scottish Fiscal Commission, the Fraser of Allander Institute and Scottish Chambers of Commerce as being a serious concern for the Scottish economy.

Both the convener and Mr Johnson made the point that, although income tax revenue is just one part of the revenues that we can hope to receive, it is a major part. I would like to ask about some of the concerns about those returns that were raised by the Scottish Fiscal Commission and, in particular, Professor Alasdair Smith. Professor Smith said to us, very clearly, that, when it comes to some of the regional aspects of income tax returns, there are areas such as the north-east that have been relatively productive in income tax revenue, whereas other areas have not.

What statistical analysis is the Scottish Government doing to consider the projected changes in industrial policy in each of the regions of Scotland, which will affect employment, and to look at which revenue returns might be better in the future? What data is being used for that?

Precisely. We surely need that important data, particularly in the next four or five years, for which the projections from the Scottish Fiscal Commission on income tax revenue are very weak. Do we not need strong data about which other industries people who are displaced from oil and gas would go to and, in particular, about those people who would be able to earn equally high sums of money outside oil and gas, as that would obviously lead to increased revenues? I am not saying that it would be easy, but is some analysis being done to work out where the high-level industries of the future will be, in order to improve income tax revenue and therefore productivity and growth?

It is a crucial area, minister. We all hope that the Scottish economy will improve and do really well because, let us be honest, it has a lot of potential. However, the fundamental point, which just about every member has mentioned so far, is that we are not doing as well as we could be, because our income tax revenues are depressed and not growing strongly enough in relation to the block grant adjustments. That has repeatedly been the central point when the committee has taken evidence from economic specialists and official forecasters.

What I am driving at is the importance of getting the data that we need to inform the policy that the Scottish Government will have to engage with to ensure that revenues increase so that we are much more fiscally sustainable for the future, because Scotland is lagging behind at the moment.

But not as fast as the block grant adjustment.

I do not disagree, minister. The block grant adjustment is essential, but so, too, is a tax structure that benefits Scotland by increasing productivity and growth, and encouraging investment.

The convener mentioned the fact that there is potential for internal migration from other parts of the UK—people coming from other parts of the UK to Scotland, not to retire but to be active in the labour market. What analysis has the Scottish Government done of the reasons for those people coming to Scotland and where they have gone? On what basis has their productivity and addition to the economy been available to those who are looking at tax policy?

That they did not.

Professor Smith argued that, if there is a downturn in the oil and gas industry and if the projected downturn continues on the same basis as when revenues started to decline in 2014, revenues that accrue from employment in other industries will have to take the place of oil and gas revenues.

How well are we likely to do when it comes to the economic growth from other industries—that is, not oil and gas in somewhere such as the north-east—that can replace those revenues? I am interested in those statistics because they will obviously inform us about what is available in future years.

Therefore, for absolute clarity, to the knowledge of the board, there has been no disagreement about any of the bank’s operations or engagement with other stakeholders.

In the past year, has the board been made aware of any disagreements at all, which are unrelated to policy and the direction of the bank?

Thank you very much for that.

When you spoke to the Enterprise and Skills Strategic Board in August 2021, according to the minutes, you said that “part of the role” of the SNIB

“is to solve the lack of private sector investment in certain projects.”

Your responses to Fiona Hyslop’s line of questioning on the same issue were very interesting. Since that meeting, which was six or seven months ago, have your fears been slightly allayed? Is putting the money in becoming more attractive to the private sector?