Chamber and committees

We move to questions from Ross Greer, to be followed by Douglas Lumsden.

Good morning, and welcome to the ninth meeting in 2023 of the Finance and Public Administration Committee. Our first agenda item is an evidence session on our inquiry into effective Scottish Government decision making. Before I welcome our witnesses, I thank the civil servants who met us last Tuesday and shared with us their experiences of decision making in the Government. We will publish a summary of the discussions on our website in due course.

I welcome to the meeting Mark Taylor, audit director, Audit Scotland; Ben Thurman, senior policy and development officer, Carnegie UK; and James Black, fellow, Fraser of Allander Institute. Good morning, gentlemen. I will move straight to questions. I want this morning’s meeting to be free flowing. We have already taken huge amounts of evidence from former ministers and civil servants and from our adviser, Professor Cairney, so I will ask some opening questions and I want you to feel able to contribute as much or as little as you wish in response to them.

In the meeting with civil servants, there was an emphasis on key areas, such as the need for strong ministerial leadership; clarity of purpose; the capacity and capability of departments to deliver; civil servants not being micromanaged and having space to work; and clear lines of accountability. All those areas might seem pretty obvious, but do you feel that those aims are delivered in practice—in part or, perhaps, fully? Who would like to kick off?

It is on page 19.

Yes. I note that your projections do not incorporate the establishment of a national care service, but you predict that social care spending will grow by 135 per cent per person, which would be fuelled “by increased ... wages”.

I want to bring colleagues in, so I will not—you will be glad to know—go through the whole document. I will finish with a question on the annual budget gap, which is discussed in what is probably one of the most interesting and important parts of the report. At paragraph 5.8, you state:

“In the fiscal framework, the Scottish Government has more control over its spending than its funding.”

You talk about a funding gap that

“is equivalent to £1.5 billion in today’s prices”

and you say that, in order to address that,

“the Scottish Government ... have to consistently reduce spending or raise devolved taxes throughout the next 50 years.”

However, you say that the UK Government is able to fund its gap, which is also significant; you talk about the UK’s

“public sector net debt reaching”

an astonishing

“267 per cent of GDP in 2071-72.”

Will you talk us through the annual budget gap a wee bit and outline its implications for Scotland and the UK?

Thank you. I will open up the session to members of the committee.

Thank you very much. We have gone over time. Daniel Johnson was going to ask a further question, but we will have to call it quits there, I am afraid.

I thank our witnesses for their contributions today. We will continue to take evidence on effective Scottish Government decision making at future meetings. We will take a five-minute comfort break before moving on to the next item on our agenda.

Okay. It would be good to change the 64 figure to whatever the pension age is. Is it 67? I am trying not to think about that.

Thank you. I will open up the session. The first colleague to ask questions will be Daniel Johnson, to be followed by Michelle Thomson.

You will be glad to know that there will be questions. Obviously, I am not going to hog things too much, because time will be against us today more than I had hoped.

My first question is about the fact that you intend to publish one of those reports every five years. The Office for Budget Responsibility first started producing such reports in 2011 and has been producing them every year. Given the fact that there can be significant changes within a five-year period—such as a change of Government, a pandemic or Brexit—do you think that, in the future, you will look at changing that frequency? Rather than the reports being produced on a set timeframe, might you produce them in response to specific events?

The overall story is critical, because it is quite clear that Governments need to look very seriously at what is likely to happen. One of the things that grabbed my attention was the fact that, over 50 years, we are looking at a 72 per cent increase in output but a 218 per cent increase in health expenditure. The good news is that we are all going to live longer, but the bad news is that it will be a lot more expensive to treat us because of new and more expensive treatments, the introduction of technology and so on. Governments north and south of the border have to take serious cognisance of those developments.

In the report, there is a very interesting graph that shows that there will be divergence in population numbers. Figure 2.4 shows that, over 25 years, there will be a 31 per cent increase in Midlothian’s population but a 16.2 per cent decrease in Inverclyde’s population. You say quite clearly that you did not look at population numbers by local authority, but it is interesting that National Records of Scotland is predicting a 2.5 per cent increase in the population over that period, whereas the SFC is predicting a 0.5 per cent increase. That is obviously a difference of more than 100,000 people across Scotland. Can you explain why there is a significant difference in the figures that have been produced by the SFC and National Records of Scotland?