Chamber and committees

On a point of order, Presiding Officer. It is the same for me: my app froze. I would have voted no.

Thank you. That is—

Just to be clear, you are recommending that that should be done in the independent report about the—[Inaudible.]—and also in the independent review of the wider issue.

Thank you, convener. I am sorry about that—there was a slight blip in the broadcasting.

The third issue that I want to raise is exogenous shocks. Obviously, we have experienced one as a result of Covid. Your report is clear that, in such circumstances, there might have to be minimum funding guarantees. I think that everybody agrees that they have been a good thing, but you also say that they cannot continue on a long-term basis, because that would be inherently unfair. You set out that, in an exogenous shock situation, there is the potential to have enhanced borrowing powers. How exactly do you see that working for the period of an exogenous shock? Would there be a time period for the enhanced borrowing?

My first question is for David Phillips. I was very interested in—[Inaudible.]—all the different principles behind the Smith commission and that, because of that, choices might have to be made about priorities. Obviously, those are political decisions for the Scottish and UK Governments. Is it your view that it would be possible for the independent review to flag up the costs and benefits of choosing different priorities? I know that it will not be the job of the independent review to recommend policy, but should it be part of the review to look at the costs and benefits of the different priorities that could be chosen?

That is helpful. That is important for the overall principle behind exactly what we are trying to achieve—namely, the best outcome for Scotland and the United Kingdom.

There is probably growing consensus on the political spectrum that there is a case for examining the issue of forecast errors. People who have been in front of the committee fairly recently have had concerns about our ability to forecast well, the time delays between forecasts, and whether we get things right.

I am not worried about who answers these questions, but are there aspects that we need to address that are not just to do with the timing of different forecasts, particularly Scottish Fiscal Commission forecasts against Office for Budget Responsibility ones? Is there extra data that we should be working on to improve our forecast ability?

If the minister cares to look at what the Scottish Fiscal Commission is saying, he will see that the greatest concern is the long-term skills gap in information technology and in technology companies. I think that I am right in saying that, according to Scottish Chambers of Commerce, some 47 per cent of employers in Scotland say that there is a lack of suitable talent for their businesses, which is detrimental to growth. That is not to do with the United Kingdom.

Secondly, there are serious productivity issues. If we track back to 2007, we will see that we have consistently lagged behind other Organisation for Economic Co-operation and Development nations, despite the SNP’s bold pledge to get Scotland into the top quartile for productivity. Sixteenth out of 37 is hardly that; we remain below the median for the OECD and the rest of the UK. That, too, has serious implications for growth.

Witnesses at the committee have flagged up that although we have the potential to improve productivity—and we do—including through our generally well-educated labour force, the SNP Government has neither taken the right approach to innovation nor offered the assistance that is required by employers that want to improve their business structures.

Members of the Scottish Government—or, which is perhaps more accurate, the SNP’s coalition partners, the Greens—should be careful about what they say in this debate. After all, their approach to oil and gas is hardly helping matters when it comes to labour market issues. I believe that, deep down, many members of the Government know that.

Then there is the issue of demographics. The Scottish Fiscal Commission and the Fraser of Allander Institute have demonstrated that Scotland’s population is ageing more quickly than the populations in other parts of the UK and in EU nations. That results in a higher rate of economic inactivity, as well as a greater social security burden on taxpayers.

The really big issue that results from the demographics is the weakness of the Scottish tax take. The net effect of current tax revenue is negative, to the tune of £190 million. Much more worrying is that we know that it is predicted that that could rise to £417 million by 2026-27. There are worrying signs for tax elasticity, too, in that regard. The decline in the working population as a percentage share of the total population is a serious issue, because the devolved tax take in Scotland, as a proportion of the total tax take, is declining. That, alongside the predicted problems to do with the need to increase social security spending, paints a picture of a very unhappy long-term outlook.

Brexit is by no means the root cause of that problem. Of course, if Brexit was the main cause, nations that are still inside the EU would not be experiencing the same problems as we are experiencing. However, they are experiencing those problems. Indeed, most developed nations are experiencing labour market shortages of various sorts.

If Daniel Johnson listened to the start of my speech, he heard me say exactly that. I recognise that Brexit is part of the problem. What I am saying, clearly, is that the issues do not relate only to Scotland and the UK. Other countries in the EU are having exactly the same problems as we are, so it cannot be a Brexit problem. That is the whole point—we cannot just blame the problems on Brexit when it is clear that countries that are still in the EU are having exactly the same problems. My colleagues will set out some of the things that we can do about that, and the policy commitments that we ought to be putting in place.

However, I finish by saying that there are, in the Scottish economy, long-term structural issues that predate Brexit and Covid by many years, so Brexit and Covid cannot be held responsible for them. That is a serious message from every single economic forecaster that we care to listen to. The cabinet secretary needs to listen to them.

I move amendment S6M-02740.1, to leave out from “reduced workforce” to end and insert:

“global supply chain issues and shortages of workers in some key sectors of the economy, and further recognises that there are serious and long-term structural issues within the Scottish economy, as shown by recent evidence presented by economic forecast groups, and that these must be addressed with more focussed Scottish Government policies targeted at reducing the skills gap, at improving productivity and stimulating economic growth.”

I acknowledge at the start of the debate that Brexit has undoubtedly been responsible for some of the current issues in the labour market. Some of those issues are serious; I do not think that anyone should try to deny that or make light of the problems that have been encountered, because we all have constituents, many in rural and farming communities, who have expressed grave concerns about key aspects of the issue, including the shortage of migrant labour. I particularly cite fruit, vegetable and berry picking in my region as examples. Those people are absolutely right to state those concerns.

However, if one looks at the motion and had listened to the Scottish National Party during many debates in Parliament on the issue, one would think that Brexit was responsible for all the labour market issues, which is simply untrue. My colleague Murdo Fraser asked the cabinet secretary about the situation in France, because that is clearly not a Brexit issue.

Several SNP members have said today that Brexit was a political decision. Does the minister acknowledge that the decision about Brexit—I disagreed with Brexit—was a democratic one by the British people, including many people in Scotland and in the SNP, which we have to accept?