Item 3 is to take evidence from members of the Scottish Fiscal Commission. I welcome to the meeting Lady Susan Rice, Professor Andrew Hughes Hallett and Professor Campbell Leith. Before I move to questions, I invite Lady Rice to make a brief opening statement.
Thank you, convener. I simply state that, although the Scottish Parliament is not in purdah, we intend to be as assiduous as ever in not being political. You would expect nothing less of us, but I thought that I should make that statement to be in parallel with our colleague Robert Chote.
When we were previously here at the end of October 2014, we discussed the draft budget and our report on that. We had done a lot of work at that point. We have since done a great deal more work—we did not know then, in the way that we know now, how much that would be.
The committee has received three missives from us. One was a response to the cabinet secretary in January, which you were copied into. We also sent you a response on relevant sections of the committee’s draft report on the 2015-16 budget. Finally, at the end of last week, we sent you a missive in preparation for this meeting. I will not repeat what we put in that. Given your time limits, it would make sense to move directly to questions, if you are content to do so.
That would be fine. We will probably ask some questions about matters in your submission, because it is important that the issues are raised for the record.
How will the process for the draft 2015-16 budget inform your approach to the draft budget for 2016-17?
It will do so in two ways. Much of that will reflect the timetable for developing the budget. We spent time last summer, after we convened in August and began functioning as a commission, learning what the process was and working with the Scottish Government forecasters to understand their models, the available data and where the historical data shortfalls might be on any new taxes coming to Scotland. We learned a lot, and we have continued over the piece to meet and challenge them in various respects as they develop their approach to their work.
We have asked for and been given some sense of the likely timetable for the upcoming 2016-17 budget. We have been told that, in a Westminster election year, the budget timetable here might be slightly altered.
We intend to work to something like the timetable that would normally apply, to the extent that we can, because we think that that is prudent. We will simply spread out the work that was very condensed last year. We have a better grasp of what needs to be done and a somewhat better grasp of when.
That is a partial answer. We will continue—this is not a tap that is turned on and off. As I said, we have met Scottish Government forecasters on a number of occasions and will continue to interact with them on their developing use of data and how their models develop, so that we stay in lockstep with them. My colleagues might want to add to that.
11:30
I was going to say that your colleagues can add a response to anything that we ask; any member of the panel should feel free to answer any question. I am sorry that I did not make that clear earlier.
My colleagues will not hold back—do not worry.
We know from previous committee meetings that they are shy. [Laughter.]
You responded to each of the relevant paragraphs of the committee’s draft budget report. The Scottish Government indicated its agreement with the development of a memorandum of understanding between it and the commission and said:
“In the interim period before the SFC is placed on a statutory footing, it is proposed to prepare a MoU for agreement among SG, the SFC, and Revenue Scotland setting out respective responsibilities and relationships.”
It also said:
“The MoU would be discussed with the Finance Committee in draft, as well as with members of the SFC.”
As yet, however, the committee has not been consulted on a memorandum of understanding, so I wonder where we are with that.
My initial answer is that that is a matter between the Government and the committee, because the Government should present the memorandum to you. We have asked it for at least a draft of such a memorandum, showing the format and the style. We need such a memorandum in relation to a number of bodies, not least the OBR as we look forward, and Revenue Scotland and some others, so we are ready to look at any draft when it comes back to us.
So you are none the wiser. You are no further forward than we are.
We do not have a draft, but we have asked for one.
Maybe we have not been consulted on a memorandum because the Government has not got round to writing it yet. That seems to be the case, although it is not the implication of the point that I cited.
We have had contact with a number of bodies, so we have informal working relationships with several relevant bodies. It is just a question of dotting the i’s and crossing the t’s to get the memorandum of understanding up and running.
The important point is that that has not held us back from doing what we felt we needed to do over the year.
I have noted the huge number of interactions that the SFC has had with many organisations, which you have detailed in your submission.
