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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Session 6: 13 May 2021 to 8 April 2026
  7. Current session: 14 May 2026 to 16 September 2026
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Displaying 17 contributions

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Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I am grateful.

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

To follow on from Michael Marra’s questions on bonds, the Scottish Government is also proposing a mutual investment model. Some might say that it looks rather like a private finance initiative or public-private partnership model, except that the public sector gets a share of the returns and holds an equity stake in the project.

I turn to Stephen Boyd. The IPPR has said that that model could lead to higher long-term costs. Can you explain that? Can it be designed in such a way that it provides value for money?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

Good morning, panel.

Professor Bell, you state in your written evidence that it should be

“growth in earnings and employment, rather than simply higher tax rates”

that drive the economy. You suggest that we need to evaluate the

“increasingly large differences between Scottish and rest-of-UK … tax rates … according to their … behavioural effects on migration, hours … and the location of high-skilled employment.”

I have a few questions on that.

The Scottish higher-rate tax threshold is being frozen again, meaning that wage growth will pull more middle-income earners into the 42 per cent rate. The Scottish Fiscal Commission says that more than 26 per cent of Scottish taxpayers pay the higher rate or above, compared with about 22 per cent in the rest of the UK. To what extent is Scotland now relying on fiscal drag rather than genuine growth in earnings and the tax base? Is that situation sustainable?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I am grateful for that information. Sticking with the constitution of the tax base that you have just outlined—you talked about the older demographic, for example—I note that the Office for National Statistics has said that 45 per cent of workers earning £50,000 or more are engaged in hybrid or remote working. The ONS contrasts that with 8 per cent of those earning under £20,000, so it concludes that managerial—and professorial—occupations are most likely to engage in hybrid working. If that is correct, is there any risk that those who have a Scottish job and earn more are more likely to live and pay tax elsewhere in the UK?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I do not question that at all, other than to note that there is a report this week that, across seven Scottish health boards, the number of staff who are registered at addresses outside Scotland has risen by 56 per cent in the past three years. Is there any evidence that that is connected to the tax rate?

In conclusion, given what you have said about the lack of evidence, is that something that the Scottish Government ought to be investigating alongside the growth of remote working and the impact of fiscal drag? Should the 2027-28 budget accommodate those facts?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

A suggestion that has been made to support public investment is to issue bonds. Professor Bell highlighted that that would not be free money and that it would eventually need to be paid back. The IFS went on to say that issuing Scottish bonds could actually cost more than borrowing from the UK’s national loans fund. To be fair, the Scottish Government analysis suggests that it is the other way round. Dr Sousa, can you explain why Scotland might nevertheless prefer bonds? What evidence would allow you to say that they represent value for money?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I am grateful for that. I would like a quick clarification, for my own purposes. How does the Scottish Government set the yield on the bonds such that they are more attractive than the interest rate on the national loans fund? Can it set that at whatever rate it wants to make it attractive to subscribe?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

We have talked about services, the size of the workforce and cuts. The previous UK Government had a public sector productivity programme which put, I think, £800 million into delivering £1.8 billion of savings by 2029, especially by using things such as technology and artificial intelligence. Is there any evidence of the Scottish Government doing any similar thinking around productivity, especially in relation to technology?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I understand. I have a related question. Between 2022 and 2024, UK Government departments saved about £300 million in cost efficiencies for running properties. It did co-location, set up Government hubs and that sort of thing. Is there any evidence that the Scottish Government is looking at the same sorts of things to mitigate reductions in front-line services?

Finance and Public Administration Committee [Draft]

Pre-budget Scrutiny 2027-28

Meeting date: 9 September 2026

Liam Kerr

I understand—I am grateful for that information.