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Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
Agenda item 2 is consideration of the Auditor General for Scotland’s report, “Administration of Scottish income tax 2023/24”. I am very pleased to welcome our witnesses this morning. We are joined by the Auditor General, Stephen Boyle. Alongside the Auditor General are Carole Grant, an audit director, and Richard Robinson, a senior manager, both from Audit Scotland. I am also very pleased to welcome once again to the Public Audit Committee Gareth Davies, who is the Comptroller and Auditor General at the National Audit Office. Alongside Mr Davies is Darren Stewart, who is His Majesty’s Revenue and Customs financial audit director at the National Audit Office.
I think that you are aware that we are quite tight for time this morning. We have some important areas of ground that we want to cover with you, so if you are able to make your answers concise, that would be helpful—and I have leant on the committee to encourage concise questions. Before we get to those questions, I invite both Stephen Boyle and Gareth Davies to make opening statements. I will begin with you, Auditor General.
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
Thank you very much indeed. I will turn to a couple of issues that both of you raised in your opening statements. In particular, Auditor General, you referred to something that is in your report. Exhibit 3 shows that £3.367 billion of additional income tax revenue has been raised from the Scottish population, but that that converts to additional budget spend of only £629 million. Presumably, that is a product of the fiscal framework. Do you have any observations about how the fiscal framework is working? What are the implications of that? As I calculate it, for every £5 raised, only £1 is available for the budget.
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
I said at the start we are quite pressed for time, but can I ask you to confirm my calculation? The figure in exhibit 3 is a cumulative figure—I draw attention to it because it is one of your key messages. For every £5 that has been raised through additional income tax in Scotland, only £1 of that—or less than £1 of that; it is about 18 per cent—finds its way into the Scottish budget.
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
Okay. Let me move on to another area that your report draws attention to and which you mentioned in your opening statement. The reconciliation figure for 2025-26 is £449 million—nearly half a billion pounds—which is the largest reconciliation to date. Is there a likelihood that that level of reconciliation will continue in the future? How does that affect the Scottish Government’s budget setting?
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
That might come back to haunt you, Mr Stewart, but we will see. I hope that you are right
My final question is on the overestimates. Your report speaks about calibration adjustments and a calibration adjustment was required to be made in 2021-22. Do you expect HMRC to have to make a calibration adjustment for the tax year 2023-24?
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
Thank you very much. I will now pass over to the deputy convener, Jamie Greene, who I know has some questions to put.
Public Audit Committee
Section 22 Report: “The 2023/24 audit of the Water Industry Commission for Scotland”
Meeting date: 19 February 2025
Richard Leonard
Okay. We will come to the international work later in our evidence session this morning.
I turn finally turn to you, Mr Brannen—but feel free to delegate to your team.
I am quite surprised that you did not know that something like that was happening. If the matter went to the audit and risk committee and the board, I would have expected there to be some oversight of it. Do the board and the audit and risk committee not produce minutes? At the very least, did the person who was in Jo Blewett’s position at the time not read the minutes that were generated in order to keep an eye on what was going on in a public organisation like WICS?
Public Audit Committee
Section 22 Report: “The 2023/24 audit of the Water Industry Commission for Scotland”
Meeting date: 19 February 2025
Richard Leonard
Okay, but does the bonus arrangement not come under the watchful eye of the remuneration committee either of the Scottish Government or, I presume, of Scottish Water, which has its own remuneration committee, has it not?
Public Audit Committee
Section 22 Report: “The 2023/24 audit of the Water Industry Commission for Scotland”
Meeting date: 19 February 2025
Richard Leonard
So, it is a ministerial decision, in the end.
Public Audit Committee
“Administration of Scottish income tax 2023/24”
Meeting date: 19 February 2025
Richard Leonard
Mr Davies, you might want to respond to that question, but I want to ask specifically about the point that you made in your opening statement about the error, which you have taken a fairly dim view of, I think. Can you talk us through that?
