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Chamber and committees

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 29 June 2025
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Displaying 3510 contributions

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Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

If we had more time, I would talk to you about the taxation of occupational pensions.

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

Very quickly.

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

I thank all our guests. I will allow them to leave and we will then have a short five-minute private session. We will put most of our private work programme to one side and discuss two issues very quickly, seeing as time is marching on.

12:47 Meeting continued in private until 12:54.  

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

Yes—they start to lose it at £50,000.

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

That first figure is assuming no behavioural impact, is it?

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

Yes, because of the message that is being sent.

In your submission, you have said:

“tax increases are likely to be unpopular and possibly counter productive and ... funding reductions to other spending priorities are likely to be valued more by the electorate than the gains resulting from the introduction of the new policy—this is so-called ‘loss aversion’”.

I find that quite interesting. I have talked about that a number of times in committee with regard to council tax reform: the people who gain will just shrug their shoulders, but the people who lose will be less than chuffed. In fact, the consultation on council tax closes tomorrow, and no one has contacted me to say, “This is great”, but I have had plenty of people tell me that they are not too chuffed about it. Perhaps you can say something about that, Professor Bell, and then I will let João Sousa in.

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

Thanks.

Professor Heald, you have said:

“budget documentation should set out clearly the additional cost of ‘above-parity’ expenditure and the reduced costs from ‘below-parity’ expenditure.”

Would you like to touch on that?

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

However, what the economists have said is that, if you implement some of these policies, you will not get any more money, because people will simply avoid it, work less hard or leave Scotland. For example, they said that, when the top rate went up by 1p in the pound last year, 90 per cent of that revenue was lost through behavioural change. Someone who works five days a week might say, “Do you know what? I am just going to work four days a week because I am not going to lose all that money to tax. Why should I work for that?” It is one thing to say that, if we do X, we will raise an extra £500 million or whatever in tax, but if we lose 90 per cent of that or possibly end up losing £600 million in tax because we have implemented that change, it does not deliver the changes that you and, I am sure, everybody really want to see. Everybody wants to tackle poverty, create better-paid jobs and have more money for the health service, but how do we realistically fund that when the impact of behavioural change is so fundamental to doing that? You can raise tax as much as you like, but if the money goes elsewhere, how do you deliver?

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

Alastair, in your submission, you talk about how research and development in Scotland is still punching well above its weight, at 13.25 per cent of UK research and innovation funding, compared with 8.2 per cent of the population, but that funding is down from around 15.4 per cent just a few years ago. Will you talk about how important that is and how important the university sector is to Scotland’s economic growth, wealth and prosperity?

Finance and Public Administration Committee

Sustainability of Scotland’s Finances

Meeting date: 19 September 2023

Kenneth Gibson

No one else has indicated that they want to come in, so I will make a couple of comments.

What has been done in Dundee with life sciences and gaming is phenomenal. Scotland really is on the global map when it comes to its universities and knowledge economy, which is important. However, have you tried to get a roofer, a plumber or an electrician these days? There is a real issue with the balance between people going to university and those not going to university. For example, we talk about building houses and the importance of affordable housing, but there is a chronic shortage across the construction industry. Sadly, some teachers in schools—I certainly found this in my area—say to children, “You will be a bit of a failure if you do not go to university,” so the people who would go into apprenticeships and probably go on to have really good and highly skilled careers are not doing so. We have chronic skills shortages in engineering and construction, for example. Where do we strike the balance?

What we need and want in Scotland is for our universities to remain cutting-edge, but what about the rest of the economy? What about the situation with apprentices perhaps not being valued as much and, therefore, not enough people doing apprenticeships? Of course, without those basic skills to support the universities and other sectors of the economy, we cannot grow as well as we could.