Chamber and committees

Right, but you can deliver only if you have, A, the money and, B, the personnel.

Yesterday, I had a meeting with representatives of Stakis Forestry LLP—it had funded a bridge that I opened in my constituency—and they said that one of the drawbacks, which makes them tear their hair out, is the sclerotic way in which the public sector deals with developments and planning applications and so on.

One example from my constituency is a road junction that was agreed to way back in 2020. For 18 months, I have chased Transport Scotland for a start date on site, or even the date that it will go out to tender, and all I get back is that Government processes and procedures are taking place—it has been 18 months. Transport Scotland does not even tell me what those processes and procedures are, even though I have asked and have raised the issue in the chamber. There is still no start date.

If people are going to invest in Scotland, they need to have a structure in place that not only welcomes investment but processes it. Years ago, I read an article by the former chief executive of West Lothian Council, who went from coffee boy up to chief executive. He was asked how he had turned things round—obviously, proximity to Edinburgh helped—and he said that the council turned all planning applications round within a month indicatively, whether it said yes or no, and then it went into further detail if necessary. That meant that people knew that West Lothian was a place where they could invest.

Clearly, there is a shortage of planners that has to be addressed, but surely, in this day and age, we must be able to approve projects much more expeditiously. I had a project in the zero-carbon area that involved 900 jobs, and the company considered moving to Teesside because the planning committee put back its deliberations for 11 weeks. I contacted the chief executive of the council and he brought the date forward so that that did not happen, but that happens all the time.

I know that this is a long-winded question, but I feel passionate about this issue, as do many people. What are we going to do about that?

Yes, inflation and earnings.

In that regard, the Government is caught in a wee bit of a squeeze, in that fiscal drag is not bringing in as much money as it might have anticipated, because pay is not keeping up. At the same time, the Government is faced with significant pay demands.

Thank you very much. We will be sorry to see you go. I am sure that you said that just so that we would go easy on you for the next hour, but that is not going to happen—I am sorry. [Laughter.]

You touched on key issues that the committee will ask about. The first is inflation. One of the concerns about inflation is that the gross domestic product deflator of about 2.4 per cent is not realistic relative to the retail prices index. I see Professor Breedon nodding.

Understandably, we face a lot of public sector pay demands. There will be a real reduction in disposable incomes—in fact, we should note that there will be a reduction in nominal earnings before we think about taxation and disposable income. The overall figure for the economy is a 2.7 per cent reduction, but is there a difference between the private and public sectors?

Cabinet secretary, thank you very much for spending so much of your morning in responding to our questions. That ends today’s deliberations.

Yes, I can see him champing at the bit.

Absolutely. I fully appreciate that. In your report, you talk about how you expect inflation to get back to around 2 per cent. Once oil prices have jumped, and if they do not increase any more, the following year there will be zero inflation in oil prices—there is a platforming effect. I understand that you expect long-running inflation to go back to normal, rather than behave as it did in the 1979-82 phase, when inflation was at 27 to 30 per cent for two or three years.

Let me go back to taxation. In your report, you said:

“From 2024-25 the UK Government intends to reduce the basic rate of income tax to 19 per cent. The income tax BGA will reduce accordingly, thus supporting net Scottish income tax funding.”

The committee has quite a good understanding of that point, but it would be helpful if the commission were to expand on it, for the benefit of the Official Report.

That is a question that we will probably want to put to the cabinet secretary—although I expect that, prior to the budget deliberations, she will want to plead the fifth amendment in that respect.

I have one more question before my colleagues come in. On page 18 of “Scotland’s Fiscal Outlook: The Scottish Government’s Medium-Term Financial Strategy”, it says:

“The assumption of future Barnett consequentials beyond the core Block Grant is based on analysis of historic data.”

The strategy suggests £250 million in assumed future consequentials next year and £400 million after that.

In paragraph 32 of your report summary, you talk about consequentials of £250 million, rising to £591 million in 2026-27. That is £191 million more than the figure in the MTFS. Can you talk about that? Will you also say how the Scottish Government fared in terms of its assumption about the £620 million, which the committee deliberated over considerably, and whether—or how much of—that came forward?

Why is your £591 million figure different from the Scottish Government’s £400 million figure?

If an employer such as the Convention of Scottish Local Authorities were to say to unions that local authorities were happy to provide workers with a 2.4 per cent pay rise—I do not think that it is even offering that—because that equated to the GDP deflator, then straightaway there would be difficult discussions. Is the GDP deflator still an appropriate measure to use for forecasts?