Chamber and committees

I feel that it is required. The cabinet secretary fairly reflects last year’s conversation, but costs were produced and shared by both sides, if I recall correctly. We presented our assessment of those costs and it was a useful and constructive dialogue. I would be more than happy to share them; they were widely publicised this year and last.

To provide some balance to the issue, the budget’s context was one of proposals being presented within a fiscal envelope. There is a point of perspective about what that envelope was and what the carryover for Covid funding from previous years was.

The final point that I make is that the other element to the issue is that the proposals are not necessarily only for recurring funds but are also for alternative approaches to Covid recovery. That is a point of clarification and I would be happy to sit down with the convener at any point and go through my costings and how they compare with the fiscal envelope that was available as set out in the fiscal framework, if that would be helpful for him.

Thank you, convener. I apologise for not being able to attend in person this morning.

I begin by asking about how the policy will be reviewed and maintained. One would hope that, by its very nature, it would be seldom used. However, such things are often left on the shelf and are sometimes, therefore, creatures of their context and time. It is imperative that the policy be proactively reviewed and renewed on an on-going basis to ensure that it is appropriate for its current time. What thought has gone into that? How will the procedure be reviewed on an on-going basis?

My second question is about the outcome of the procedure. I understand that the focus of the procedure is about establishing fact and doing so in a transparent, robust and independent way, but is it purely focused on that narrow outcome? To what extent is there also a need to establish the severity and seriousness of what is complained about? Does the process address that sufficiently?

I thank the Deputy First Minister for that answer and completely accept the sincerity with which he has given it, but I have to wonder whether this is the key tension in the process.

Ultimately, decisions on whether the ministerial code has been broken will be made by the First Minister or the Deputy First Minister, for a serving minister, but there are two or three issues with that. First, it is almost impossible for a serving First Minister to deliver a decision on one of their own ministers without the pressure or filter of political reality entering into it. Does not that make exceptionally difficult the independent decision making that the Deputy First Minister correctly identified as being important to this? I wonder whether it places too much pressure on the decision maker.

Secondly, the processes are required not only to be robust and transparent but to be seen to be so. If a First Minister is to make the final decision on one of their own ministers, is it possible for the public to see that as robust?

Thirdly, in her recommendation 10, Laura Dunlop says:

“complaints against a former Minister should be investigated and adjudicated ... independently.”

I wonder whether that final decision making on the breach of the ministerial code, which ultimately is an adjudication, is actually independent at that point, and whether that is a flaw in the process. I understand why, ultimately, you might wish for the decision to be made by the First Minister. I understand the argument in that respect—because of the democratic process, the First Minister has to be the final decision maker—but I wonder whether the procedure adequately addresses those three flaws.

I thank the Deputy First Minister for his answers.

I, too, thank the witnesses for their written submission, which is extremely interesting. In particular, I am interested in figure 3.4, which shows the impact of applying the different models to Scotland. I wonder whether the Scottish Government needs to be careful about what it wishes for. In discussions on the fiscal framework and the Welsh example, the assumption often is that indexation for separate bands would be in addition to the existing IPC model, which would of course reduce the negative consequences. However, the grey dotted line in the graph in figure 3.4 shows that applying that model but using the comparable method would actually result in our being significantly worse off.

The points that you have just discussed with John Mason also need to be added into the mix. The issue should not necessarily be seen in isolation from the Barnett formula and the block grant. In a sense, John Mason was talking about the endpoint that the Barnett formula works towards for Wales but, if we look at what the Barnett formula currently delivers for the nations, we see that, in essence, Scotland ends up being the best off from that side of the equation.

Should we be careful about what we wish for, given that, with the application of indexation of separate bands, we could end up having the comparable method? Is there a risk for Scotland in a re-examination of Barnett and how it applies to us?

I have one final question, which is about the long-term sustainability of the method. If we are basing it on tax and welfare decisions in Scotland compared to policy positions for the UK as a whole in 2016, that becomes more difficult as time passes. It is feasible, because the UK has, by and large, pursued the same overall policies on the method and size of taxation and welfare spending compared to 2016. However, if the UK Government diverged significantly from that, either by increasing or decreasing tax or welfare spending, projecting what would have happened from that 2016 position becomes more and more difficult, if not impossible. Will we have to have a far more fundamental rethink in five or 10 years’ time?

Is the fundamental point not that, regardless of what model you choose, if we have a devolved taxation system, Scotland needs to grow its income tax faster than the UK average in order to benefit? In a sense, it does not matter which model we use; that fundamental truth is the overarching one.

[Inaudible.]

It is important to try to establish critically the purpose and effect of each of the measures around the block grant adjustments, as that is where the bulk of the discussion and debate is likely to be. I want to clarify a few things. In essence, the comparable method seems to involve isolating the ability of a Scottish taxpayer to pay tax in comparison to the average UK taxpayer. On top of that, in the index per capita method, we have a factor to offset the ability of Scotland to grow its population relative to the rest of the UK. Wales has a system that isolates each tax band, which, in a sense, offsets its ability to change the make-up of its tax base. Is that a fair summary of what the three different methods do?

In your report, you say that the review of block grant adjustments is a political decision, not a technical one. I think that I understand that. Therefore, is the political decision the extent to which the devolved Governments are able to influence the size of their population, the extent to which their citizens are able to pay tax and the structure of that tax? Is that a fair summary of what the political drivers of the models might be?