One of the issues, of course, is that the Government’s view is that it should not be the SFC’s role to produce official forecasts. What is your view on that?
We all have views, but I turn to my colleagues to answer that, so that I do not do all the talking.
There is a range of ways of operating. We heard from Robert Chote earlier about charting a middle course of obtaining information from some bodies but being responsible for the overall forecast. We receive the forecast from the Scottish Government and then critically evaluate it. Alternatively, a body could produce everything to do with the forecast. It is a question of resources. Enormous resources are needed if everything is to be done in house, and fewer resources are needed if some forecasting is put out of house. That is your choice.
I realise that you do not have access to the first-class plane travel and chauffeur-driven limousines that Robert Chote has come to enjoy. I am being facetious.
There is an issue about the £20,000 budget that was allocated to the SFC. I appreciate that the University of Glasgow has been helpful in providing in-kind support, but you said in your submission that your
“expenses in 2015-16 will increase significantly as we now have the office to run, we need to develop our rather basic website, we may commission some research, and we now have a part-time PA.”
You are also looking at the possibility of having a fourth commissioner this year. What growth in resources do you need to be able to do the job that you hope to do and that you believe is expected of you?
I cannot give you an exact number right now, because Scottish Government colleagues are well down the road in negotiations with the University of Glasgow about what expenses the university might be able to carry for us, instead of charging them back for part of, or maybe the whole of, the coming year. Those expenses relate to some extent to occupancy costs—the costs of putting in desks and whitewashing an office and the on-going costs. We have office operating costs and we now have a part-time personal assistant. I provided that kind of service from my old office gratis until the end of December, so we have been operating in a new style since the beginning of the year.
To give you an order of magnitude—although none of us would want to be held to it, because we do not know the exact numbers just now—we are probably talking about a cost of £20,000 for a PA, although the university might help to pay for that. A process has started to identify a couple of research assistants, a small piece of whose time would be spent supporting our work. The cost for them might be in the same range but, again, the university might well pick up those costs. We are trying to get our arms around the costs.
We have not fully spent the £20,000 that was allocated for this year, but that is because we operated hand to mouth and, as I said, my office provided some gratis service for the work that we were doing. We have factored in a bit of travel, a bit of research and a couple of conferences. I would say that we are not an expensive date and we do not expect to be in the coming year.
However, we have identified an urgent need for somebody—I do not know what their job title would be, so it is hard to say, “It is this kind of person”—who can scan the political debate, scan a lot of your debates, brief us, see what is happening outside and keep us much more closely in the loop, because we are doing this part time with day jobs, as you know. We are not in that circle all the time and we need some such support.
We have talked to the Scottish Government about the kind of person who would be helpful. If our remit grows significantly over this year because of what comes out of the Smith commission report and the subsequent command paper, or for any other reason, we might look to bring on board another economist. We have a lot of questions about the costs for the individual’s position—you might have a title for it, but I do not; I call it the political scanner—but that person would be needed and would have to be remunerated.
Indeed. You said that you were living a hand-to-mouth existence, which cannot continue. If the commission is to be a sustainable organisation, it cannot rely on the good will of its landlords, so to speak, at the University of Glasgow. Surely you need a more substantial budget in order to be in effect self-standing, wherever you happen to work from, and not to rely on the university to pay the heating and lighting bills.
That is absolutely correct. I do not think that the university intends to pay those bills for ever, but it has been a good host in the beginning. The Scottish Government is working closely with the university on what costs the university will carry and what it might charge back. If anything is charged back—costs relating to occupancy or anything of that sort—it will go through us for approval, to confirm that we received the service or that we received the heat from the system. However, that would not go on for ever.
If, as we assume, the commission is put into statute during the next parliamentary session, that will anchor us. As we do our work over the period, we will get a better handle on what the costs are. We have put together a budget submission to the extent that we can, using the numbers that we can predict, and we have submitted that.
You want a fourth commissioner to look specifically at economic matters.
