Chamber and committees

Given the way in which the fiscal framework works and the size of the public sector workforce, might there be some additional considerations in Scotland?

Thank you. I will leave that there, but it is an interesting topic.

I quite agree. It is useful to hear that on the record.

I will follow on from the early set of questions from the convener. Although we were all aware of the interactions in the economy between different budget decisions before, the autumn certainly brought that into very sharp focus, including in relation to spending plans versus debt.

The other issue that has become clear in recent months as we look at UK economic data compared with that of other countries is that our difficulties are confined not only to recent months—UK growth has lagged that of our comparator nations over the past decade, which seems to be a function of investment.

I also put this question to the previous week’s panel, which consisted of the IFS and others. Do we need a renewed focus on what spending within UK or Scottish Government budgets is genuine investment in order to track that consistently and have a good overall view of the level of Government investment and therefore what the likely longer-term impacts on the economy will be from an individual budget and over time when we see funding being altered?

From the answers that you have just given, it seems that, in effect, you are saying that we might be talking about one of those things that politicians cannot be trusted to categorise, and that more objective bodies should perhaps be taking a broader view. It is clear to me that we need to have a much clearer and tighter focus on what spending is genuine investment, otherwise we will be doomed to end up in a downward spiral.

Is this area one that the OBR and the Scottish Fiscal Commission could take a broader view on? I am cognisant of the fact that there are lots of grey areas where spending could be categorised as consumption or investment, but it is important that we at least try to take a view of the overall balance between consumption and investment over the longer term. Is that a potential area of focus for your work or that of other bodies?

I will conflate two slightly different issues, but they come down to the same point, which is how we gain a better understanding of inflation and our lack of growth.

There are some things for which we do not have accurate insight or an accurate measure. First, we still have relatively higher energy prices compared with Europe, especially for electricity generation. That does not entirely make sense to me, especially if we compare the situation directly with that in other countries with similar energy production composition, such as the Netherlands. Electricity prices in the Netherlands are about 20 per cent lower than they are in the UK.

Given how expensive the energy intervention is, do we need to compare more carefully what we have done in the UK on the price cap with what other countries have done? I can understand why different countries might be different if the composition of their energy production or consumption is different, but the Netherlands is comparable with the UK in its economic mix and production. Do we need to examine that more carefully and try to measure it, given that the point is becoming so critical?

Likewise, you said that we do not quite know why we have had a lack of growth in the past 10 years but, broadly, we know that the fundamental problem that we have in the UK is a lack of Government and private sector investment. Do we need to measure that more carefully and precisely? In your previous answer, you mentioned the cuts in capital investments. Do we need to measure our energy market and investment more closely? Would it help our fiscal position if we understood them better?

Thank you. I want to follow up on the point about tax revenue and the block grant adjustment. It has been a recurring theme at the committee, which has been looking at why we consistently have negative block grant adjustments. That is largely about the fiscal framework and our per capita income tax receipt growth.

Given that the OBR is projecting further negative block grant adjustments, is there any further insight to be drawn out on why our income tax receipt growth is slower in Scotland? Is there more detail on that, given that it is critical to our understanding of public finances in Scotland?

It is important to keep a bit of a watching brief on that issue.

I have a couple of questions about inflation measures and, potentially, economic structure. We are seeing very sharp inflation, but it is being driven by a combination of very specific things. For example, there is the increase in wholesale gas prices, which is being experienced across the world. Likewise, the war in Ukraine is a specific event, but given the critical importance of Ukraine for basic agricultural goods such as sunflower oil, it is having very particular impacts. Although we are seeing very sharp inflation, it is lopsided. For example, skimmed milk is one of the goods that has experienced the highest inflation, at around 30 per cent.

Not all people will buy the same basket of goods, and Governments do not buy the same basket of goods that people buy. Do we therefore need better measures in order to get a true grasp of how much Governments’ and people’s spending power has been reduced so that we can understand how much money we have to spend?

Finally, I say to Ben Zaranko that “You cannot manage what you do not measure” is one of my favourite sayings. I thank him for using it.

I echo Pauline McNeill’s point, and I would go further. If we accept your logic, cabinet secretary, that, essentially, there is no impact, and that it is open to public bodies, and indeed others, to use the exemptions set out in the Equality Act 2010, will you clarify that it is proportionate and reasonable to do so, such that public bodies and others can distinguish between people on the basis of physical characteristics, if we want to describe it like that, or however we want to capture it—I recognise the issues around the terminology and the differences between legal and commonplace definitions—that it is open for them to do so, and that they should do so where that is fair and proportionate, such as for school trips or shared accommodation? You might not wish to pick out particular examples, but can, or indeed should, public bodies use those distinctions, rather than simply using declared gender identity?

I accept what the cabinet secretary has said about the narrow scope of the law, but I wonder whether she would consider the following aspects.

Although the bill does not alter the 2010 act, it deals with very much the same landscape. There are concepts and considerations here that, in terms of the practical implementation of public policy, public bodies will have to think about at the same time as they consider their duties under the 2010 act. Therefore, as a practical—if not a legal—consequence, there is overlap, as there always is in legislation.

I would go further. Regarding other legislation, the Government is on the record as saying that law is not simply the regulation of what can and cannot be prosecuted. Laws are also about communication and wider social impacts. Does the cabinet secretary acknowledge that there are consequences that go beyond the strict scope of the law that will have to be contended with by public bodies? I do not think that the cabinet secretary really answered the point that the EHRC made about the bill having an impact on the application of the 2010 act in Scotland. Does she acknowledge that point? What is the Government’s response to it?