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Displaying 4779 contributions
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
In some demand-led areas, there might be less demand than one anticipated, and it could be that taxes are a wee bit higher than was perhaps originally anticipated. What kind of projects have been delayed? What are we talking about here?
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
That is certainly helpful. It is a lower figure than what I and—I am sure—others have heard. Colleagues may wish to pursue that further.
I want to talk about the capital and fiscal framework. It has been a very difficult year in that the capital allocation from the UK Government has been reduced by £185 million—obviously, with inflation, that figure is higher.
When we asked questions with regard to the capital and fiscal framework, the response was that the Scottish Government has
“disproportionately constrained borrowing and reserve powers.”
Since 2016, inflation has been 39 per cent, but the Scottish Government is still working with the same kind of figures that it had all those years ago. Have you had any indication from the UK Government about when it would be willing to review the borrowing figures, for example? Inflation is 50 per cent higher than it was in 2016—perhaps even 60 per cent or 70 per cent higher. What on-going discussions have you had, because that is clearly having an impact on the Scottish Government’s ability to manage its finances?
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
Okay. Behavioural change is another issue that is very important in relation to future Scottish Government policy and thinking. As you will know, the Scottish Fiscal Commission told us that it believes that, although the higher additional rate of tax would raise £30 million on paper, it would raise only £3 million in reality because of behavioural change. The Fiscal Commission emphasises that that change would be more people not working as hard, as opposed to people with more than one address moving their tax affairs south of the border.
However, in your response you said that the Scottish Government had considered the issue and that the
“study found no evidence of significant behaviour change, including cross-border migration, as a result of our move to a more progressive tax system.”
How does that sit with the comments of the Scottish Fiscal Commission, which says that 90 per cent of that income from a simple additional penny will be lost? That is a very dramatic loss for a small increase, yet the Scottish Government seems to be saying that it does not see that happening.
In previous meetings with the committee, you have suggested that the Scottish Government is very aware of behaviour change. Where are we on the issue? It clearly needs further exploration.
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
I am just wondering if there is any way—
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
I just wanted to clarify that.
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
That will be next year.
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
Of course.
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
Thank you for that brief opening statement. As is traditional, I will start with a few questions; we will then open out the session to colleagues around the table. My first question relates to one that I posed in the chamber, to which you responded on Thursday, about our estimated overspend. When you gave evidence three weeks ago, I believe that the overspend was between £200 million and £500 million. Work has obviously progressed to reduce it to around £100 million. First, how have you managed to achieve that reduction? Secondly, what steps are being taken to try and eliminate it altogether between now and the end of the financial year?
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
I was really keen to get that on the record. I know we talk about always having to balance the budget. People might think that we can just kick things into next year.
Finance and Public Administration Committee
Meeting date: 7 February 2023
Kenneth Gibson
Colleagues may wish to pursue that further.
The committee has raised a number of issues about taxation. For example, we asked when the Scottish Government plans to publish a discussion paper about tax and spending choices. The response that we got was that the rationale for that document has changed and the United Kingdom Government’s mini budget has gradually been unwound. What is the rationale? Is it because of volatility at the moment, or are there other factors to consider?