Good morning and welcome to the 14th meeting in 2014 of the Finance Committee of the Scottish Parliament. I remind everyone present to turn off any electronic devices that they may have on their persons, please.
Our first item of business is evidence from the Cabinet Secretary for Finance, Employment and Sustainable Growth on the implementation of the Scotland Act 2012. Mr Swinney is accompanied by Alistair Brown and Alison Cumming of the Scottish Government.
Both the Scottish and United Kingdom Governments are required to produce reports under section 33 of the 2012 act. Members have copies of both reports. The committee will take evidence on the UK Government’s report in the coming weeks.
I welcome our witnesses to the meeting and invite the cabinet secretary to make a short introductory statement.
Thank you, convener. This is the second annual report, and it is the last report before the devolved tax and borrowing provisions in the Scotland Act 2012 are implemented in April 2015. Our report describes the progress that continues to be made by the Scottish Government on the arrangements for implementing those provisions.
Significant work has been undertaken over the past year in line with the programme plans. The pieces of legislation for the land and buildings transaction tax and the Scottish landfill tax have completed their parliamentary stages and have received royal assent. As the committee has already been advised, I will announce rates and bands for the devolved taxes this autumn when I present the 2015-16 draft budget to Parliament. That is also in line with agreed changes to the written agreement on the budget process.
There continues to be good co-operation between Her Majesty’s Revenue and Customs and the Scottish Government as the implementation project for the Scottish rate of income tax proceeds. The Scottish Government is represented on the relevant board and has access to all project papers and background information. Significant achievements over the past year have included deciding how Scottish taxpayers will be advised of how much SRIT they have paid. Scottish taxpayers will find that information on their annual P60 and will also have access online to the HMRC tax calculator and to individual tax statements.
HMRC has consulted the Scottish Government on options for the Scottish rate and on decisions that have a potential impact on Scottish taxpayers and employers. Agreement has been reached on how to ensure that the appropriate level of tax relief is applied to contributions that are paid into private pensions by Scottish taxpayers for after-tax income. HMRC has been undertaking consultation work with the pensions industry in developing and communicating a solution.
The Public Audit Committee has done some helpful work on audit arrangements for the SRIT, which culminated in its report on the issue on 10 March. The Government will respond to that report shortly. Audit Scotland’s engagement with the task of settling the audit framework is also important, as will be its scrutiny of the process once it has been established.
The preparation by HMRC of revised cost estimates for implementing SRIT is a significant development. As the annual report says, the estimated costs are now £35 million to £40 million, compared to £40 million to £45 million in HMRC’s original estimate, which was published in November 2010. Our aim continues to be to ensure that value for money is delivered in the project.
In my letter to the committee of 7 January, I set out in detail how the block grant adjustment and reconciliation process in respect of the Scottish rate is expected to work. Although some details remain to be settled, there is now a well-developed understanding of the processes.
We need to agree soon the block grant adjustment mechanism for the devolved taxes, not least to ensure that estimates can be factored into the preparation of the draft Scottish budget this autumn. The UK Government’s report describes its proposals. As our report makes clear, the proposals move away from those that are set out in the command paper of November 2010, and I am currently in discussions with the UK Government on the matter. My task is to achieve an outcome from the discussions that the Finance Committee and, indeed, the Parliament, can agree is fair for Scotland.
Parliament has a key role in continuing to provide assurance on and conduct scrutiny of the process. I look forward to discussing these important issues with the committee.
Thank you for your opening statement.
There is also material on the fiscal commission, which I assume we will come to under another item.
Yes—that is a separate item on the agenda, so we will not ask you about it now.
I have a question on the block grant adjustment. I have to say that I think that the photograph of you in the second annual report was taken when I was at school.
I am not sure what to read into that remark, convener, but I shall think and worry about it for the remainder of the meeting.
Okay—let us get to the meat of it, then.
Paragraph 42 of the annual report states:
“The block grant adjustment in respect of the devolved taxes remains under discussion between Ministers.”
What are the bottlenecks to full resolution of the issue?
In essence, we have been in two phases of a discussion. The first phase was the examination of what was in the command paper “Strengthening Scotland’s Future”, which was considered by Parliament and was the basis on which Parliament gave its consent to the proposals in the Scotland Bill. In the command paper, the United Kingdom Government said:
“When the smaller taxes are devolved ... there will be a one-off reduction which will then be deducted from the block grant for all future years.”
