Chamber and committees

I point members to my declaration of interests. In particular, I am a director of a company with retail interests. I am also a trustee and vice chair of the ADHD Foundation charity.

I ask for clarification on declarations of interests from the secretary to the commission. Is it relevant to declare any governance or, indeed, audit roles with external organisations that we might have? Members might want to reflect on making those declarations.

I request that members reflect on whether they have any audit or governance roles with external organisations and maybe use the opportunity to declare those now.

Thank you very much for those answers, which provide us with a good overview of the challenges and changes that Covid has brought.

I started with the macro, but I hope that you will forgive me for diving straight into the micro. In looking at your accounts for this year, I see a number of variances that I might expect, such as a decrease in expenditure on stationery and an increase in information technology spend, but two line items jump out at me, the first of which is a 44 per cent increase in rent and rates. I would like an explanation of that, because it is quite a large increase not only in percentage terms, but in actual terms, especially at a time when people were using buildings less. I am keen to understand why that occurred.

Likewise, expenditure on staff recruitment was up by 44 per cent. That might not be a significant amount in actual terms, but I would be concerned if that indicated underlying staff churn. I would be interested in an explanation of why staff recruitment costs increased so significantly in the year.

I begin by asking the big question. Covid-19 has clearly disrupted life over the past 18 months, but it strikes me, and has been alluded to by Professor Alexander and Stephen Boyle, that it has had a fundamental impact on how Audit Scotland conducts an audit. I always think of auditing as requiring some level of being able to eyeball and assure that what is on the accounts is actually there. If you are working remotely, it strikes me that that is fundamentally disrupted. In broad terms, how has that impacted your ability to conduct an audit?

More important, we are all aware that Covid-19’s impact is not just temporary, but is likely to alter how we work in long-lasting ways. Which of the changes that you have made this year do you see persisting? What impact will that have on the way that Audit Scotland organises itself in the future?

Thank you. I will end my questions there, chair.

Following on from some of the topics that have already been touched on, I have a question that is by and large about some of the short-term elements that we been discussing and some of the longer-term ones that you have just touched on with Liz Smith.

In the shorter term, your forecast has us returning to pre-Covid levels in quarter 2. Given what you have just set out, how safe is that forecast? Furlough is coming to an end and we can see from what has been happening over recent months the phenomenon of unexpected savers who are spending money on things that they would not otherwise have bought. I saw a report yesterday showing that used car prices are up by 15 per cent and you just highlighted spending on home improvements. It strikes me that those spending patterns cannot be sustained into the medium or long term. If that is true, is it safe to straight-line our economic performance from quarter 2 of this year? That is what your forecast appears to do, on the basis of your report. Should we not at least have a sense, if not an expectation, that there is a risk of more of an oscillation in our recovery or that there may be some head winds resulting from some of those effects?

I will ask a final question about the longer-term impact. I accept that it is difficult to predict right now what the long-term structural changes in the economy will be, but I agree that there will be some. Are some of those, even if we are not able to safely predict them, a good bet? It is very likely that there will be structural changes in relation to the consumer-facing economy, especially retail, and I declare an interest as a former retailer. Those patterns of spending have permanently changed—I do not think that anybody in the retail industry thinks otherwise.

To what degree are you starting to consider or identify those changes so that you can embed them in your forecasting as soon as possible and anticipate them? Some of those changes are very likely. Likewise, in relation to changing patterns of work, having a screen and being able to work over Zoom is all well and good if your work involves things for which that is suitable, but if you are a retail worker or a delivery driver, it is somewhat more difficult to do those things by Zoom. Not only sectorally but in terms of types of employment, the recovery might well look very different depending on where you are and what industry you work in. Are you starting to identify that and embed it in your forecasting?

The fundamental point is that we want productivity to go up so that people are paid more and they pay more tax. That is the fundamental of what we are discussing, in broad terms.

Exactly so.

I agree that we need to get into the detail of the fiscal framework, but I do not think we have time for that this morning. However, there is clear agreement that we need to increase income tax on a per capita basis. Fundamentally, that would tell us that people in Scotland are earning more money, which is a good thing. Indeed, you summed it up earlier as more people participating in the economy and earning more money, underpinned by productivity.

In relation to some of the things that the convener was raising, my concern is that that sounds a lot like economic growth. I am very clear that economic growth is a good thing, especially when it is underpinned by growth in productivity, because it means that people are better off and are leading better lives. However, certain people who are about to join your Government think that economic growth is a bad thing. What is the Scottish Government’s view on economic growth?