Thank you for those answers.

We know that tax is complex, but the public out there are trying to make sense of what is going on with the Scottish Government’s finances. The key takeaway from the report seems to be that the Scottish Government might claim that the tax decisions that it makes are raising huge amounts of cash, to the tune of £1.7 billion in a single year, which is more than what people would normally pay in tax if Scotland followed the rest of the UK’s tax bands and rates. That gives the impression that there is more money sloshing around the Scottish treasury to spend on public services for example, but the reality is that, for every £1.70 raised, 61p is available to the Government. There is a huge disparity in what people think the Government is raising from people paying more tax—and people will have a view on that—and the reality is that people are not getting back what they are paying into the system.

Your report seems to highlight some worrying reasons for that: people in Scotland have weaker earnings; we have lower economic growth; there are behavioural changes in response to increased taxes; and, as we know from this week, some sectors are dying before our eyes, such as the oil and gas sector in the north-east. All of that is having an effect on the Scottish economy.

What does the Scottish Government need to do to restore public trust and confidence in the statistics that it is using?

That is interesting, because on 13 November, the current First Minister said to Parliament:

“We have maintained our manifesto commitments in relation to taxation.”—[Official Report, 13 November 2025; c 19.]

Those commitments were to

“freeze income tax rates and bands”

for the duration of the parliamentary session, and to

“increase thresholds by a maximum of inflation”.

In your judgment, was the First Minister being accurate and transparent in making that statement?

Thank you, convener. Good morning. The report highlights the perilous state of Scotland’s finances in relation to devolved taxes. In your opening statement, you said that the Scottish Government is not being transparent and clear enough with the public about additional taxes paid in Scotland relative to the net benefit to the Scottish Government. Indeed, you said that the contribution of devolved taxes, or additional taxes paid by Scots, is constrained. Why is that the case?

Thank you.

Good morning—it is just about still morning.

Mr Watson, you have just answered my question on AST, so there is not much to add. What happened at AST is clear. It had a future in a market that is booming and growing in Scotland and across the world. It should have been supported by as many parts of the public sector as possible but, due to its structural arrangements, it was simply unable to stay solvent. That is my summary.

So, in your view, not signing off the accounts was the right and proper thing to do.

Thank you. Living quarter to quarter financially is not great for any organisation. You have staff wages to pay. I have spoken with some of the college tutors at Perth and they admit that they did not always realise the bigger picture of college finances, how perilous they were and that their salaries might not go into their bank accounts that month. I guess that you do not want to advertise on the walls of the college that you are running out of cash this month.

I want to talk about some of the mitigating measures that you took to make ends meet. If at any point you were running out of cash, how were you able to make ends meet? Were you given loan funding? Was there bridging funding from the SFC? Were you simply taking money out of future pots of cash to suck into this quarter from the next? I could not quite understand how you were able to pay the bills.

Sure, and again, you cannot answer for the current scenario because you are no longer in the organisation, so those are questions to be directed to others. From my point of view, what I have heard this morning is a prime example of what is wrong in the college sector in Scotland and of how perilous it is, how teetering on that cliff edge of financial meltdown some of the colleges are. Here is a prime example of that—there are others; we all have anecdotal stories from our regions—playing out in practice, unfortunately.

The Scottish Government is considering the transformation of the model or the role of colleges in the skills sector and in educating Scotland’s young people. Any such transformation would benefit from the sort of feedback that we have had from you this morning, particularly Mr Watson, given your industry experience. I hope that that is something that you would consider, if you are ever asked.

The graphs in the report are helpful for understanding something that is quite complex.

Auditor General, the current Scottish Government was elected in 2021. In advance of that election, it made the following statement—a promise, I suppose—to the public. It said that it would

“freeze income tax rates and bands and increase thresholds by a maximum of inflation”.

Based on your analysis of the Scottish budget over the past couple of years, has that been the case?

My original question was whether it is Audit Scotland’s understanding that changes have occurred to tax bands, rates and thresholds since 2021. My understanding is that that has happened.