The UK Government has now made it clear that what it really envisaged with those words was a one-off adjustment and then an indexation to ensure that the Scottish public purse does not benefit disproportionately from the devolution of the taxes. As you will imagine, I have contended strongly that that was not what was in the command paper. That was my position in the early part of the discussions with the UK Government.
The UK Government has advanced to us a proposal—which also features in its proposals to the National Assembly for Wales in the recently published Wales Bill command paper—that involves what would be called a form of Barnett abatement. That would be a form of indexation of a one-off adjustment to the block grant, which would involve influencing the Barnett formula. I have indicated to the UK Government that that is not acceptable to us and I have submitted alternative proposals to it in an attempt to resolve the difference of opinion on the question.
The Chief Secretary to the Treasury, Danny Alexander MP, has made it clear that he does not want the UK to be disadvantaged by the process, and it is clear that the Scottish Government does not want to be disadvantaged either. What would be the potential financial disadvantage if the UK got its way? What would be the implications for the Scottish budget?
It is difficult for me to quantify the effect of any proposals because I have not seen a proposition from the UK Government that would enable me to answer the question definitively. It depends on two things: the size of the one-off block grant adjustment, which there will be under any circumstance and proposal, and the indexation mechanism, which relates to the potential growth in public expenditure in the UK. At present, I am unable to quantify that figure. I am trying to ensure that we remain clearly aligned to the contents of the command paper and that we have the opportunity to ensure that the growth of tax revenue as a consequence of the devolution of the tax instruments relates to the performance of the Scottish economy and not the performance of public expenditure in the whole of the UK.
Paragraph 44 of the annual report states:
“We have written to HM Treasury proposing a settlement which we believe addresses the concerns of the UK Government, provides an equitable settlement for Scotland and unlike the UK Government’s proposals does not amend the ratios used for the Barnett formula.”
What are your concerns about those ratios?
I do not think that there is a relevant connection between the devolution of these tax powers and the operation of the Barnett formula. The tax powers are being devolved to increase the Scottish Parliament’s accountability and fiscal flexibility. I think that we should be able to establish a connection between the Scottish economy’s performance and the performance of the tax base in question and, as a consequence, be able to retain the returns. There should be no on-going relationship with public expenditure once we have made the one-off block grant adjustment that was always envisaged.
When the Chief Secretary to the Treasury appeared before the committee in September 2013, we sought clarification on how the Scottish Government and Scottish local authorities might be disadvantaged by not having access to the project rate, which was intended to be used to take forward certain major infrastructure projects. He indicated that he would be happy to consider that point but, as yet, no clarification has been received. Are you able to provide some clarification for the committee?
I will have to come back to the committee with a definitive response in writing to that question after a look at all the current statements and the contents of the budget document from earlier this year.
How have you managed to make what is a quite significant reduction in the costs of implementation?
HMRC provided some outline estimates of the likely costs in the original proposition in the command paper. By their nature, those estimates were much more general and, when they were produced, would not have benefited from the detailed scrutiny and project planning work that will have been going on in relation to the system changes and information technology measures. Given that we are meeting the costs, all relevant parties and Scottish Government officials have a clear mandate from me to try, in the discussions, to minimise the cost to the public purse in Scotland and to make sure that the strongest possible scrutiny is being applied to all the measures to ensure that they represent value for money. In short, HMRC’s outline estimates, which were presented some time earlier, have been subjected to the rigours of project planning and, as a consequence, we now have a more robust estimate. Nevertheless, the pressure and the approach that I have mandated my officials to apply will continue in order to ensure that we are in as strong a position as possible.
We recently took evidence from the Office for Budget Responsibility on receipts from land and buildings transaction tax. As you will probably know, the OBR has, since March 2013, uprated its forecasts for this financial year’s receipts for stamp duty land tax—as it is at present—from £372 million to £456 million, which is an increase of about 22 per cent. It has said that that is because house prices have picked up and the number of property transactions in Scotland has increased. Are you happy with the OBR’s forecasts on the matter?
The factors that were cited by the OBR are borne out by evidence of a general increase in both house prices and the number of transactions, but whether that represents a 22 per cent increase from the figures that it had set out is a different question altogether. As part of the exercise that the Scottish Government will undertake in projecting future revenues, we will consider all relevant data on the matter and will put our modelling and methodology to the fiscal commission that I will establish in due course, so that they can be independently tested.
