Seòmar agus comataidhean

Thank you very much. I invite Gareth Davies, the Comptroller and Auditor General from the NAO, to make a short opening statement, after which we will move to questions.

I think that that would be helpful. One of the factors that we considered last year but which has possibly been brought more to the fore in this financial year is the rate of inflation. Inflation has led to higher wage settlements and, therefore, people’s incomes are rising. I presume that that means that the income tax take is going up. Is that a fair assessment of what is going on?

They might be higher in reality, but I am not sure that they are higher in real terms. My point is that people’s incomes going up—albeit that they lag behind the cost of living and the consumer prices index—presumably leads to an expansion of the revenue that comes in to HMRC. In turn, that will lead to an increase in the resources that are available to the Scottish Government.

Yes. We will come to discuss that in more detail.

Gareth Davies, you mentioned methodology a couple of times. Again, that is something that exercises the committee’s interest, and other committee members will have more detailed questions in that area. Scottish income tax is now well established, but we have heard some concerns that the methodology does not give us the level of data that we think is necessary to make informed policy decisions.

I will cite an example. In the report, you identify some of the methodological flaws, if you like, or recognised areas in which there is not the level of data that we might like. The second point about the methodology in your report states that

“The methodology combines the calculation of PAYE and Self Assessment liabilities for the UK such that the amount apportioned to Scotland does not reflect the differing proportions of each type of taxpayer between Scotland and the rest of the UK.”

Do we know, for example, what the balance is, in England and Northern Ireland versus Scotland, between people who are on the pay-as-you-earn system and those who are on the self-assessment system? Are there more people on PAYE in Scotland than there are in England and Northern Ireland, or vice versa?

Therefore, that could be built into the data that is available, but currently it is not. Even on some kind of sampling basis, it would presumably be possible to gauge the relative balance between PAYE and self-assessment liabilities in both jurisdictions.

Another point strikes us in relation to the methodology, which the Auditor General for Scotland reflected on in last year’s report. Paragraph 16 of this year’s report, which notes the NAO’s report, states that the

“methodology has remained broadly the same since the prior year.”

This time last year, we were having conversations with Scottish Government officials, as well as with HMRC, about the methodology, the service level agreement and the quality of data that was being procured, because there is obviously a financial cost to it.

Last year, Gareth Davies commented:

“Clearly, if you had a more highly specified agreement that got into some of the areas that we have been talking about today”—

why we cannot get more qualitative data and fewer estimates—

“it is likely that HMRC would require more costs to be covered. However, on the basis of the agreement that is currently set out, we think that the cost is fairly stated.”—[Official Report, Public Audit Committee, 3 February 2022; c 25.]

In other words, we were getting into the terrain of suggesting that, if the Scottish Government was prepared to pay a little bit more money to HMRC, it could perhaps get some better-quality data.

In her evidence last year, Alyson Stafford from the Scottish Government said that

“the committee’s consideration is extremely timely for us to take your observations and comments into account”

and that the Government was

“looking at data breadth and depth.”—[Official Report, Public Audit Committee, 12 May 2022; c 41.]

However, nothing appears to have changed. Is that a fair estimate of what is going on here? Nothing.

We will move straight to questions. I invite our deputy convener, Sharon Dowey, to ask the first question.

Although it is not in the written report, the £550,000 increase in grant aid to the Crofting Commission, which has been provided for by the Scottish Government, was alluded to earlier on, and Pat Kenny said that it was, in part, to address an enhancement of staffing capacity.

I have two lines of questioning. First, could you describe in more detail what those job roles are and whether the enhancement was about filling vacancies or increasing capacity? Have there been particular logjams, where the commission has not dealt with things as speedily as it might have? Is the enhancement of staffing capacity an attempt to address that?

Secondly, are other, non-staffing costs being met through that increased level of grant aid that has been provided for?

Thank you. There will be public interest in the proportionate increases in the salary levels from the regulatory team that is, I presume, working on the front line and those who are in strategic senior management positions. There will also be an interest in the net outcome from the new structure compared to what it was under the previous structure.

My final point is to pick up on something that you spoke about earlier. Some of the new commissioners were elected and some were appointed. I am interested in understanding what training and development they have been given. In answer to Colin Beattie’s earlier questions, you talked about the role of the public bodies unit and there is an expectation that training will be provided. In our report, we identified that we would want to understand what quality of training is being provided to a new cohort of commissioners.

It strikes me that a lot of the six-page report reflects on the recommendations and lessons that were put at the point of the previous section 22 report on the Crofting Commission and, indeed, on this committee’s conclusions. I just wonder whether it would not have served transparency a little better if you had listed the 41 recommendations and given some kind of tracking of how they had been progressed, so that we had a sense of that. I do not know whether you alluded to that as being part of the internal audit but, as far as the published document that is before us is concerned, that is not captured. I wonder whether you would consider that.

Okay. Maybe it is just me, but I thought that, for completeness, given the scale and breadth of the recommendations—seven on financial sustainability and the other 34 on governance and transparency—it might have been useful to capture those details in the document that is before us, but I hear what you say.

Craig Hoy has some questions.