Chamber and committees

What I cannot get my head around is that there is still headroom, which means that ministers have had—and still have—the ability to borrow more if they wish to. In the financial year 2023-24, for example, the Scottish Government borrowed £300 million to support capital projects, which was less than the £450 million that was initially outlined in the budget, so there was significant underborrowing, so to speak. At the same time, there was a mid-year review into capital investment that led to a number of projects not proceeding.

The public will look at that and say, “You have had headroom to borrow cash, yet at the same time there is a freeze on capital investment in much-needed projects—for example, in the national health service or in other infrastructure projects”. The public will not understand why such projects are not going ahead when, at the same time, ministers are not borrowing the cash that is available to them. How do you marry those two things together?

Given the huge pressures that public finance is under—we have spent two hours talking about them—are you comfortable about the fact that there are civil servants working for you on theoretical white papers—13, I believe, in total? Does that sound like good use of civil service time and taxpayers’ money to you?

Ms Stafford, does anyone in the Scottish Government advise ministers on their taxation policy? Does anyone, at any point, undertake an analysis of the revenues that are achieved versus what was expected? How are we faring with that? Is the Government, through variation in taxation bands in Scotland, getting the amount of money in tax that it thought that it would? Are we looking only at tax intake, or are we looking at the bigger picture in terms of wider investment, difficulty in recruiting and all the other economic factors that sit around taxation policy, not just the numbers themselves?

Many people have lauded and applauded the decisions that have been made, and others, particularly in the business community, have criticised those decisions. I am trying to unearth how the civil service goes about advising ministers on the right course of action, or, indeed, how it flags up any areas of taxation that it thinks should perhaps be changed in the future.

That is the number of individuals; it does not necessarily equate to higher tax intake in numerical terms. You could be losing people and have more people coming in, but they are paying less tax than the people that you are losing. What does that analysis look like?

My other question is about commercial assets, so I will stop there for now and ask about that later.

You think that it is appropriate and impartial. That is your view?

Yes, but those trade-offs are often quite substantial and will come at the expense of the delivery of other worthy public services. For example, capital investments have been frozen, and there have been shifts from the rural affairs, transport and housing budgets to other portfolios where we simply cannot say no to a funding increase. Benefits have to be paid, but we can pause progress on a road project or a hospital renewal. I appreciate that those decisions are made by ministers, but what advice is given to them by the civil service on which portfolios have to be cut to fund increased expenditure in other portfolios?

Okay—I have quite a lot of ground to cover, so I will move on.

Permanent secretary, we hear frequently from ministers, in a comment or a statement—it is a matter of record in the Official Report—that the Scottish Government needs more borrowing powers. My understanding is that the Scottish Government already has a significant amount of borrowing power. Its outstanding borrowing balance is to the tune of £1.7 billion for capital borrowing and £0.5 billion for resource borrowing, which means that over £2 billion is already on the books. Of course, that amount attracts quite a large amount of interest. I understand that there has already been over £320 million of interest on those two figures combined. In the year 2023-24, borrowing repayments of £217 million were made, which is up from £160 million in the year before.

I am trying to understand where we are at with borrowing, because those sound like pretty hefty figures. Are the levels of borrowing in Scotland sustainable? Are we borrowing enough to fund capital projects, or are we borrowing too much?

Good morning, Auditor General and guests. Thank you for your opening statement.

Your report paints quite a stark picture of the long-term viability of the yard. You mention in points 1 and 2 of your key messages that there are significant risks and uncertainty around the yard’s long-term financial sustainability—a point that you have just reiterated. Could you elaborate on why you have come to that conclusion?

Mr Boyd, one of the things that it would be very helpful for us to understand is whether the draft budget line of £47.9 million includes or excludes any of the additional £14.2 million that was announced separately for investment. That might be a question for ministers rather than for you, but I presume that you looked at that in the whole anyway.