Chamber and committees

We have commitments in the Bute house agreement to take forward discussions on the reform of the council tax, and we will pursue that. There is also the local visitor levy bill, which will come to Parliament, but that relates to an additional form of local taxation.

The Government obviously gives consideration to sources of taxation. However, a point that is relevant to some of the issues that the convener raised with me earlier is that, if we were to develop any new taxes, we would have to seek the consent of the UK Government to introduce them. It is not something that we can just take forward under our own steam.

The committee will recall from the fiscal event or mini-budget—I do not know what to call it—in September that there were to be a plethora of investment zones. When the new Prime Minister came into office, I cannot remember at which stage—

Obviously, that is on a range because a number of variables are involved—

We have some scope in relation to capital activity to address some of those issues, principally through capital borrowing. Obviously, in the budget statement, we set out the intention to utilise our borrowing facilities in relation to capital projects to the maximum. Judgments will be made during the financial year—particularly more towards the end of it—about the volume of actual borrowing that is required, because that is a product of the interaction between individual projects, the cost of those projects, and the availability of funding. We do not want to borrow if we have no need to borrow to support the projects that we have under way. Those sensitive judgments will be made, but we have some ability to address those requirements.

One of the issues that I have to be particularly mindful of in the current period is the possibility of an implication for our capital programme in this financial year from the United Kingdom Government’s supplementary estimates, which we expect to be published some time over the course of the next six weeks. There is undoubtedly a risk that that will restate capital expenditure within the United Kingdom, which could have a negative effect—I cannot see there being a positive reaction, but it could be neutral or negative. I have to be mindful of that in the decisions that I take in the remainder of the financial year.

Dr Brewer made an important point. We want to sustain investment in the capital estate of Scotland.

Another caveat that I should probably put on record in relation to that point is that capital projects are significantly affected by the effects of inflation and the input prices that largely arise from the global turmoil that we are experiencing as a consequence of the war in Ukraine. We are looking very carefully at the cost of capital projects because, in some circumstances, there might be an argument for delaying the commitment to a capital project because the cost at the moment might be so great compared with what we would have ordinarily have expected to be the case, given the exceptional pressure of global input prices and inflation. There is a set of sensitive judgments to be made about whether we should take forward all the capital projects that we would have ordinarily been committed to taking forward, given the effect of price inflation on those projects at this moment in time.

In the judgments that we make, we need to bear in mind many of the factors that I have just outlined to you. The more homes affordable housing programme will be uneven from year to year, because of the nature and timing of particular projects over the course of the programme. It is a long-term, multiyear programme lasting at least five years, if not 10. Those numbers will vary from year to year, depending on the maturity of the programme.

The increase in capital grants to local authorities is a material point to consider in relation to the overall local government financial settlement, in which local authorities have a significant amount of flexibility in how they utilise the resources that are made available from the Scottish Government. It is important to consider all those issues in the round when we look at the financial capacity of local government to take the decisions that it has to take.

As the committee knows, I am required by statute—I do not complain about this—to use the numbers that are provided to me by the Fiscal Commission. That is the right and proper way to do it, and I cannot ignore what the Fiscal Commission says on those numbers. I see commentary into the debate that suggests material that I could not take into account, because it is not the Fiscal Commission’s view.

The committee has heard the Fiscal Commission’s view. I cannot ignore that—I have to take it into account. However, there is other analysis that suggests that, if Swinney just went off and did this, there would be much more money available. Unfortunately, that collides with the reality of the assessment put forward by the Fiscal Commission, which I cannot ignore.

That is perhaps the best way to convey that point, convener.

Yes.

I think that it is, and I have just explained why.

The point that Liz Smith is missing, which is the point that the First Minister was making, is that the financial arrangements for the financial year 2022-23 were largely set in a low inflation climate in the autumn of 2021. By the time we started to face the reality of 2022-23, inflation was galloping away from us and there was no subsequent adjustment of the financial year 2022-23 provisions from the UK Government.

I do not know whether we have information on a granular enough level to answer your question. I will take that away and see whether we can answer it. As far as I am aware, reconciliations that have taken place have not indicated much divergence from what was planned, but it would be better if I took the whole question away and provided the committee with a more substantive answer in writing.