Chamber and committees

Wales might have learned from Scotland, but it is time that Scotland learned from Wales. In terms of the block grant adjustment, what has happened with regard to separate tax rates has been a real eye opener.

Our inquiry will go on for some months; I hope that we will be able to speak to both of you further down the line. However, I have a final question for you, before I bring in other members. If the Scottish Government could wave a magic wand and make one change to Scotland’s block grant adjustment, what should it be?

Who has not fed their dog? Is that you, Michelle? It is Michelle’s dog—I wondered why she had disappeared from view. Are you back, Michelle? Are you joining us?

Yes, I do not want to focus too much on political issues. Scotland might get powers over corporation tax and a share of VAT assignment, and I am quite keen on getting powers on alcohol and tobacco duties, which would certainly help, given some of the issues that we have to deal with on those matters.

I thank Ed Poole and Guto Ifan for their evidence. I apologise for delaying you by some 30 minutes because the previous session overran. I appreciate your patience.

The committee will consider the next steps on this work once the UK and Scottish Governments agree the terms of reference, timetable and authorship of the report. In fact, we might invite Ed Poole and Guto Ifan back. We did not spend a lot of time asking questions, mainly because their submission is so detailed, which meant that we already had many of the answers before us, so I thank them for that.

Thank you for that clarification. I could ask more questions on that, but I want to move on and then let colleagues in. I have a couple more brief questions.

In developing its budget, the Scottish Government assumed that it would receive extra income of £620 million to the resource budget in 2022-23 from a number of sources, some of which is still a matter of negotiation between the Scottish and UK Governments. Last week, the committee pressed the Scottish Fiscal Commission and economist colleagues for details of that and they were not really able to solve the mystery of those sources, how much they will be and the likelihood of them coming to Scotland. Can you enlighten us a wee bit on that, cabinet secretary?

Thank you. I said that members could come in a second time, but no one has more questions to ask, and the cabinet secretary has given us more than two hours of her time, which we greatly appreciate.

I thank the cabinet secretary for her evidence today, and I wish her and all the committee members a merry Christmas and a happy new year when it comes.

Our next meeting is scheduled for Tuesday 11 January.

That was very diplomatically put.

I will move on to my final question, which is on the £1 million contingency for enhanced security support for members. I realise that some prudent assumptions have been made in regard to that, which works out at about £8,000 for each MSP. What indications do you have of uptake? I know that it is relatively early days, but certainly I will not go up to anything like that level. What information does the SPCB have at this point?

Local government is a bone of contention, as it is every year. According to page 11 of the SPICe report, four portfolios have had a reduction in cash and in real terms, and one of those is social justice, housing and local government. However, last night, I received a copy of the local government finance 2022-23 total revenue support, which looks quite reassuring overall. According to that, across Scotland, the budget increases from £11,043 million to £11,853 million, which is an increase of £810 million, or 7.3 per cent, so that looks good. However, £319 million of that is undistributed, so could you confirm when that will be distributed and how it will be distributed?

When I looked at the increase in funding for local authorities, I was disappointed to note that the wealthier and more prosperous areas, such as Aberdeenshire, East Renfrewshire and Edinburgh have significant increases of 4.3, 4.8 and 4.9 per cent. However, if we look at the poorer areas of Scotland, we see the Western Isles getting a 2.1 per cent increase, West Dunbartonshire getting 2.9 per cent, Inverclyde and Glasgow getting 3.3 per cent, Dundee getting 3.1 per cent and North Ayrshire, which I represent, getting a 3.5 per cent increase. I am aware of the local government funding formula, but surely when we have a challenging funding situation we cannot have the areas with the highest poverty, highest unemployment and an ageing population—because many of the younger people are moving outwith Scotland or to more prosperous areas of Scotland such as Edinburgh, East Renfrewshire and Aberdeenshire—getting lower local government settlements.

Thank you very much, cabinet secretary. The committee looks forward to examining the report from the three Davids.

As you are aware, the committee has been given conflicting information and advice regarding the size of the Scottish budget from the Scottish Fiscal Commission, the Scottish Parliament information centre, the Scottish Government and the Fraser of Allander Institute. We will take the Scottish Fiscal Commission’s figure for examination and consider its implications.

The SFC says that the Scottish Government’s budget next year will be

“2.6 per cent lower than in 2021-22”

and that

“after accounting for inflation the reduction is 5.2 per cent.”

At the same time, spending on the Scottish Government’s largest social security payments, including new payments, is forecast to be £764 million more than the funding that it is forecast will be available through the UK’s block grant adjustment in 2024-25, which will reduce the funding that will be available for other spending priorities.

The latest SFC forecast shows that Scotland is lagging behind the UK on economic performance, that income tax receipts are falling behind the block grant adjustment and that social security spending is exceeding the block grant adjustment, so how do we ensure fiscal sustainability?

As long as that is on a non-commission basis.

Yes, that is very helpful. I have a final question. You talked about choices; you have made your choices, and we can agree or disagree with them. In discussion with Opposition party representatives, have they provided any choices to you? In other words, rather than just asking for additional expenditure on a number of areas, have they pointed out where in the Scottish budget reductions can be made or taxes raised in order to fund their demands?