We are not seeking a fourth commissioner today, but we believe that if the remit expands, we might well need one. I would not expect that that would be the case for the first half of next year, but we do not know. It is only proper to say that we have thought about and discussed the issue.
There are a couple of other questions that I am keen to ask, but I do not want to steal all my colleagues’ thunder, so I open up the session to them, starting with Gavin Brown.
Good morning. My first question is about the subject of forestalling and behavioural impact in relation to LBTT. You made some initial observations in your paper in October and wrote to the Scottish Government afterwards, before stage 3 of the budget. I might have picked this up wrongly, but the impression that I got from the cabinet secretary was that you were doing a piece of work looking at the behavioural impact and forestalling to help the Scottish Government in its discussions with the UK Treasury over the coming weeks and months, now that the financial year has closed. Are you currently doing any work on forestalling and behavioural impact specifically for the Government?
I will answer that. At the time of the budget, we noted that the Scottish Government’s modelling work in that respect did not include any behavioural responses. When forestalling became a bigger issue in January, Scottish Government forecasters started doing some work on the issue. We have been scrutinising that work. We have not been doing the work ourselves but, in keeping with the way that we operate, we have been scrutinising what the Government forecasters do.
At the time, we asked for further evidence on and development of the estimate of the forestalling effect before we could sign off on it. We were aware of academic work in the area, which I think feeds into the OBR’s estimates on forestalling and other behavioural effects. We encouraged the Scottish Government forecasters to look at that work more deeply and to establish whether it could be replicated for Scotland. They have done some preliminary work but have not gone the full distance in identifying effects, as has been done for the rest of the UK.
So you have done various bits of work, but you are not involved in a live piece of work.
If you are asking whether we are doing an independent piece of work or whether we have commissioned research or anything of the sort independently, the answer is no. As Campbell Leith says, we are working consistently with our method, which is to interact with the Scottish Government forecasters, to challenge them and to discuss matters, and then to meet again and take it to the next step, but we are not doing anything independently of those conversations.
Andrew, do you have anything to add?
Only that if we wanted to go any further under the current regime, I think that we would need to contract out, which goes back to the budget question. It all depends how much you want.
A discussion will take place—I presume that that will happen in the coming months rather than the coming weeks, given that there is an election coming up—between the Scottish Government and the UK Government to work out the effect of forestalling in 2014-15. The OBR has made projections based on what it thought the effect was and the Scottish Government will have to work out what it thinks it was. I presume that a deal of some sort will be done between the two Governments to recompense the Scottish Government.
The OBR will have told the UK Government what it thinks is the case. Has the Scottish Government asked you what you think the effect of forestalling was in 2014-15?
No. The Scottish Government gave us its initial estimate of what it felt the effect of forestalling was, and we discussed the method that it used to calculate that. I think that our conclusion was that that might or might not be a reasonable estimate, but that we required further evidence, which would involve looking at various bits of modelling work that could be done to supplement the initial work, to establish whether it was robust. We have not quite received updates on that work that convince us of that.
11:45
In the committee’s initial report, we said that the Scottish Fiscal Commission should have responsibility for producing the official macroeconomic forecasts, but the Government disagreed with that view. It would probably be slightly political to ask whether you think that the commission should have that responsibility, so I will not ask that. However, imagine for a second that the Government changed its mind and said, “Actually, on reflection, we think the Scottish Fiscal Commission should be responsible, in the way that the OBR is, for the official macroeconomic forecasts.” If that was the Government’s decision, could you do such forecasts at this stage if you were asked? If not, what sort of work would need to be done before you were ready to do macroeconomic forecasts?
We three could not do that ourselves.
Sure.
Absolutely not. If we were asked by Parliament to do that, we would need more resource. I do not know whether my colleagues want to comment.
