Chamber and committees

I have seen the document that was published in May.

To go back to your point, Kirsty Flanagan, sometimes we see facilities management, for example, being part of a shared services function. I accept what you said about the disparate geography of Argyll and Bute, but you have also pointed out that there is a lack of appetite across councils in respect of replicated functions—for example, finance directors, IT, HR and the specialisms. In any other commercial walk of life—I spent some time in commerce in a previous life—there is no way that there would be duplicated functions across the board. Hence my comment about appetite. On the one hand, councils complain about not having any money; on the other hand, it is clear that that is an area that should be looked at, as there are duplicated functions across 32 councils.

That is the point that I am trying to make, although I accept that there is the time issue and a cost.

I want to ask Kirsty Flanagan one more question. It is a bit of a technical question, so I hope that we can deal with it quite quickly.

You made a point in the submission about capital accounting. I know that that has been rumbling about for some time. Obviously, there are concerns about the planned review, but what was the driver for the concern? That issue has been raised a number of times, and something is now being done about it—it is being looked at. Surely a potential outcome is a positive one. I want to understand where your concerns are coming from and the assumption that the result could end up less favourable for councils.

I will not labour the point, because I am conscious of the time; however, I am just not clear why you think that that will automatically happen. That is what I am querying.

I go back to your point about the immediacy of the crises from which we are lurching. We have had several: we have had Brexit and Covid and we have a cost of living crisis. In addition, there are the up-front costs, which you clearly pointed out, before we get the benefits—if they are financial benefits. Does that work to inhibit structural change? Does short-termism always win the day, or is the possibility that it wins the day increased?

Good afternoon. Thank you for coming along today.

I will ask the Auditor General a question first. In your submission, you said that the resource spending review

“notes that there are ... 129 public bodies in Scotland”.

You quite coyly comment that

“structural reform ... can take time to achieve and generate short-term costs.”

I also note your point about service delivery and outcomes.

With regard to the typical time-cost quality of any change, you have not given any indication of the potential for cost savings. From an audit perspective, how does our having 129 public bodies compare with the situation in other countries? I realise that this is a difficult question, and I accept what you said earlier, but, by head of population or some other appropriate measure, do we have far too many public bodies, and should we have fewer?

My last question is on net zero targets, which the Auditor General and Susan Murray both mentioned. We know that they are already very difficult to achieve. We anticipate a fiscal event from the UK Government, which, if reports are correct, could roll back some of the commitments to net zero. Where is the tipping point for how that will increase the challenge for the Scottish Government, which has a clear target to achieve net zero?

Susan, in your submission you mention the Acorn carbon capture and storage project—and nearly everybody I have spoken to was utterly gobsmacked that that did not come to Scotland. I am trying to flesh out what could happen that would make you really concerned about Scotland’s job becoming much harder.

It is a pleasure to take part in this debate. I thank Rhoda Grant for bringing it to the chamber and for her very good speech.

I have had an interest in taxation issues for a number of years, not only because I have to pay quite a bit of it. Back in 2016, when I was an MP, I was a sponsor of a double taxation treaties bill. The bill sought to right some injustices, such as the fact that if African countries were able to access the corporate taxes that they are due, the money would exceed the total amount of aid supplied by the rest of the world. The bill reached a second reading and, although it was not picked up in full by the UK Government, it brought about some changes.

As has already been highlighted, one problem with the UK tax system as a whole is its complexity and large number of loopholes. There is a huge industry to milk those loopholes, limited resource in Government agencies to plug them and a limited appetite from the UK Government to narrow the tax gap, which stood at £32 billion in 2020-21. I am reminded of the joke about an accountant’s children being told the story of Cinderella and interrupting to ask, “But, Mum, when the pumpkin changed into a golden coach, would that be classed as income or a capital gain?”

Although the Scottish Government has very limited powers over taxation, I applaud its efforts to create a fairer and more efficient taxation system in those areas within its control.

On re-reading Tom Arthur’s excellent Reform Scotland blog post from June of this year on the Government’s framework for tax, I noted that he explained the need for fairness, transparency, engagement and good guardianship. I suspect that those things hark back to the four principles of good taxation that Adam Smith set out in 1776.

One of those principles was fairness, by which Smith meant the ability to pay, and it appears be a guiding light for the framework for tax. Similarly, Smith argued for certainty, by which he meant that taxpayers should be clearly informed about how and why taxes are being levied. In other words, he argued for what we today term transparency. Again, I note that Tom Arthur has taken forward that concern. He knows that there is considerable scope for improvement in that regard, and he has pointed out that 61 per cent of people in Scotland know very little about the tax system. Transparency and fairness are fundamental to further progress. It is fair to say that we are on a journey but we have some way to go before we reach our destination.

A further thought is that it is difficult to conceive of any tax that does not have unintended consequences. That is inevitable, as the way in which individuals respond to tax changes may be very different from the intentions of Government. I am sure that we have all seen examples that we can relate to.

My concerns about the world that we live in include concerns about the growth of shell firms and, not least, the massive abuse enabled by the existence of Scottish limited partnerships—which, despite huge efforts over the years, the UK Government, which is responsible for the relevant legislation, has steadfastly refused to reform.

We are making progress, but we have a huge way to go.

So it is not actually your customers who have said this. You used the term “customers”, but it is a committee of the Law Society that has suggested that approach rather than the customers at the end of the chain.

But surely some customers will not know that there is a problem with cases going back to 2017 until it is uncovered, by which time it will be too late.

I think the convener is going to come in here—

I am sorry—it is not a supplementary question. It is on something entirely different, and it is a quick question for the end.