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Good morning, and welcome to the second meeting in 2023 of the Finance and Public Administration Committee.

The first item on our agenda is an evidence session with the Minister for Public Finance, Planning and Community Wealth, Tom Arthur, on a Scottish statutory instrument. Mr Arthur is joined by Ewan Cameron-Nielsen, who is head of the fully devolved taxes unit at the Scottish Government. I welcome you both to the meeting.

I advise members that I own a flat that I rent out, as per my entry in the register of members’ interests.

I invite Mr Arthur to make a short opening statement.

It seems to me that, when the legislation was put in place, no thought was given to that anomaly. If there are two RSLs, with one run by a local authority and the other by a housing association, it seems daft that the relief applies to one and not the other. We will move on from that, but others might wish to look at it in more depth.

We have received responses from the Scottish Association of Landlords, the Scottish Property Federation and others. Although the theory behind the proposed increase is, as you said in your opening statement, that it will make more houses available to first-time buyers, the Scottish Association of Landlords said that most of its tenants are not in a position to buy, which is why they are in the private rented sector.

The Scottish Association of Landlords said that the increase will reduce the availability of properties in the sector, because it will act as a deterrent to people investing in the sector. The survey of members that it undertook last month revealed that

“44% of landlords are planning to reduce their portfolio size in the next 5 years”

and that

“around 10% of tenants in Scotland will be evicted in the next 5 years so that landlords can exit the sector by selling their properties with vacant possession.”

If the sector has issues at this time, how will what has been proposed help?

Would the Scottish Government consider a couple of areas for which exemptions have been suggested:

“investment in empty and new build properties”

in order to increase the supply of housing stock, and

“properties which are being purchased with a sitting tenant”?

Everyone is aware of rising interest rates and prevailing economic conditions, but the issue that is being raised here—the concern that has been expressed from the market—is that the Scottish Government is not working to mitigate that situation but is going in the opposite direction. For example, Savills has said that the accumulation of measures has reduced the supply of rented accommodation in Scotland such that 29 per cent fewer properties are listed for rent in 2022, as compared with 2016. That is the start of a downward slope, for which no incentive seems to be in place to reverse.

The SPF said that, following the measures, the tax on a home priced at £188,000 would be £12,140, whereas it was £8,380 before the rate change was implemented. In England, it would be £5,640, so the tax in Scotland would be more than double that in England, which could discourage investment in new property in Scotland.

Okay. So, basically, the Scottish Government’s contention is that the money is important for investing in our health service and other front-line services, and you do not feel that there will be a detrimental effect on the housing sector, whether socially or privately rented.

Everyone is keen to ask questions. Michelle Thomson will be first, followed by Daniel Johnson.

It is not a criticism of the SPCB. This is a public meeting, and it is important for people to be able to understand where their money is going.

The other significant point is that the budget of every one of the commissioners and ombudsmen is increasing by more than the increase that you have bid for for the entire Parliament. You are bidding for a 4.8 per cent increase from £128 million to £134.2 million, but every commissioner and ombudsman is seeking to increase their budget by more than that, with the average increase being 8.1 per cent. If we compare that with areas in the draft budget such as justice, transport, local government or wherever, we could argue that the budgets of the office-holders are increasing by more than the budgets of all those front-line services. It is therefore important to put on the public record why that is happening.

The other one that stands out is the Scottish Commission for Human Rights, which has also had a significant increase of 22 per cent. Has there been a big deterioration in human rights in Scotland in the past year, or is it just that the commission is dotting more i’s and crossing more t’s? What is the situation there?

That is absolutely fine. It is just that, if the budget is £37 million and the submission says that that is “including use of contractors”, we anticipate that it will be a lot more than £4,000. It might have been easier just to have said, “including £4,000 for contractors”. That would have saved me having to ask you that question.

In 2022-23, the staffing baseline was increased by £2.7 million. We are told in the submission that that was to help to deliver strategic priorities, which are listed. One of them is to

“enable enhanced public engagement and participation in committee work”.

Has that happened and how many staff have been allocated to it?

Do you mean scrutiny of the post-Brexit constitutional arrangements?

John Mason is looking at me with doe eyes, with that appeal. [Laughter.]