The resource implications would be quite significant. The OBR operates with some modelling work done by HMRC, and it has its own macro model to do its main macro forecasting. I do not know exactly the number of staff involved but I think that at least 13 members of staff are involved in producing the macroeconomic forecast. The OBR inherited that model from the Treasury.
I think that the Scottish Government is in the preliminary stages of developing its own macroeconomic model. We would need to maintain a team to run that model in order to produce a complete, coherent macroeconomic forecast.
In your report, you commented on the Scottish Government’s forecasts for LBTT and landfill tax, and then on the underlying indicators for business rates. I forget how you actually expressed your view, but you said something like, “We can endorse these forecasts as reasonable.” I might be wrong about your use of the word “endorse”; you might have said, “We accept these as reasonable,” but it was something of that nature. I did not think that your report was clear about what would be unreasonable in your view—the edges of reasonableness, if you like. For example, there is a central projection, an upper one for where you are a bit optimistic, and presumably a lower scenario for where things go wrong. For future reports, are you considering publishing in more detail the numbers that you would consider to be reasonable and where you think the upper or lower thresholds might be, or is it your intention to say only that something is reasonable or not reasonable? Will you go into more detail in future reports?
In relation to non-domestic rates income, I think that we described the initial forecasts that the Scottish Government forecasters produced as being on the optimistic side—in effect, they were on the upper reaches of reasonable. As a result, the forecasters decided to change the forecasts. We introduced language in the report to indicate that the forecasts were pushing the boundaries of what was acceptable.
The judgment of reasonableness is based on what the forecasters themselves have chosen to work with and the work that they have done. We are not saying that that they should have used certain or different data; we took what they presented, challenged it and then made that judgment.
Yes. It is very difficult to publish numbers that you think are reasonable but which contrast with what the Government is doing. We do not endorse specific numbers; if we endorse, we endorse the way of doing it—we say that the outcome is as reasonable as can be expected in the circumstances. There is obviously an enormous judgment going on there because, academically, you might want a much tighter model or some other data that does not exist. The word “reasonable” is used in the context of what you can do, so there is a compromise in there. That is an explanation of what we thought was reasonable. What we thought was not reasonable was not so much about numbers as about places where things could be better.
When you have been talking about behavioural responses, you have largely been talking about how people alter their behaviour as a consequence of taxes changing—the forestalling issue. There is also the issue of behaviour around LBTT with regard to the housing market and the economic and financial circumstances surrounding it—for example, how national income has grown and what has happened to interest and mortgage rates and lending ability.
My take on the matter is that that is the biggest part of what is missing, at least in relation to the residential element. We were also concerned that the non-residential element is probably the weakest part of the forecasts. It is very difficult to go any further with that because it is very difficult to model, so its weakness is not so surprising, but if we could make any progress on that, I would put a priority on it.
Having been through the forestalling exercise, I would say that one can pick holes in the way that it was done, but at the end of the day we came down to £20 million, which would be wonderful in my bank account but is relatively small in the context. Perhaps that is not the highest priority from now on—perhaps we should try to deal with some of the bigger numbers. I would approach the problem by looking at the less reasonable parts, if that answers your question.
With regard to the bigger numbers, has the Scottish Fiscal Commission been formally asked to do anything in relation to the Scottish rate of income tax at this stage?
We have understood that part of our remit is to become involved with that, presumably starting in the next legislative year. As a result, Scottish Government officials have sat down with us and given us a bit of history—a teach-in, if you will—to get us started in our thinking.
We also had a teleconference; that was one of the ones that worked—
Yes, that is true.
We had problems with BT—I had to get that in.
We had a teleconference with the OBR people who are doing the same thing, but viewed from London. The extent of our engagement has involved us in trying understand how they do it and how the process is supposed to work over the next few years, rather than our doing something and saying, “We expect this kind of number to come out.”
We are conscious of the fact that we are dealing with a shared tax that is different from the ones that we have previously dealt with.