09:45
I will touch on one further area before I open out the session to committee members.
The committee has previously pointed out that it is unclear how the UK will bear a risk of a deviation from the forecast receipts for SRIT during the transitional period when there is no reconciliation with the actual receipts. For example, if Parliament agreed to an 11 per cent rate as opposed to one of 10 per cent, and the forecast was pessimistic, it is unclear why the Scottish budget would not be disadvantaged if the receipts for the 11 per cent rate were higher than forecast.
Essentially, the variation factor under the arrangements for the Scottish rate of income tax is carried by the Treasury in the transitional period. As we work through the reconciliation of the numbers to establish the comparison between actual receipts and projected receipts, the Treasury will, essentially, be meeting the cost of any gap that arises as a consequence of a deviation between the projections and the amount of receipts that are generated. That is the nature of the proposal that has been advanced by the UK Government.
But that reconciliation will not happen in each of the financial years; it will happen at the end of the three-year period.
That is correct. Essentially, we will be working to ensure that we have sufficient comfort in the budgeting arrangements to ensure that any deviation is accommodated in our management of the public finances.
Thank you, cabinet secretary. There is a tsunami of members who want to ask questions.
On the issue of the block grant adjustment, I was interested in what you said about the command paper that was presented being the basis on which this Parliament, and, presumably, the Westminster Parliament, considered the legislation. This is shifting the goalposts after the event but, presumably, Parliament might have considered matters somewhat differently if information had been presented differently in the command paper.
In my opinion, the command paper is crystal clear, as was the report of the Scotland Bill Committee, which considered these issues, that the block grant adjustment mechanism is based on a one-off adjustment. That is why such a long period has been taken in pursuing that particular issue in this debate. I thought that it was important that what had clearly been expressed to Parliament through the command paper and the report of the Scotland Bill Committee was clearly articulated to the UK Government as part of these discussions.
The convener made an interesting point about the 22 per cent increase in the OBR’s estimate of receipts for stamp duty land tax in 2014-15. Accepting the point that you made, which was that there has been an upturn in activity, surely the issue is not so much the 22 per cent increase in the 2014-15 estimate between March 2013 and March 2014 but the fact that, according to the OBR’s estimate, receipts from 2012-13 to 2014-15 would go from £283 million to £456 million. I accept that I have only calculated that on paper, but I make that out to be a 60 per cent increase in receipts. That does not seem credible to me.
The nature of my answer to the convener was that activity has increased and property prices are higher, but whether that translates into a 22 per cent increase in the estimated receipts and the scale of increase between 2012-13 and 2014-15 that Mr Hepburn mentioned is a matter of significant debate. I think that that is why a Scottish fiscal commission, in assessing the validity of estimates that are put forward and the basis on which they are formulated, will provide important reassurance.
My final question relates to the start-up costs for the Scottish rate of income tax. It is welcome that those costs are quite significantly lower than was estimated in November 2010, but can you explain why that is the case?
I do not think that I can say more than I said to the convener. The outline estimate of £40 million to £45 million would have been made by HMRC on a more general project-planning basis. As a result of the rigour that we have applied through the project board and the mandate that my officials have to deliver value for money for the Scottish public purse, we have managed to arrive at a more refined and more reliable estimate, and we will continue to press on that issue.
You mentioned your desire to bring about an increase in accountability. I know that there are different ways in which people can hold their Government to account and judge the decisions that it has made, but one of them relates to the amount of tax that is taken from them. It would appear that you had some discussions with HMRC about whether the amount of SRIT that is taken should be on people’s pay slips. If people do not know how much they are being taxed, the extent to which they can hold their Government to account might be seen to be diminished.
Although the decision not to show that information on people’s pay slips might have been taken for practical reasons, because of costs and technicalities, who was consulted on whether we should know what the SRIT element was? Was the business community consulted? Were the trade unions consulted? It is important that we understand why people will not know how much they are being taxed by the Scottish Government.
People will know that, because the information will be set out in their P60 on an annual basis. That was my decision. The judgment that I took was that there would be a greater cost to employers if we made it a requirement for all periodic wage and salary slips to include information about how much SRIT had been paid. I judged that people would get clarity on how much SRIT they were paying from their P60, which is made available annually to all employees. I believed that that would be an appropriate way of minimising the cost to employers, while ensuring that members of the public would be clear about how much SRIT they were paying. They will be able to see that on their P60.
