Chamber and committees

We should commend the work of the prison staff. Having been on other committees and have visited some of these places, I understand that. Still, we have moved a long way since even my last visit to Saughton.

What is the maximum capacity when we absolutely cannot take any more? What happens when we get to that point? What physically happens when you reach maximum capacity? What does the Prison Service do?

Mr Rennick, what are those options? What are ministers considering?

We are not far off that stage. We are hearing that we are one bad weekend away from reaching the critical point at which ministers would have to come to Parliament and ask for the power to release prisoners. Is that where we are at?

It was the best run, but she said it should be bulldozed. We have to reflect on that.

Perhaps you could share your expertise this morning. What are people doing? If there is divergence as a result of either more bands or higher tax rates, what sorts of things do people do? Do they move out of the country? Do they not take pay rises? Do they not do overtime? Do they put more money into their pensions? Is there more tax avoidance or evasion? What are the risks when there is divergence?

Good morning to our guests. I want to get straight into the meat and bones of the content of the HMRC reports. There are more than 100 pages to digest and, as the convener said, we have not had much time to do that, but what is contained therein has been the source of a lot of commentary over the past 24 hours from an analysis point of view, but also from the media and, unfortunately, as is always the case, from a political point of view.

It is important that the committee gets under the skin of the facts and figures, so I ask HMRC to enlighten us on the key findings of the reports. They singularly pick out the year 2018-19, but nothing since then. They give a snapshot—I understand that—but it seems odd that we have had no further analysis of any subsequent years. Maybe you can comment on that. I would also like to know what you found when you analysed the 2018-19 tax year, when Scotland moved to a five-tier system. What is the situation regarding our income tax base? Is it better, worse or indifferent?

Okay. I know that other members have a lot of interest in that issue.

I understand that, but I have a concern that, if we have to wait five or six years for the 50-page reports that contain that data, it is impossible for them to be used to inform Government decisions. They just show what has happened, and not what might happen in the future. What we really need to know is what the trend has looked like over the past few years, particularly when there has been further divergence in tax bands and fiscal drag.

You said that there was a small or moderate loss of income. The analysis in your report says that it was about £60 million in the financial year 2018-19, but that related to a very small number of people. It does not take a lot of behavioural change or a lot of people to drop out of the Scottish tax system for there to be a fairly substantial loss in the income that the Government receives and, therefore, has available to spend on public services. Will you give us an indication of how worrying that figure might be? Table 19 in the report shows that just 60 people coming out of the system at the top rate equated to a loss of almost £38 million of income. That is huge.

It does. Of course, someone does not need to be ultra-rich for divergence to affect them. When someone earns just £50,000, there is a 20 per cent differential between the income tax rates. That could affect a much wider range of people.

Ms Stafford, you are director general of the Scottish exchequer. Is it a concern to the Scottish Government that just 16 per cent of Scottish taxpayers form more than 62 per cent of the tax base? As we see in the report on 2018-19, any change in the number of people in the higher bands, or any behavioural change, will have a huge detrimental effect on the amount of money that the Government has to spend.

It was notable that the Scottish Government was quick to comment publicly on the net migration figure. However, over the past 24 hours, various commentators and analysts whom we often rely heavily on for independent, neutral analysis, such as the Institute of Directors, the Fraser of Allander Institute, Scottish Financial Enterprise and a bunch of others, all say that the numbers themselves are quite meaningless if we look only at the net migration figure and that what matters is how much money is coming into the system and how much money has been lost from it.

That goes back to my original question, which I am not sure was answered. If we lose higher-rate and top-rate taxpayers, that will have a much more substantial impact on the amount of money that comes into the system. We do not have a year-by-year analysis of that, and it is very difficult for the committee or anyone else to take a view on that if we do not have the data.