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Thank you for that.

Gail Macgregor mentioned the fiscal framework. In paragraph 28 of your submission, you say:

“The devolution of tax powers to the Scottish Parliament has introduced a higher level of risk and uncertainty around the assumptions required to deliver a Budget ... Fundamentally the relative difference in earnings growth and the composition of taxpayers in Scotland compared to the rest of the UK, which is a key feature of the current block grant adjustment mechanism, suggests an inherent unfairness in Scotland’s disfavour.”

How would you rebalance that? We will be deliberating on that issue over the weeks and months ahead.

Susan, I asked you the first question, and you will get the last word. Obviously, the consequentials will be rolled out over a number of years. What is your view of how the proposal will impact on Scotland’s budget and economy?

Ray, is there anyone who knows how all those different things fit together?

Indeed. As I recall, productivity is a balance of skills, attitude, aptitude and capital applied. It is a question of getting that balance right, is it not?

I thank our witnesses. In particular, I thank you for coming to give evidence in person, which makes a significant difference to the quality of the session. That is very much appreciated. We hope to see you all again before too long.

We will have a two-minute break, after which we will consider a letter from the cabinet secretary.

What about CIPFA, Alan?

Linda Somerville, the STUC has said that it believes in progressively increasing the overall tax take of Government and local government. How far do you wish to advance that? Have you looked at what the behavioural impact would be? For example, about 30 per cent of income tax is paid by about 1 per cent of taxpayers, so what would be the behavioural impact if our higher tax levels were significantly higher than those south of the border or elsewhere, given that capital is often mobile?

On the 100-day commitments, you said in your submission that, in its manifesto, the SNP has “tended to favour universalism”. You went on to criticise that and to talk about the need for more specific targeting. However, there has always been an argument about whether to use targeting or universalism. The UK Government brought in universal credit and the NHS is a universal service, as are pensions and concessionary fares. The argument against having a national care service is to do with bureaucracy, but having a more targeted approach can also increase bureaucracy, because people have to administer that. I remember that, when I was a councillor, a huge resource was spent on administering grants.

There is bureaucracy and stigma, but there is also buy-in. With universal services, there is an opportunity for people who pay taxes to gain from the contribution that they make to those services. Where should the balance be between targeting and universalism? It is a difficult balance to strike, but where does COSLA believe that it should lie?

Thank you. I thank all our witnesses. We have run over time, but we will have a break until 11.15.

We now turn to our second panel of witnesses on Scotland’s public finances and the impact of Covid-19. We are joined by David Eiser, senior knowledge exchange fellow, Fraser of Allander Institute; Susan Murray, director, David Hume Institute; and Ray Perman, fellow, Royal Society of Edinburgh. I intend to allow up to 90 minutes for this session. Members have received written submissions from each of our witnesses. I welcome everyone to the meeting—I give the witnesses a particularly warm welcome for coming here in person, which the committee greatly appreciates.

I start by asking something of the David Hume Institute. Under item 3 in its submission, it says:

“At a time of multiple challenges and tight public finances, hard choices are almost certainly going to involve choosing to stop spending money on services or initiatives that are achieving public good, and are valued by their recipients or stakeholders in order to start or increase spending on other areas that are now judged a higher priority.”

With many of the witnesses we have heard from, it has been like drawing teeth to get them to say where they would disinvest. Everyone has come to the committee and said, “We require additional funding in our areas.” We have explained that we might have only a 2 per cent real-terms increase in the budget, but all our witnesses appear to feel that that should be specifically targeted at their sector.

I hope that Susan Murray and other colleagues will help by contributing some ideas as to where disinvestment can take place, because, if we are going to spend money more effectively and deliver better outcomes, that will need to happen. Do you have any examples that you can share with the committee?

Indeed—I suppose so. However, it would affect some people disproportionately. If they then had to invest elsewhere, they might not necessarily gain proportionately.

What is David Eiser’s view on the matter? Where should we look to disinvest if we are going to spend or invest—however you want to phrase it—in order to have more effective outcomes for Scotland?