As far as consultation is concerned, I think that we discussed some of those issues with the tax consultation forum, which has a broad membership of employers, and HMRC discussed it with employers.
One or two members have mentioned forecasting LBTT, or SDLT, as it currently is. One thing that concerns me about the OBR forecasts is its point that house prices
“remain well below their longrun trend”.
The OBR assumption seems to be that the trend will just continue. I thought that the trend was a bit unhealthy and that people were paying well over the odds for houses, here and elsewhere. I do not know whether the OBR has to assume that the trend will continue because of the methodology that it uses, but I had hoped that some people would learn that they have been paying over the odds for houses and that, in future, prices would settle down at a more reasonable level. Do you have any thoughts on that?
It would be a matter of concern if the housing market took the same course that it took for large parts of the period running up to 2008—that would be undesirable. We can clearly see the implications of that and what it leads to in the wider decisions that people make in the economy and in their economic activities and commitments. I agree that a different and more sustainable approach in the housing market would be desirable.
The reason why I am cautious about the OBR estimates is that I do not think that they will be sufficiently refined to reflect the Scottish market. They will be driven largely by an extrapolation from the assessment across the United Kingdom, and the United Kingdom position will be skewed significantly—enormously, in fact—by what is happening with house prices in London and the south-east. From a lot of the available information, it looks as if the market there is coming back to some of the conditions that existed in the run-up to 2008.
For us, it is important to take the responsible steps that we are taking of assessing the factors in Scotland and testing them with the independent fiscal commission.
On borrowing, paragraph 20 of the annual report states:
“It is the view of the Scottish Government that the option of phasing borrowing—for example over a spending review—should be open to the Government.”
It goes on to state that you wrote to the UK Government about that on 19 February. Will you explain the thinking behind the idea of phasing the borrowing?
In essence, that is about giving us a bit more flexibility over a spending review period. If an annual limit is put in place over the duration of a spending review and if we wanted to use the maximum amount of borrowing flexibility, would we have to borrow that in three equal components, or is there an argument for borrowing a more significant amount in one period in the spending review to support the roll-out of a major capital project or element of our capital programme? We simply want to have that flexibility.
Would that necessarily mean that you would spend more in year 1 and less in years 2 and 3, or would it sometimes be the other way round?
It would depend on the choice. In essence, we want to have flexibility to make that choice and to be driven by the contents of our capital programme rather than an obligation to borrow the same amount of money in three annual instalments, if we were using the maximum amount of borrowing capability. We might want to undertake a capital project for which we wish to borrow because our capital departmental expenditure limit allocation is not sufficient. However, we might not need to borrow anything in year 1 but need to borrow a lot in year 2 and less in year 3. That is the type of scenario that I am talking about.
So that would be similar to the Forth replacement crossing—we know that it is coming and that there will be a big bump in one or two years.
Correct. We just want to have that flexibility.
With regard to landfill tax, the annual report that we have from the UK Government states:
“Draft legislation setting out the necessary changes to existing legislation for the disapplication of Landfill tax ... will be published in autumn 2014.”
That is obviously Westminster’s timetable, but it sounds quite late to me. We are introducing a new tax and Westminster is only going to think about stopping the old one in the autumn.
To be fair to the UK Government, I do not think that it is saying that it is thinking about stopping the old tax; it is the technical language that is used. I find myself in the very unusual situation of being fair to the UK Government, but that is consistent with my reputation for fairness in all such questions. Those are simply the technical provisions to conclude the tax powers being held at Westminster. It is nothing more to be worried about than that.
10:00
So we can be relaxed about that, then. That is reassuring—thank you.
I was interested in some of the comments that Mr Carmichael made in his foreword to the annual report. I would be interested in your thoughts. He discusses the “two new Scottish taxes”, which are land and buildings transaction tax and landfill tax. He suggests:
“All of this as part of the United Kingdom, with the strength and support of the UK’s economy and resources. This is devolution in action.”
I thought that those two taxes were totally under our control. I did not see how the “UK’s economy and resources” were having any impact on either land and buildings transaction tax or landfill tax. Is that your reading of it, too?
That would be my reading of the situation as well, yes.
Mr Carmichael goes on to say:
“This Coalition Government made a commitment to people in Scotland to deliver the recommendations of the Calman Commission”.
