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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 5 May 2021
  6. Current session: 12 May 2021 to 22 June 2025
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Displaying 1200 contributions

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Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Liz Smith

There is a case to be made; it has been put to us by witnesses that there were different economic circumstances when those arrangements were first set up. However, there is an on-going relationship between the UK and the Scottish Governments that determines that, over the next period, things could be looked at again.

On that point, cabinet secretary, in the chamber on 27 September, you were very complimentary about the Scottish Government’s relationship with the UK Government. You spoke warmly about the improved relations between the Scottish Government and the UK Government and you mentioned John Glen. Are the negotiations in a better place than they were before?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Liz Smith

The tensions have been flagged up a lot and there are obviously debates to be had about whether the Smith commission principles need to be slightly revised as we go into further fiscal frameworks. Nobody has said to us that all the Smith principles can be achieved at the same time, so it is about the balance that the cabinet secretary described earlier, of deciding what the priorities must be when choosing principles.

As we go into a possible five-year period before we have to look at the fiscal framework again, when, as I understand it, both Governments will have the facility to make suggestions, will the Scottish Government make suggestions about revising the Smith commission principles?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Liz Smith

Not at all. It is good to hear that, cabinet secretary, because that has not always been the case, particularly when it comes to financial discussions and the fiscal framework. I, and the public, think that it is very important that Governments work together to get the best deal for Scotland, so I place on the record that I think that that is encouraging.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

That is very helpful. I think that the committee would agree with the statement that forecasting is an inexact science. Obviously, we have to accept that. However, is there anything that we can do through budget analysis and fiscal framework analysis to ensure that the forecasting error is minimal?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

The Financial Times contained an interesting article about this a couple of weeks ago. The presentation of the data is making life very hard for the OBR and the SFC. That matters to us big time because the data is absolutely crucial not only for informing us what the current economic picture is but for informing the Government when it sets policy. Can we do anything else to help to reduce the forecasting error, which obviously has created difficulties between the OBR and the SFC, certainly over the past few years?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

That hits the nail on the head. In Scotland, forecasting is a difficult job because the SFC is having to deal with two forecasts rather than just one.

If we accept that there will be a degree of forecast error, we have to play that into the system. Do you know whether, when the OBR and the SFC are looking back at the predictions that they made and how things turned out in practice, there is a lot of co-operation between the two in order to assess where some of the forecast error came in? In your opinion, is that well documented?

10:45  

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

When you say that it has got a lot worse, is it that the trends of that forecasting have got worse, or is there just extra volatility in the earnings that is very difficult to predict? I am asking whether there is a problem with the statistics that we are using and, therefore, a difficulty for the OBR and the SFC in interpreting that data or whether something else is causing a problem.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

Thank you. That is very helpful.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Liz Smith

Let me return to the issue of forecasting by the OBR and the SFC. What you have set out for us is extremely important not only for determining some of the issues within fiscal frameworks but in relation to setting budgets. We have had the OBR and the SFC in front of this committee—they were extremely professional in both cases, I have to say. Is there statistical evidence, within recent trends of the forecasting of the OBR and the SFC, or particular data that shows a greater issue of error or volatility, or is it just the overall predictions that provide some problems for us?

Finance and Public Administration Committee

Scottish Fiscal Framework: Value Added Tax Assignment

Meeting date: 14 November 2023

Liz Smith

Is it not the case, convener, that previous finance committees have come to exactly the same conclusion that we have, which is that there are strong reasons for this being so complex and difficult and that the practicalities are just too great?