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The Official Report is a written record of public meetings of the Parliament and committees.
All Official Reports of meetings in the Debating Chamber of the Scottish Parliament.
All Official Reports of public meetings of committees.
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Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
You touched on the issue of demographics, which was discussed a lot in the session with the previous witnesses and in the pre-meeting private session.
David Eiser, perhaps you could touch on that. I would also be happy for you to respond to any of the points that have been raised. We discussed, for example, the fact that immigration is down, perhaps because of Brexit; the birth rate is down; and even the number of younger people who are in tertiary education is down. However, we still have a high—in fact, a record—number of vacancies in Scotland. Around 100,000 people, or roughly 4.5 per cent of the working population, are unemployed. If those people were in productive employment, that would make a difference. What could we do to upskill those people in order to improve market participation and reverse some of the trends that we currently see?
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
You were going to say something about capital, David.
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
I sometimes think that we look too much at what is happening in the UK and that we should look further beyond our borders, where there might be many more ideas for us to look at.
That brings us to the end of our time. I thank our guests, David Eiser and Graeme Roy, for again providing thought-provoking and helpful evidence for our scrutiny.
We will allow our witnesses to leave and then I will take a couple of minutes to update members of the committee on a couple of important matters.
Meeting closed at 13:01.Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
Indeed.
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
The decline in the number of younger people in the labour force has come up quite a lot. We discussed it to some extent in our private session before the meeting. What is the reason for that decline? Is it that more young people are in higher education? Is it our lower birth rates, or the fact that there are fewer young migrants in the population? Why is the situation here so different from that in the rest of the UK?
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
I have to say that it is all a bit vague. I think that colleagues will want to explore the issue in some depth, because there are no numbers against the £620 million to explain how it comes together.
With regard to your forecasting, how has your thinking evolved since August? Why have there been changes in your judgment over that period? One of the main surprises that came out of the budget was the £190 million reduction in the net tax position, relative to your previous forecast. Will you talk us through how you arrived at that?
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
If we take the nadir of business rates to 2027, the growth will be 69 per cent. That is why I did not take the nadir: it was from 2022-23 to 2026-27. I discounted what was an unusual year, but there is still a 25 per cent growth in rates, which is quite a lot for the business community to cough up. That is why I was wondering about your view on where that money will come from. Is that increase being driven by inflation? It is at twice the level of growth. Why are you predicting an increase from £2.8 billion to £3.5 billion over that four-year period? It seems quite a big increase in a relatively short period.
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
David Eiser, I do not think that you want to make any opening remarks, but you can if you so wish.
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
One of the issues that we have with this budget is the plethora of different figures. For example, the Scottish Government is saying one thing about figures and the Scottish Fiscal Commission is saying something slightly different. Of course, the UK Government is probably saying something different again, depending on whether Covid figures are included.
Where do you and the Fraser of Allander Institute stand on the figures that we are dealing with? On page 2 of the budget document, which you have seen, the Scottish Government says:
“In practical terms, between 2021-22 and 2022-23, resource funding is 7.1% less in real terms.”
The key words are “In practical terms”. It goes on to say:
“The equivalent reduction for Scotland’s capital budget grant funding is a 9.7% real terms cut between 2021-22 and 2022-23.”
From the figures that others have presented, the second figure appears to be less controversial. Where do you feel that we are on those figures? Obviously, when we scrutinise the budget, we have to look at the figures and see where we are and what room for manoeuvre the Scottish Government has.
Finance and Public Administration Committee
Budget Scrutiny 2022-23
Meeting date: 14 December 2021
Kenneth Gibson
Is it not the case that the capital budget is declining quite significantly—by about 9.7 per cent in real terms—in the next financial year?
Is one productivity issue not that much of the Scottish budget is demand led? Given our ageing population, we need more care workers and more people in the national health service, and it is harder to increase productivity in those areas. Much of that work is highly people focused and labour intensive. We cannot just decide to reduce the number of people who are seen by a certain doctor, nurse or carer in a shift. It is much more difficult than increasing productivity through technological change in manufacturing, for instance.
