Chamber and committees

The national care service is going to be an important reform that will lead to more consistency and improvement in the quality of care services. Having worked in the sector for many years, I can tell Liz Smith and others that consistency, and the requirement for consistent quality, is something that service users tell us is a priority. They are very keen that we make progress with the national care service.

The building blocks and infrastructure for the national care service are being put in place; we are working with local government to make the necessary progress. The service will take longer to establish, but it is a very important reform that will, in the longer term, deliver huge benefits for those who receive care services.

The investment in the team that is supporting the delivery of the service is a fraction of the cost of the delivery of social care. If we were not investing in a team to deliver it, questions would be asked around whether we were putting in place the necessary building blocks to ensure that the national care service will be delivered. We are doing that in order to ensure that the NCS is delivered successfully.

As I said, it is expected that the funds that will be available to colleges will be very similar to the funds that were invested by colleges in the 2023-24 financial year. We need to make sure that the in-year savings that were made because of demand-led budgets are factored into what colleges will require to spend. Those discussions with the SFC will continue in order to make sure that the college sector has the resources to deliver what is required, particularly when it comes to demand-led expenditure. I do not know whether Alison Cumming has anything to add.

The only number that I am aware of is the one that I spoke about earlier: the 1,200 Covid places. That is the bubble for which we have sustained funding for an additional two years out of Scottish Government resources, because the Covid money that had initially funded those places was stopped by the UK Government. We kept those places going with Scottish Government funding for two years, but we are no longer going to be able to sustain that. Beyond that, no figure has been agreed with the university sector, because discussions are on-going around what the university sector will deliver and they are not yet concluded.

Well, without the bubble of 1,200, it will return to the pre-bubble position.

The position with regard to international students is constrained by the UK Government’s position and the decisions that it has made, which makes it more difficult for international students to come to university in the UK, in particular regarding their ability to bring their families. I think that that is a very short-sighted policy from the UK Government. The universities are pretty clear that it will impact on the numbers of international students who come to the UK, not just to Scotland but elsewhere in these islands. That is unfortunate, and it is not a helpful policy for the university sector as it moves forward.

These decisions are carefully considered. I point out that it is estimated that the new advanced rate will impact only the highest-earning 5 per cent of taxpayers but, nevertheless, the decision was not taken lightly. We have, of course, looked very carefully at the assessment from the Scottish Fiscal Commission on any behavioural change, and that is factored into the net gain or benefit from the tax changes. The SFC estimates that £82 million will be raised from the advanced rate, which is not an insignificant amount. We also have the analysis that is being worked on by HM Revenue and Customs, which will be made publicly available later this year. That builds on the evaluation of the 2018-19 income tax reforms, which found very limited evidence of Scottish taxpayers lowering their declared income, for example, in response to increasing tax rates.

It is important to note that we still see net migration of working-age people from the rest of the UK to Scotland with a net gain that averages about 7,000 people per year. Over time, that adds significantly to Scotland’s workforce and it is important in growing the economy.

However, we should not be complacent about these matters and we keep them very much under review. Taken as a whole, the SFC estimates that the tax changes that we have made over a period of time compared with the rest of the UK are worth about £1.5 billion, which represents a significant contribution to public services.

You started by talking about the marginal rate, and we have to be cognisant of that. The marginal rate for earnings between £100,000 and £125,140 is mainly due to the personal allowance taper rate, which is entirely reserved. The marginal rate for taxpayers in the rest of the UK is also significant.

We are not complacent and we do not take such decisions lightly. However, in the most challenging of budgetary circumstances, if we had not made the decision, even less money would have been available for public services at a time of constraint.

There are not widespread errors. That error has been picked up and we are not aware of any others.

That is not dissimilar to what happened in the previous budget, when pay policy was set out in March last year. There is difficulty in being able to predict the outlook in the light of the forthcoming spring budget, which could make significant changes to our fiscal outlook. It is important to understand what that will look like as part of the issuing of pay metrics. With the level of uncertainty, it would not be right to do so now.

That is why the timeframes are what they are. I accept that, in an ideal world, we would want to align that with the budget, but because of all the difficulties in forecasts, that has proved to be very difficult. We will set out our plans for public sector pay following the spring budget, which will provide an update on the fiscal outlook and, most importantly, on the UK Government’s public spending policy, which could impact on our budgets. Given that pay is such a large part of our budget, as I set out in my letter to you, it is prudent that we do that.

The protocol sets out the information sharing that is expected in the lead up to the budget. We provided the SFC with the latest position on public sector pay costs for 2022-23 and 2023-24, and we commented on the pay award assumptions that are being made for future years. On the specific metrics, we are in an unusual position in which an upcoming spring budget could have a major impact on the available spending, even though our assumptions have been made based on the autumn budget.

It is very important that we try to encourage Scotland-domiciled students and those who come to study here to remain living and working in Scotland. We certainly try to do that.

If you are talking about the 1,200 places specifically, I would note that, had the money for those places continued to be invested—as we called for at the time; we said that the Covid money should not go off a cliff—we might have been able to make different decisions. However, that position was never going to be able to be sustained into the future, because that money was deployed as a mechanism to take account of the spike in university applicants as a result of the Covid period.

It was a short-term intervention, which we have delivered for two years beyond the period covered by the Covid moneys. In terms of support, the position with Scotland-domiciled students is that we want the universities to continue to provide and deliver opportunities for those students, but we cannot continue to fund the Covid-related 1,200 bubble that was funded previously. The resources are simply not there to do so.