I have to say that, when the convener was asking you about your budget of £20,000 and the settling-in arrangements, I felt a little uneasy about the fact that we are expecting you to do quite a lot of work with really very few resources. Maybe I should just relax and say, “Well, we’re settling in.” Is that how you folk feel about it? Do you think, “We’re in a settling-in period, so we just accept it, and things will settle down in due course”?
I think that we are past the settling-in period. What we have learned over the piece is that there is a whole lot more to developing a budget than just producing the draft budget in October. We have learned what the work is.
If you asked us, I would think—although we are not scientific about this—that my colleagues would say that, in terms of time, they are putting in, at minimum, a day a week and sometimes more. I am doing probably double that. Excuse me for saying this, but for people who are unremunerated and doing the work against a backdrop of day jobs, it is about more than just saying, “Oh, we’re settling in.”
Yes.
This is becoming serious business—let me put it that way.
That is exactly my feeling. I personally think very highly of the three of you, and I think that you should be properly resourced.
We have talked about your independence as a commission, and part of that must surely be that you will get a fixed budget and fixed arrangements at some stage, at which point you will be much more distinct. You have mentioned a number of times that the Government has been speaking to the university, and that gives the impression that you are not independent. That is not to say that you are not independent in your forecasting, but there is an on-going close relationship there that I am not altogether happy about.
At the end of last summer, we were given a so-called framework document by the Government, which I assume you will have seen at some point. It discusses specifically how some of the budgetary matters will operate.
The Government foots the bill, at the end of the day. If, for example, we take a train to Glasgow and there are travel expenses, we put the expense request into the public sector system and it goes through the hopper in that way. There is a stated role for the Government in relation to moneys, but we are the ones who are trying to build how much we think that it will cost us.
We have already submitted some numbers. Our estimate of what it will cost to run the office—office supplies, phone calls, photocopying and so on—is based on guidance from colleagues at the University of Glasgow, who have nothing to do with the Government, and is around £18,000 per year, including some travel. We are building the budget from our own base, but those colleagues have been involved in ascertaining the transitional piece from moving the budget from Glasgow to us.
Okay, well—
I am sorry to interrupt, but I want to say that I do not debate the point at all. We need to be on a proper footing in terms of budget.
Ultimately, it is very important that we become a separate budget line.
Yes.
When you say that we are settling in, I would say that we are in limbo, because we do not know what is coming further down the track, with regard to further devolution and any other obligations that might become statutory. Those seem to pop up now and again. We may have views on whether that is a good idea or not, but we are not quite sure what we are going to get loaded up with.
Starting off with a ridiculously small budget is fine—we discussed that when I was being grilled about whether I should be on the commission—if we expand it as the work expands. That is to be expected and we could take a shot at estimating what those numbers might be. However, it is a little premature, because we do not know how much the work will expand. I imagine that it will be done stepwise, as things are added further down the line.
In one sense, that it what I meant by settling in. The problem is that over the next few years there will probably be a lot of changes in your remit every year.
It will not happen in one go.
In our report, we considered whether you had a remit to look at long-term investment commitments, the whole area of prudential borrowing and so on. At the moment, the Government says that you do not have a remit to do that. In your response, you say:
“This point is one for future consideration, as it is well beyond expectations for the SFC today”.
That is fair enough, and I assume that that is still the position. However, if the SFC took that work on board, it could require more resources.
Yes. We have plenty of views on that, but this is perhaps not the point at which to discuss them. You are right to say that such matters will have to be discussed and we will either take them on board, which would have resource implications, or not.
To be fair, we were told from the beginning that we would have a budget of £20,000 and that if we needed more during this year, perhaps for research or other projects, we could ask for it. It is not as though the purse was closed had we needed it. However, for what we have done so far, we have not needed to ask for more. It is not an ideal situation to be in, and you are right that we should have our own budget.
Thank you, I appreciate your frankness on that.
