Chamber and committees

I want to briefly make explicit a point that has been implicit in some of the discussions about access to finance. We have heard valid commentary about SMEs: personal guarantees are hugely prohibitive, as is carrying coronavirus business interruption loan scheme loans, bounce back loans and so on. In relation to the college sector being able to access funds under the current structure and Lesley Jackson’s comment about FTs and SNIB, it might be worthwhile for us to put down a marker that access to finance in different sectors is deeply constrained when linked to the economic multipliers that have been mentioned, particularly around housing. We should think about that in a slightly different way.

That is an extremely important clarification, because that approach is different from what is happening in the rest of the UK. The difference between a case that goes through court processes where there is a finding of fraud and a case of suspicion of fraud will skew your figures, so that clarification is helpful.

I will pick up on something that the cabinet secretary said right at the start of the conversation. What did you mean when you said that there was no black hole? There are different meanings of the phrase, which we might go on to, but what is your understanding? What are you saying when you say that?

You have made my point for me. There are nearside considerations in relation to the forthcoming budget, and there are longer-term projections. The Scottish Fiscal Commission has made clear the challenges of the fiscal sustainability of continuing to make social security payments at the rate at which they are currently being made. In your discussions with senior colleagues, at what point do you say, “Oh, this looks utterly unsustainable. How on earth are we going to manage it?” What is the tipping point? How do you model that? That goes back to the questions about opportunity costs.

It would be useful to get your personal reflections on the point at which you start to worry, rather than just thinking, “How do we get through the nearside budget that is coming up thick and fast?” I have never been able to detect any sense of longer-term strategic thinking about the fact that the current level of social security payments is clearly unsustainable as it stands.

Hi, everybody. I have been listening to the session with interest. As the convener set out at the start, one of our key focuses is fiscal sustainability, but we have not really reflected on that thus far. We have touched on the UK balance sheet, which is pretty dismal—it drives everything and ultimately flows through into what we see in Scotland.

We have almost got a counterintuitive challenge here. First, we have touched on the availability of labour, which we know would be a key way of addressing some of those challenges, when we have political drivers against immigration. Secondly, I was surprised that Scottish Enterprise’s submission did not mention artificial intelligence, because it has so many links to skills and productivity, which we have touched on. Finally, I have a gentle challenge to Universities Scotland: you ended up in a position of overreliance on overseas students, but, from a business perspective, any business would be doing the risk analysis of having so many eggs in one basket—of a critical type of customer, if you like.

Are we ready and up for this challenge, given its counterintuitive nature and a backdrop of decreasing and constrained public sector funding against a demand from everybody for more money, often for a good reason, such as wanting to invest? Do we have the audacity of thinking and the leadership that we need? Do we properly understand the almost counterintuitive nature of fiscal sustainability? I appreciate that this is a pretty big question. We have had a nice chat so far. However, will that nice chat really start to shift the dial? That is my question. Elaine, you are nodding—

I thank the witnesses for bearing with us. I will finish on one tiny point on the £36 million. You have extensively laboured the differential approach in how you deal with that in Social Security Scotland, but I did not get a strong sense of how your approach to overpayment through error—not somebody’s fault—differs from that to overpayment when there has been fraud as an intentional act of obtaining money by deception. Okay, you are going to be fair, you are going to be nice and you are going to treat people with dignity but, clearly, fraud is an entirely different matter. How do your processes differ in those circumstances?

We have laboured that point and questioned whether the recovery percentage is 10 per cent or more, but my understanding is that “black hole” is simply terminology to express a projected overspend against projected income. People will say, “Oh, the Scottish Government’s got a black hole”; equally, you could say that the UK Government has got a massive black hole.

I will briefly explore with you an important differential. In the UK Government’s situation, some economists will argue, “Well, of course it’s not a black hole, because you can squeeze people till the pips squeak”—in other words, the UK Government can raise tax, increase borrowing or create money out of thin air vis-à-vis quantitative easing. It is different for the Scottish Government, because the only available fiscal lever is to tax. Therefore, when you say that there is no black hole, do you mean that we do not need to worry about the difference between projected income and projected expenditure because we can just increase tax?

That efficiency, in system terms, is important. However, in the light of the statistics—or projections, I should say—the other important issue is what policy levers you can use so that the differential between projected spend and projected income is not so stark. That is more a decision for the Cabinet Secretary for Finance and Local Government.

When I first got elected, I used to talk frequently about the creation of a sovereign wealth fund. My antipathy to using ScotWind money to plug a hole in revenue expenditure is on the record. This is not going to compute, but I will not ask you what the latest thinking is on a sovereign wealth fund. I do not think that anything is happening in that respect, although it probably should be, because the measures that you are setting out, which are about treating people fairly, cannot remain in place without something ambitious being done to create wealth for the long term. That is my tuppence-worth.

Good morning. Mr Sousa, I want to talk to you briefly about the issues in the wider UK economy. It is anticipated that the UK black hole is £41.2 billion; debt is around £2.7 trillion. We have seen the yield on 30-year bonds. Potentially, there could be a sovereign debt crisis. You have referenced the very late autumn statement, with a potential impact here. One of the things that worries me is that we tend to take a very nearside view on some of the challenges for the Scottish Government without looking at the bigger picture, so I would appreciate your reflections on that economic reality. There is a good reason why there will be a very late autumn budget. I would appreciate your reflections on that, casting back to some of the complexity and uncertainty that the Scottish Government needs to deal with.

Following on from that, Mr Robinson, from your audit perspective, you are uniquely placed to take the view that the best predictor of future behaviour is past behaviour. Looking at the context, what do you sense is the appetite, based on reading the documents that we are discussing today, for real substantive change rather than keeping the ball bouncing in the light of the considerable uncertainty and complexity? You have long experience in your career. Is there real appetite for change, or are we just necessarily in the time, not that far away from an election, where we can bounce the ball beyond the election?

I remember bringing up the need for women commissioners with Graeme Roy, probably in 2021. Many people are blindsided because they forget about systemic issues flowing through economics that affect women, and we tend not to gather supporting data that allow for various hypotheses. In my opinion, Professor Roy has done a very good job thus far in starting to broaden out the work of the Fiscal Commission. What do you think that you can bring to the table in that regard, because it still seems like there is quite a gap because we do not always ask the question, “What does the data tell us about women?” If we do not have that data, we need to ask what we can do about that, because we need to understand what the systemic issues are before we try to change them.