Admittedly, he does not say “all the recommendations” of the Calman commission, but neither does he say “some of the recommendations” of the Calman commission. I understood that those recommendations included things such as air passenger duty that have not been devolved. Could you comment on that statement that the UK Government is delivering
“the recommendations of the Calman Commission”?
It is a matter of fact that the UK Government is not delivering all the recommendations of the Calman commission.
Also in that foreword, Mr Carmichael refers to the people of Scotland making a choice and to the question:
“should Scotland remain part of a strong, successful United Kingdom”?
Is it your opinion that the United Kingdom is strong and successful?
It will not come as much of a surprise to the committee that I am a supporter of the arguments for Scottish independence, so I do not find myself in accord with the secretary of state on that point.
Thank you.
Thank you for your clarification on that.
If it is okay, I might return to the Scotland Act 2012.
Is the figure of £35 million to £40 million a sort of shared estimate by the Scottish Government and the UK Government? Are you both saying that you think that that is what it will end up costing to implement the Scottish rate of income tax?
That estimate has emerged from the project board, in which the Scottish Government is a participant. We consider it to be robust.
I will come on to the block grant adjustment, but before I do, I want to ask about paragraphs 75 to 77 of the UK Government’s annual report on the act, which have the subheading “Cash reserve”. They outline the mechanism of the cash reserve. Does the Scottish Government have a position on that, or a plan? Does it intend to do anything on that, either in this financial year or in the next financial year?
The arrangements that are cited by the UK Government in those paragraphs are an accurate representation of the facility, but at this stage the Scottish Government has made no provision to contribute to that cash reserve. Obviously, however, there are budget statements yet to come.
Is the matter under discussion?
All these issues are always under discussion.
On the block grant adjustment, I will deal first with the Scottish rate of income tax. Is it fair to say that the Scottish Government and the UK Government broadly agree on the overall mechanism?
For the Scottish rate of income tax?
Yes.
Yes, it is.
I have a minor question. It appears to be said quite frequently that there will be two or three transitional years. Will it be two transitional years or three transitional years, or is it a case of seeing how things will develop and taking a decision at a later date?
That is correct. There is still discussion about the appropriate transitional period. It is fair to say that nobody is absolutely certain how all the reconciliation arrangements will work themselves out, so some flexibility is being retained, perhaps to spread it over a longer period rather than a shorter one.
I turn to the block grant adjustment for the devolved taxes. Is there likely to be an agreement that rolls the two taxes together or will the mechanism for each tax be treated separately and on its own merits?
That will be a product of whatever agreement we arrive at, so I cannot predict whether the two will be rolled together. It would desirable if they were.
You said to the convener that one of the bottlenecks was indexation. I suppose that you are limited in what you can say, but if we put indexation to one side, is there broad agreement on what the one-off figure would be or is there still some disagreement about what represents a fair figure?
We cannot separate agreement about the one-off adjustment from indexation. To go back to the original starting point, which I probably discussed with the committee when I was here a year ago to speak about the previous section 33 report, I concentrated on the provision in the command paper that, in my view, is the clearest distillation of the position, which is that there should be a one-off adjustment and that should be the end of the story. If we add in indexation, which the UK Government has done, it becomes clear to me that we cannot come to a conclusion on the one-off adjustment without also coming to a conclusion on the indexation arrangements, if we are going to have any of those in the first place.
Okay. I understand that.
You say in your paper that you have written to the UK Government and made a proposal. It says in its report that it has received the proposal and is considering it. What was the approximate date on which the proposal was put to the UK Government?
It was 10 April.
Perhaps there is no protocol for this, but is there a date by which you expect an answer or have you been given an indication of when to expect one?
We have not been given an indication of when we should expect an answer. I am keen to ensure that the issue is resolved sooner rather than later—it would be better for the good administration of budgeting processes if that were the case—and I will work to effect that.
At paragraph 65 on page 28 of its report, the UK Government talks about taking an approach similar to the one that was taken when business rates were devolved to Scotland. Over several paragraphs, it goes on to talk about how that might operate. What would the Scottish Government’s primary objection be to mirroring what happened when business rates were devolved? Is the situation so different?
I do not quite understand the connection, to be honest. The devolution of business rates must have happened 15 years ago. I was not intimately involved in the discussions about that, so I do not have all the details to hand, but there was a budget line in UK public expenditure on business rates. Therefore, I can understand how, when the function was devolved, comparability went from 100 per cent to zero, because there was a budget line associated with its devolution. There is no budget line associated with the devolution of stamp duty land tax and landfill tax, so I cannot quite understand what point is being made about the example of business rates somehow being a touchstone for how we might approach the devolution of those taxes. I simply cannot understand the basis of that.
