Chamber and committees

Presiding Officer, Jackie Baillie invites me, by asking those questions, to break the law, because she invites me to interfere in the running of the inquiry. I simply will not do it, because I have no intention of breaking section 17 of the 2005 act. If I were to do that, the first person to complain about it would be Jackie Baillie.

I have listened with enormous care to the bereaved families on a number of occasions during the establishment of the inquiry. I have taken all the time that they have asked me to take to engage with them. I will be seeing bereaved families next week. I offered to speak to the three bereaved families groups that made representations to me on Monday. I have spoken to one group, I am in correspondence with another and I will see another group next week. Their concerns must be at the heart of the inquiry.

Jackie Baillie asks me what I will do to ensure that their voices are at the heart of the inquiry and that is something that I can do. I can insist, when I secure the appointment of judicial leadership for the inquiry, that the point that Jackie Baillie has put to me will be taken on board. It will be a condition of appointment for the judicial leadership that is put in place that bereaved families must be at the heart of the inquiry. Their issues and concerns must be properly aired and properly addressed. They must have answers. That will be at the heart of the appointment process of the next judicial leadership.

I stress the point that the inquiry is established on the basis that it is independent of Government, and it will continue to operate independently of Government.

I want to ensure—I think that this was broadly understood from the terms of reference—that members of the public who lost loved ones in the Covid pandemic had the opportunity to address their concerns and issues as part of the inquiry. That will be central to the way in which the inquiry proceeds in the days, weeks and months to come.

We have seen that risk over the past 10 days. Mortgage products have had to be withdrawn from the market because they will be fiscally unsustainable for lenders, because of their expectations of where interest rates will head. There is market disruption.

People who had a reasonable expectation of getting a mortgage at one level of interest rate now have to face perhaps double that interest rate, which has an effect on those people’s capacity to borrow. That has been followed by a perilous moment of collapse for the pensions market as a consequence of market uncertainty.

The moral of the story is that the events of a week past Friday—undertaking substantial changes in the fiscal envelope without appropriate forecasts to show how they are sustainable—should never be repeated, because there is a direct connection between those decisions and the market chaos in which the Bank of England has had to intervene to safeguard pensions.

Let us think about that for a moment. Mr Mason and I come from a political stable that has often had to set out our views on how we deliver sustainability and pensions. Well, the United Kingdom Government came perilously close to destroying the pension entitlement of thousands of people because of its recklessness.

Forgive me, I am not absolutely familiar with whether we are obliged to do that through statute—now that I think about it, I think that I legislated for that, so I think that we are obliged to have that in statute. It is a good thing to have a forecast and that is why we should do it.

I invite Mr Mason to wonder what outrage there would have been if I had stood up and said, “I am not going to bother with a Scottish Fiscal Commission forecast”. I can think of some people who might have expressed outrage if I had done that.

To be candid, if I were to ignore an SFC forecast, it would not have quite the consequences of a UK Government ignoring a fiscal forecast, not taking a fiscal forecast or not doing the job properly. We have seen the damage that has been done and our economic prospects have been set back significantly as a consequence of that behaviour.

We would have to have necessary agreement with the Treasury about any revisions to those limits. Obviously, those are issues that we pursue with the UK Government.

There are two points there. First, we must be pretty realistic about the fact that the mini-budget, far from fuelling growth, has actually undermined it. The disruption to the housing market alone as a consequence of that fiscal recklessness will be significant. There is plenty evidence of impact there.

You asked about recent dialogue on the proceeds of crime. It is a while since I have dealt expressly with that. To ensure that I can give the committee an accurate answer, I had better respond to the committee in writing about that.

The last discussions that we had on that were some time ago, because of some of the challenging issues around the devolution of air passenger duty. To my knowledge, those issues have not yet been resolved.

I do not think that it could have had forecasts on the implications of its tax decisions. It had forecasts on the condition of the UK Government economy and public finances. I understand that some forecasts from the OBR were made available when the Chancellor assumed office on 6 September. I do not think that OBR forecasts were commissioned of the particular changes that were made but I am absolutely certain that forecasts would have been run within His Majesty’s Treasury and that the Treasury would have told ministers about the damage that was likely to be done. I can only assume that ministers decided to ignore that.

I have had a couple of conversations with the Secretary of State for Levelling Up, Housing and Communities on those questions. The United Kingdom Government is very keen that we develop a proposition in Scotland that is comparable to what is being taken forward in England. The secretary of state has indicated to me that he fully understands that many of the characteristics, aside from the national insurance contribution benefits, are, in essence, on devolved questions.

I have agreed to explore what those zones might look like. Mr Mason puts some pretty fair points to me about the concept of investment zones. I suppose that the critical question is, do they generate real new growth or are they, in essence, providing for displacement? If they are providing only for displacement and there is an erosion of the tax value, the growth estimates that the UK Government is putting out will not be realised as a consequence. We have to make some very sensitive judgments about that, but we are engaging constructively in that discussion with the UK Government.

We are looking at all those questions as we assemble our judgments on the position that we have to resolve in relation to our tax proposals in the budget. We will set out our position to Parliament as part of the commentary on the budget and the judgments that we think are relevant at that time.