Chamber and committees

It is only fair to note that in the exact circumstances that you outlined, the real issue is section 24 of the Finance Act 2015 from Westminster, which provides that such costs cannot be offset as a legitimate business expense. Perhaps you should clarify that for everyone here. In other words, Westminster legislation has greatly contributed to that situation.

It is not often that I get the last word in any session of the committee. I am looking at the four men on the panel, and I am reminded that significant structural inequalities for women remain in the economy. Covid has had a big impact. The cost crisis has had a disproportionate effect.

Close the Gap suggests that narrowing the gap could add £17 billion to the Scottish economy. That organisation has expressed the view, with which I strongly agree, that equality must be seen as an economic issue, not an equalities issue. Will you give a commitment to testing every element of what you bring forward for the Scottish budget as to its impact on women, in terms of contribution and reduction?

You have made that very clear at this meeting and elsewhere.

One of the reasons why the markets were so spooked was not just the lack of an OBR look-ahead but the fact that the UK Government intended to borrow vast sums of money to fund tax cuts. I wondered at the time whether the same people who were running gleefully to borrow money for those would also run gleefully to press for an increase to the Scottish Government’s borrowing powers, although we would both immediately agree that the Scottish Government would not be so stupid as to borrow money to fund tax cuts.

In light of that, will you commit to an increased emphasis on further proper flexible borrowing powers for the Scottish Government? The situation has laid bare the lack of fiscal resources available to you in the current economic climate.

Just picking up on John Mason’s point around investment zones, it is good that some initial discussions have taken place. Do you have any concerns that money will be made available for them that bypass the priorities of the Scottish Government with no proper accountability or scrutiny, as has been highlighted as a concern in relation to some of the other levelling-up-type funds? Have you got that far in your discussions yet?

You have talked eloquently about last week’s pretty disastrous fiscal event. Arguably, too many people in politics and perhaps even the media were too hasty to view the wider economic landscape through the prism of London. That often happens. However, that budget and fiscal event talks to a culture, perhaps, of risk taking. We saw that with defined benefit pensions, where liability lies with the providers. Today’s Financial Times reports some statistics on the dwindling investment of UK pensions in the domestic stock market. The article says:

“as recently as the mid-1990s, pension funds allocated just under half their assets to UK equities, a figure that has fallen to under 15 per cent.”

It goes on to say that the type of pension schemes that, last week, were

“caught up in the liquidity squeeze ... allocate just 3 per cent of assets to UK equities.”

Frankly, it is not a good sign that long-term patient capital vehicles are reluctant to invest in their home turf and the alignment of that. That strikes me as a business opportunity for Scotland whereby you signal a prudent approach, aligned with the Scottish National Investment Bank with long-term patient capital. Are you able to commit that, with regard to all funding towards the Scottish National Investment Bank, and, indeed, in relation to long-term patient investment capital, you will do all that you can to protect that and perhaps even increase it? It would be good if Scotland were seen as a place for some of these defined benefit schemes to invest, where they are not going to invest elsewhere.

I am on record as talking about corruption and how we should reframe the loss of those moneys in gross domestic product terms. People tend to consider corruption as crime rather than a loss to GDP and, therefore, an inability to fund vital public services. I have said in a speech that conservative estimates put the loss to UK gross domestic product at around at around £267 billion each and every year—that comes from figures from the likes of the National Crime Agency.

Can we have a short update about any further discussion of the proceeds of crime? The figure was less than £30 million prior to 2016. As I understand it, that was then folded into the Scottish budget and nothing has come to Scotland since 2016. The UK Government regards it as something that should be deducted from Scotland’s budget, whereas the Scottish Government sees it as something that should come under the no detriment principle.

A loosening of regulation has been trailed, which usually correlates with increased criminal activity—that is what we have seen: history tells us that. Have there been any further, more recent, discussion about the proceeds of crime? In my opinion, that affects Scotland’s international brand—we do not want to be associated with that. If there has been no discussion, will you undertake to look at that more closely, given the correlation with loss to GDP and the impact that that has on Scotland?

I refer members to my entry in the register of members’ interests, which states that I rent some property out. I consider it unethical to speak on issues on which it could be construed that I am attempting to influence the Scottish Government in my own interest. Therefore, my speech will make no reference to the buy-to-let market. I will, however, make some remarks on the broader housing market.

Fundamentally, the Scottish Government is seeking to do the right thing, but it is subject to limitations. The first of those is a lack of adequate powers. The Government’s job, above all else, is to protect Scottish citizens, and there is nothing more fundamental than having a roof over one’s head. However, without an appropriate basket of powers, including on borrowing, the Scottish Government is heavily constrained.

The second is the macroeconomic context. The Scottish Parliament has no monetary policy powers and very limited fiscal powers. That is why the Scottish people are facing the full brunt of Tory economic incompetence. Rising food inflation, rising mortgage costs and the recent disastrous fiscal event by the latest Tory chancellor and Prime Minister all call for action. The willingness of the Scottish Government to take action is to be commended.

If the intervention is specifically about the regulatory environment for SMEs, I will happily take it.

This is my last sentence.

Despite the complexities that I have outlined, fundamentally, the Scottish Government has a duty of care to citizens, and for that reason I absolutely stand by the legislation.

I do not have any evidence, because I do not have a crystal ball. However, I am pointing out that there is a housing market—we are not debating that here—and what is critical in relation to the housing market is having macroeconomic and fiscal powers. If we had adequate borrowing powers, we could take action, for example, to build more houses. That is the point that I am making. [Interruption.] I will carry on.

I reference the Scottish Property Federation’s remarks that there is a pipeline of new build-to-rent properties that is worth £3.5 billion and its concern that some of those projects might be put on hold. Risk assessments for other businesses such as small and medium-sized enterprises are growing more complex, and they are becoming more risk averse. Access to funding is already problematic, with interest rates increasing and being exacerbated by the current Tory-induced chaos. No one who lived through the credit crisis of 2008 will forget clauses in commercial contracts that allow for a demand for the repayment of bank loans regardless of whether any debt is being serviced regularly. We need strong guarantees that, this time around, the finance sector will act appropriately to support businesses.