Sorry—I meant the fiscal drag in terms of the threshold, of course.

You did not touch on capital funding in your opening statement. We are going to be talking about the infrastructure delivery pipeline in the next session, but you say in paragraph 1.50 of the report that,

“In 2023, around half the projects in the 2021 Infrastructure Investment Plan had been affected by cost increases or delays.”

I was first elected in 1992 and I do not remember a time when that did not happen, not just in Scotland and the UK, but elsewhere. Where are we in relation to that particular issue? It seems to be almost built in—not deliberately, of course. It seems that delays and cost overruns are almost de rigueur in infrastructure investment. Is it a serious concern? Has the problem grown? Has it stayed the same? Has it become less of a problem in recent years? Where are we on that, and how do we compare Scotland to, for example, high speed 2, the rest of the UK, or whatever?

You talk about the devolved public sector workforce having some 468,000 full-time-equivalent workers and how that figure has been growing by 100,000 or so under devolution. Some of that is accounted for by the extra powers that have been devolved, but a lot of it is due to the NHS, the ageing population, the need for a larger workforce and so on. People become older and frailer and need more support.

However, in paragraph 2.7, you highlight a reduction in the police and fire services workforce from 28,500 full-time-equivalent workers 12 years ago to 26,675 in 2024-25. Would one not expect that anyway? We went from having eight police boards to having just one, so we no longer have eight headquarters and all of that infrastructure, which meant having eight chief constables, eight deputy chief constables and so on. Is such merging of funding streams in order to be more efficient and have larger overall bodies not what the Scottish Government should do, given that it aims to reduce the workforce by 13,600?

Frankly, I am not convinced that such labels are helpful, because one cannot work without the other. I would have thought that it is always about a team approach.

You started your opening statement by talking about growth, and what you said seemed quite pessimistic. Both the UK and Scottish Governments are committed to growing the economy, but you expect only about 1.1 per cent growth in day-to-day resource spending over five years. Pre-crash, it was an average of 2.9 per cent, which seems like the sunny uplands compared with where we have been for the past 15 or 16 years.

There seems to be a clash. You say in the paper that, as we move forward, the workforce relative to the dependent population will decline because of demographic change and so on. At the same time, we also have new technology. I appreciate that, for folk who are working in social care, it is a lot more difficult to increase productivity than it is in some kind of advanced manufacturing facility. Why do you feel that growth will be stuck at 1.1 per cent? Is there no way to escape that fairly depressing trend?

09:15

There is also the issue of broadening the tax base, which we might come to in a few minutes.

I found it really quite touching that you wrote in paragraph 3.1 of your report something that you have reiterated today:

“Political parties need to be clear about what the Scottish Government can afford and the impact on public spending for people in Scotland. Manifestos should make clear if any additional spending commitments set out would need cuts to other areas of spending or raising more revenue to fund them.”

I thought that it was quite sweet and innocent of you to write that.

Governments, wherever they are, always talk about reducing spending or keeping spending the same, and, if they increase it—I say that because, if we look at the big picture, we can see that there are real-terms increases—that increase might be less than is required. However, efficiencies do not always follow: the fact that you are spending less money in an area does not mean that it will become more efficient.

09:30

It all comes back to outcomes.

Thank you for those responses. Michelle Thomson will ask the next questions.

Okay, that is fine—apologies.

In paragraph 3.28, on local government services, you stated that

“the Improvement Service reported that in 2022-23 and 2023-24”—

that is a couple of years back—

“(the most recent data available) more performance indicators declined than improved … 45 per cent compared to 39 per cent”.

Will you tell us what you think the reasons for that are? Is that balanced? For example, were the 45 per cent of indicators that declined in large or small areas of local government spending, or were they equally balanced? Some indicators might be quite small while others might be significant. Will you tell us a wee bit more about that picture?

In paragraph 1.51, you point out that 93.5 per cent of the Scottish capital budget effectively comes from Westminster, so we are basically at the mercy of the decisions that are taken there. That was a big feature of your presentation last Thursday. I think that we all accept that we are having a real-terms reduction in capital, and it is probably deeper in real terms than you say, because we use a gross domestic product deflator, which I have talked about before. That means that delays and cost overruns have an even more adverse impact on maintenance and new capital projects, does it not?

It is in all age groups, is it not?