Chamber and committees

In the set of forecasts that it made in the summer, the Scottish Fiscal Commission recommended that the Scottish Government should prepare its budget on the basis of the Organisation for Economic Co-operation and Development COFOG principles. Does the OBR have a similar view about the UK budget and what improvements it could make to transparency? Do you have any particular views on the transparency and clarity of the way in which the Scottish Government sets out its budget?

It sounds as though you are saying to me, “No luck—I’m afraid that it’s back to you politicians to make those sorts of tricky decisions.” In all seriousness, it is an interesting point, on which I am clear that we need to have a sharper focus.

This will be my final question. In recent—

I apologise, Andy. I cut you off.

My final question is on a related issue. In recent weeks, Frances O’Grady from the Trades Union Congress and Roz Foyer from the STUC have been involved in an interesting discussion about the true cost of public sector wages. That is interesting from the base point that, given that tax is paid on those wages, the Government needs to consider not the gross amount but the net amount. I wonder whether that is a sharper point in Scotland, given that we have a higher proportion of public sector workers, and given the way in which the fiscal framework works, which is about per capita growth in tax receipts.

Do we need to be more sharply focused on the true costs of the public sector wage bill and how that works its way through the tax system, in particular the fiscal framework in Scotland? I am thinking, in particular, of the true net cost of public sector wage increases, given that it is such a sensitive topic at the moment.

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.

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 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?