Agenda item 4 is the Executive's response to our resource accounting and budgeting inquiry report. Members should have a copy of the Executive's response.
The only area where there may be any controversy—if that is the right word—is recommendation 5 on the relationship between the capital element and the Barnett formula. The answer is that we do not know and, in effect, nor does the minister. It could have some significance for the overall Scottish budget if things were to go strangely out of kilter. However, I am not sure whether we can pursue that any further at this stage. It is something that we should keep a watching eye on.
It would be appropriate to monitor the situation. We might wish to consider inviting the minister to give us some indication of when he expects the conversion to RAB to be completed and asking him to keep the committee fully informed.
The other point about that, in terms of bringing capital charges across the budgets of the devolved and Westminster Parliaments, is that the extent to which the UK Government has devolved its civil service and the physical assets to support it will affect the capital charging element initially. In other words, it is yet another case of perverse incentive. The more you have a high capital value, the higher your initial charge and allocation will be. You will therefore be rewarded for failing to devolve things and to move them out from the centre. Do you follow me?
Yes.
We need to consider closely those capital charges as they are applied, because it could work adversely against us up here, with our lower cost base.
If that is the feeling of the committee, we could take on board the fact that we wish to keep a close eye on that area. We could invite the minister, to ensure that we are kept informed on that.
Whoever he or she is.
I am sure that we will find out soon.
Meeting continued in private until 12:08.