Chamber and committees

I will just finish this point, Ms Baillie.

The companies in question are owned by us all through pension funds and insurance firms, and they have to be attractive to new investment.

Windfall taxes risk a reduction in output and therefore an increase in prices for consumers. We should not forget that £100 billion of investment is needed to secure future power generation. In short, the energy experts are telling us that we need to increase energy supply and reduce the demand, and a windfall tax would do the opposite.

I will give way to Jackie Baillie.

I can very much acknowledge Gordon Brown’s failure on a windfall tax. On that point, I am happy to conclude my remarks.

I move amendment S6M-03042.1, to leave out from “and defer” to end and insert:

“; believes that the Scottish Government should deliver a fair settlement to local government to avoid households being hit with council tax increases in April; welcomes UK Government action to increase the Living Wage, raise the Personal Allowance, reduce unemployment and freeze Fuel Duty, and calls on both of Scotland’s governments to take further action to support individuals and families at this difficult time.”

The minister quotes the Scottish Fiscal Commission, and we could go on to talk about the Fraser of Allander Institute and other economic forecasters. The Finance and Public Administration Committee described the economic underperformance as “deeply worrying”. That is the biggest concern, and that is surely one of the issues that the Scottish Government has to address.

Given what Ross Greer is saying about the importance of this kind of debate, even if not many members seem to be attending it this afternoon, does he think that considering a finance bill alongside the budget bill would be an advantage to the Parliament because it would mean that we could engage in greater scrutiny?

I do not doubt for a minute that there are serious issues with the cost of living, including the potential increase in national insurance contributions. That is a big concern. However, does Paul Sweeney not recognise that the proposed rise in national insurance contributions will be dedicated to helping the health and social care budgets following the pandemic, to which most parties agreed?

As the minister has rightly reminded us, it is the convention of this Parliament under the standing orders that a rate resolution must be agreed before stage 3 of the budget bill process.

Although political parties will inevitably have very different views about tax policy, a restraining order is upon us, which means that, if we voted against the rate resolution, we would, in effect, be preventing tax being collected, with the uncertainty that that would create for taxpayers and for those working on payroll for the next financial year. I am sure that we can all agree, particularly this year, given all the challenges of Covid, that that would be irresponsible and create greater instability and uncertainty. I put on record that we will certainly not oppose the rate resolution, even if we have very different views from the Scottish Government about tax policy.

In recent weeks, the Parliament has witnessed several debates—in the chamber and in committees—about the economic priorities as we continue our efforts to emerge from the pandemic. Despite the different tax policies of the different political parties, I think that we are agreed on what the objective should be: namely, to improve Scotland’s productivity and its labour market flexibility, especially in relation to the skills gap and retraining, and pursuing economic growth—although I am not entirely sure that the Greens share that particular agenda. We shall see.

We are very keen that Scotland remains attractive for investment, which is why we do not want Scotland to be the highest-taxed part of the UK, because that creates disincentives not only for business but for families who want to work and live in Scotland.

On 9 December, we were very pleased to hear the cabinet secretary confirm in her budget statement that the income tax rates for 2022-23 will remain unchanged. We were much less pleased about the adjustment to basic rate bands, which has put 68,000 people into paying more tax. On the Conservative benches, we believe that we need to be extremely careful about any policy that will lead to some divergence, and here is why. I refer to the Finance and Public Administration Committee’s report on scrutiny of the budget, which we have debated several times in recent weeks. It concludes that Scotland’s economic underperformance is “deeply worrying”. That is because the official forecast is that low wages, poor productivity—which, obviously, feeds lower wages—weak investment and changing demographics are having a downward impact on income tax receipts, and that comes at the same time that Scotland’s welfare burden is increasing and there are worries about rising inflation.

The Scottish Fiscal Commission shows us that, for the medium term at least, income tax revenues are not increasing sufficiently fast, as they would have done had income tax remained aligned to UK rates. In other words, our greater tax powers in this place and our higher taxes are not being accompanied—certainly not as yet, and certainly not in the SFC’s forecast—by the increased tax revenues that Scotland so desperately needs.

We also know, of course—I do not know how many times we have said this in the past few weeks—that what is extremely worrying is the net financial gap of £190 million shortfall that we have, and the prediction is that that will rise, possibly, to £417 million in four years’ time. I think that these are very serious statistics, because—

Yes.

No, I do not accept that and I do not think that that is borne out by a lot of the economic forecasts. There are serious issues regarding the amount of revenue that we are in effect not getting in because of the tax policies of the current Scottish Government. I do not think that what Mr Mason says stands up to the information that we have in front of us.

As my last comment, I want to say something about the fiscal framework. John Swinney and the UK Government signed it in 2016, and the Cabinet Secretary for Finance and the Economy will no doubt have to sign the new one with Simon Clarke in due course. The committee rightly sets out that there are very important issues to be debated. Although we will have very different views about borrowing powers, I think that there is some agreement on some issues on which we can make progress, and we look forward to hearing more from the cabinet secretary, who I know is meeting her counterparts very shortly.

The finance committee report was both comprehensive and very hard-hitting. It gives the Parliament an awful lot to think about. In the meantime, there is the legislative requirement to pass the rate resolution.

I will pursue a couple of themes from the convener’s questioning, as well as one of my own.

As the cabinet secretary knows—she has already given us an answer about it—the frustration for the committee is that it is difficult for us to scrutinise the budget because there are doubts about what is new money, what is old money and what has been transferred across.

However, there is also concern that it is very difficult for us to measure transparency in where the money is going. You cited the example of health and social care; obviously, there is a lot of chat about setting up a national social care system and the expense that that might incur.

The committee is interested to know your thoughts on how we can improve our scrutiny of outcomes and of where, in fact, spending is going—in particular, on budget lines at levels 3 and 4 for local government.

Will you give us your thoughts on those matters?

My last question is about the longer-term predictions for the Scottish economy, which are, as you know from witnesses who have come to the committee, not good.

I heard you say in answer to the convener that one of the concerns about tax take is that we have issues regarding the population of taxpayers. You referred to the north-east, where there is perhaps greater variation. It is also an area where there is, on balance, a highly educated workforce that earns higher incomes. Therefore, we can argue that it is able to produce more, when it comes to the tax take. If the Scottish Government’s intention is to reduce the oil and gas industry, what effect will that have on the tax take, which we are all desperate to increase? That has substantial repercussions for what the Scottish Fiscal Commission tells us about deficits.