I want to touch on another main point. As I understand it, your remit is to comment on the reasonableness of the forecasts. We have already talked about the higher end and lower end of reasonableness. As an accountant, I like numbers. Would it be possible to mark reasonableness out of 10 and give something a score of nine out of 10, or two out of 10? Is that far too mathematical?
There is a huge range of errors associated with the forecasts. If you look at the fan charts of the Bank of England, or the robustness that the OBR does, you can see that if you change an assumption the forecasts will go in a different direction. There is a range of single point estimates that would be reasonable.
As much as considering the point estimate, we assess the methods that have been used to produce it. We are very concerned about what assumptions have been made in the modelling work, how detailed they are, what effects are being accounted for and what effects the modellers have failed to account for. The robustness of the approach that has been followed is what gives it the score of being “reasonable”.
That raises a few questions in my mind. Your process could be quite reasonable along the way, but is the result reasonable? Are you saying that you are not commenting on that?
It is an iterative approach. If you see that the approach that is being followed will lead to a wild forecast that has no credibility at all, there is something fundamentally wrong with that approach.
12:00
In your comments, do you have the scope to be nuanced, or whatever the word is? Are you able to say, “This is very reasonable,” “This is quite reasonable,” or “This is a little bit reasonable”? How do you see that developing? Is it evolving?
That is something that evolves. It is in our report: we have already used language to indicate where, within the range of reasonableness, a particular forecast happened to be.
You are happy with that approach.
Yes. Given that we are not responsible for the forecast, that is the way to do it.
As Campbell Leith said, the language had an impact. Where we commented that we thought that the actual number—the end number—was optimistic, a change was made in what was put into the draft budget. We think that the process has been effective.
Right. We probably need over time to keep watch on how the language that you use feeds into what actually happens.
We had earlier a quotation by Alan Greenspan, who is well known for being opaque. The problem is that when you use certain language, you have to establish what the words actually mean.
It is the same as what Campbell Leith said about the fan charts: basically, what one would be saying is “Reasonable to this degree of probability” or something, but that is hard to write in a report for everybody. I know what I mean when I say it, and you might, too, but not everybody else does. It is a bit awkward.
Having said that something is reasonable, we then give qualifications further on—for example, “It is reasonable but here are some things that need to be improved.” Sometimes we say that a forecast is reasonable and make no further comment, which means “This is probably as good as you’re going to get.”
I am not sure whether all of us will still be here, but we may find later on that when we have a bit of a track record on forecasts and the outturns, we will have a better handle on how reasonable is “reasonable”. For example, we might have discovered that some forecasts are not terribly sensitive, and so tend to stay within a certain reasonable—excuse me—band around the central forecast, while others are much more volatile.
In the OBR papers, we saw statements such as, “There’s a 65 per cent probability of such-and-such,” or, “This has a probability of over 50 per cent.” A probability of over 50 per cent does not reassure me very much. Would you go down that way with language, or would you prefer just to stick to the words?
I would prefer to stick to the words. I do not find 50 per cent probability all that bad; it might be only 30 per cent.
It is all relative.
Right. It is a matter of judgment, ultimately—even in how one interprets what is said and so on. I would prefer not to get too fancy, but would try to establish a way in which you and everyone else understands what we mean when we use certain language.
On reasonableness, surely it is not so much about whether an estimate is reasonable as it is about whether there is political influence. Is that not one of the concerns?
I have been listening to this little discussion. Rather than thinking in terms of reasonableness, the issue is whether we have been convinced that the way in which the forecast has been produced and the number that has been produced as a result of it are convincing. Obviously, if it was subject to political interference it would not be convincing.
It is as much about Scottish Government forecasters saying, “Look, here are our methods and models. These are good solid ways of doing it.” We critically evaluate those and say, “I’m not convinced by that. Let’s do this a different way and do that a different way.” That goes on until the forecasters have produced enough supporting evidence for their forecast to convince us.