In a way, Gavin Brown has half dealt with this question. I think that you would agree that, if we get the result that you do not want and have further fiscal devolution, income tax will become the crucial issue, particularly if it is devolved further.
You said to Gavin Brown that you had agreed the block grant adjustment mechanism—the Holtham mechanism is what it is normally called—with the UK Government. Does that mean that you are entirely happy with it or have you agreed it because that is the nature of negotiations?
It is an infinitely preferable approach to the one that was proposed by the Calman commission and in the command paper.
Just taking the years of devolution for the sake of argument, do you happen to know in how many years the non-savings, non-dividend tax base in Scotland has grown more quickly than the UK average?
I do not have that information to hand, but I could explore it.
It would be interesting for us and the public to know that.
Cabinet secretary, I got ticked off last week for asking questions that were too long and rambly, so I will keep my questions short.
I hope that there is no ticking off for people who give long, rambling answers, or we certainly will be in trouble.
That was not discussed.
What is the point of the Scottish rate of income tax?
The only point of it is to give the Scottish Parliament more involvement in the setting of one element of Scotland’s income tax base.
However, if we were to adjust it, that would not affect Scotland’s income, would it? That would be compensated for in the block grant adjustment.
It would have an effect because, if the Parliament decided not to collect as much tax as was envisaged by the block of taxation that was devolved or if it decided to collect more of that tax, that would mean a variation in the amount of money that it had available to deploy in public expenditure.
There would be no change to the Barnett formula calculation of Scotland’s block grant.
The effect would be more on the amount of money that the Parliament would have available to allocate to public expenditure. There would be a block grant adjustment, but the decision that the Parliament took to raise or to lower the rate of taxation would have an effect on the amount of money that we would have available to spend.
My other question is about the Scottish Government’s borrowing powers. I will try to keep it short.
One of the biggest concerns in local government finance is about the cost of continuing public-private partnership and private finance initiative repayments, which are extraordinarily harsh and about which local authorities can do nothing. If the Scottish Government is allowed to use its borrowing powers to do so, would it consider the kind of investment that might save money in the long run if there was a possibility of paying off some of the 20 and 30-year arrangements for school, hospital and other capital expenditure programmes?
10:15
An exploration of each of the projects involved would have to be undertaken, because all the PFI commitments that were entered into were entered into on a specific contractual basis for the particular asset or group of assets involved, and there are probably differences between almost every project that is in place. I have looked previously at whether it would be possible to renegotiate some of those terms of agreement and, in almost all cases, the ability to renegotiate the contents of the agreement was so constrained that it was impossible to secure a better deal.
In some circumstances, the contract prevented any reopening of the contract during its 25-year life. In others that could be reopened, the public sector had no ability to insist on that happening; the contract could be reopened only with the consent of the special purpose vehicle party. In many circumstances, if there was to be any gain or benefit from the renegotiation, a significant proportion of the proceeds had to go to the special purpose vehicle in the private sector. That was part of the contractual arrangements that were entered into at the outset of the PFI contracts.
The re-examining of PFI contracts has been a priority for me. I have reluctantly come to the conclusion that the room for being able to renegotiate such contracts is limited, if not non-existent. That serves to illustrate the fact that we must always take the greatest of care when we enter into such negotiations in the future.
The wider question about the sustainability of borrowing is an important one. The committee will be familiar with what I have put in place in relation to the wider fiscal framework within the devolved arrangements that we have. I have set a limit on the amount of borrowing or revenue-financed investment that we undertake of 5 per cent of our departmental expenditure limit budget, essentially to provide a framework to discipline how many commitments we take on and what we envisage being utilised. Of course, the same principles apply to local authorities, whose conduct must be consistent with the prudential code.
Thank you. That concludes questions from colleagues.
I have just one further question. Time is marching on as regards the block grant adjustment. If no agreement is reached between the Scottish Government and the UK Government, will the UK Government just impose its own view on the issue?
That would be utterly undesirable and it would be a dreadful mistake by the UK Government if it decided to do so.
Thank you.
Okay, colleagues. I will not call a break, because we are only 48 minutes into today’s deliberations and we have the same witnesses for agenda item 2 as we have had for agenda item 1.
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