The deputy convener has provided an image of the forecasting being scored by the Scottish Fiscal Commission as if it were an episode of “Strictly Come Dancing”. I will leave it at that.
Do not ask us to do that, please.
I would not dream of doing so.
Legislation will obviously be introduced in relation to the Scottish Fiscal Commission. I anticipate that it will be allocated to this committee; we will certainly be looking at the financial memorandum.
Are you thinking about the costs that will be associated with your anticipated workload? For example, you have mentioned today the requirement for somebody to be your eyes and ears out there, and there will probably be administrative requirements behind that. You have spoken about further requirements depending on the outcome of further devolution and where it leads. As part of the discussions that you will have with the Scottish Government as the legislation and its costs are developed, will you feed in information on what you anticipate your requirements will be so that the Government can paint an accurate picture of the likely budget that will need to be attached to the commission?
The short answer is yes. We have been doing that.
Okay. Obviously, we do not yet know what the final outcome of the devolution process will be. We have a rough idea, based on the command paper, but what happens in just over a month’s time may alter that significantly, slightly or not at all. There needs to be some cognisance taken of where the process is going, because it might lead in a number of different directions.
You spoke about the possibility of requiring another economist, which may require you to have additional staffing beyond the one individual that you mentioned—there may be administrative support attached to that post. Are you building in a number of different scenarios?
That is correct, in that we have identified some potential needs, but we have not built in formal scenarios that say, “If this happens, we need exactly that.”
I have already mentioned that we need someone to be our eyes and ears; I am convinced that we need that now. There are some more powers coming, almost no matter what, but we do not know when or to what extent, so we have already drawn a line in the sand with regard to the real possibility that we will need another economist at some point during the year.
I believe that we should not build up staff until you need to deploy them—just as one would do with an army of soldiers to build an empire.
We will also need more general support—as Mark McDonald said, we will need more admin support of one sort or another, and we will need research support. We have not set that out as a formal “Scenario” with a capital S, but we have put all those ideas on the table for consideration.
If it is helpful at all, I can offer some comparisons with fiscal councils elsewhere. For example, the Irish have five commissions, like us, but they do not do any forecasting. Of course, they have more things to consider, because there is no question about devolution; that happened 100 years ago. However, the comparison offers a marker for the kind of resources and manpower that may be needed to deal with such matters. The Irish commissions have a number of other people—I cannot remember how many without looking at my notes, which are all here. It is good to go through the numbers and check the views of other commissions, which can be a mark of what might be coming down the road.
As you give the commission more tasks, one of the crucial aspects will be the nature of those tasks. Will they require that we scrutinise work that is done by Scottish Government forecasters, or that we do our own analysis on top of that? As soon as we are asked to do additional analysis and produce our own forecasts, there will be an exponential rise in the amount of resources that we need.
Indeed. That will change the game.
The position that the Scottish Government is taking, certainly at present, is that it does not expect the Scottish Fiscal Commission to produce its own forecasts, so I imagine that you will be operating within that envelope.
The question arose—although I am not sure whether it is still live—as to whether we should avoid using the word “reasonable” in relation to the affordability of the investment projects. If we were required to produce our own forecasts, which we are not currently in a position to do, that would mean a huge increase in our workload, so resources would be needed because we would really be getting into the details.
Professor Hughes Hallett is referring to the long-term commitments and investments.
That subject is probably off the agenda at the moment, but I am not entirely sure. It may come on to the agenda; that will depend on what we are asked to analyse.
I appreciate that. Others have made calls about what they believe needs to happen. Are you suggesting that in some of those calls cognisance has not been taken of the level of budget that would be required to deliver what is requested.
Exactly.
This is a process—I assume that there will be discussion about what we will become over time. That must be costed and the Parliament must make a decision about value for money.
Thank you. There appear to be no further questions from committee members—
I am sorry, convener, but I have a quick question.
Perhaps you could have let me know a minute earlier.
I should have done that. Lady Rice says that she is working two days a week, and Professors Hughes Hallett and Leith are working approximately one day a week. Did you expect that workload?
I turn to my colleagues to answer that. To be honest, we expected a fairly intense period in the late summer, in the build-up to the draft budget and our report. I am not sure that any of us expected the work to continue at the pace at which it has continued, although my colleagues may disagree. It is not the same every week; some weeks are much busier. We were a little quieter in November, but otherwise it has been all go.
Absolutely—it has been lumpy and, as Susan Rice says, the lumpiness is smoothing out in the wrong direction, as far as workload is concerned. I would have reckoned on a day a week, on average, across the year. I do not know about Campbell Leith, but the workload is approaching two days a week for me.
Things sometimes happen at very short notice, which is difficult because we have other lives, as we must have if we are to put food on the table. I plan for the year ahead, so when I am asked on Friday to comment on something by Tuesday, that sometimes does not fit, although I have been known to do such work in airports. It is difficult to regulate the work, but I guess that that is all part of the settling-in process. In the second year, we will be much better at forecasting our own workload—as opposed to the economy.
As the other commissioners have, I have found the work to be quite demanding on my time, given that I have a full-time job to do outside the commission’s work. Going forward, it might help if the budget were to make provision to buy the commissioners’ time from their employers, which would free up time for us to devote to Fiscal Cfommission work.
The bottom line is that the commissioners should get paid. Your workload is only going to increase, and it is reasonable to expect to be paid for the work even though it is a prestigious position. Robert Chote might do it for nothing, but that does not mean that everyone else should. That was a good question, Jean.
I have a couple of questions to finish off the evidence session. On your role in evaluating Scottish Government figures against outturn figures, you say in your response to the committee’s report on the draft budget:
“It is indeed our intention to compare forecasts to actual outturn figures, once we have figures for the outcomes that match the forecasts made under the current techniques. At the moment, we haven’t been given sufficient data on matching pairs.”
I am not sure what you mean by that. What are those “matching pairs”?
They are the forecasts and the actual outturns.
Okay. I am not familiar with the lingo. That is fair enough. I just wondered whether there was something exotic that I should know about, but you have clarified the matter.
In my view, that is the next most important thing for us to do. The problem is that, as is made clear in that quotation, we need data on the outturns, otherwise there is going to be a period of time before we can do things properly.
Do you have access to HM Revenue and Customs data?
No—and I do not think that we will get it.
That is interesting. I thought that you did.
I have one other question. I understand that you have had discussions with the fiscal commissions in Sweden and the Republic of Ireland. Are you aware of any other sub-national fiscal commissions? If so, have you had discussions with any of them?
That is a very good question.
Scotland’s is one of the very tiny number of sub-national fiscal commissions. I believe that Ontario also now has one.
I thought that there might be some in Australia.
Campbell Leith and I are going to a meeting of fiscal and budget officers that the Organisation for Economic Co-operation and Development is hosting. I asked Lisa von Trapp, who runs that part of the OECD, about other sub-national bodies and her answer was that there are very few. The hope is that we will meet whoever is there and have conversations with them to understand how they have developed if they preceded us. However, to some extent we are breaking new ground.
12:15
As far as I know, the sub-national commissions are in Ontario and California. I was told that there was one in Virginia, but the last time I was in Virginia I asked about it and there is not one there. There may be others. One place to look would be Belgium, for obvious reasons. We have difficulties that other fiscal commissions do not have due to the fact that we are sub-national rather than national. Although other sub-national commissions’ experiences would be interesting, the question is whether they would have more experience than we have—they may not. I can follow that up if such people are in Vienna.
We are hoping to meet other sub-national commissions, if they exist.
Thank you. Are there any other points that you want to make to the committee before we wind up the evidence session?
I do not have any other points to make. Thank you for inviting us.
Thank you very much.
I thank the witnesses very much. Your responses to our questions are much appreciated.
12:16 Meeting continued in private until 12:35.