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I do not think that anyone doubts that having more money in people’s pockets is a good way of reducing poverty. However, local government and others are saying that, if the money went into their services, they would be able to provide more jobs, apart from anything else, which is the best way out of poverty.

Professor Heald said that

“being ‘progressive’ on social security and other cash benefits at the expense of public services expenditure will have an ‘anti-progressive’ effect because lower income groups have less access to substitute private services if satisfactory public services are not available.”

My concern is that local government is having to focus on its statutory obligations and, therefore, cannot support things such as employability services in the way that it wishes.

People are trapped on benefits—they might have more benefits now than they would otherwise have, but they are still trapped. We want to break that cycle of poverty. You know yourself, cabinet secretary, that the situation in Dundee is a particularly difficult one.

Indeed—and so is the curriculum and how it is taught, and there is a whole debate to be had on that separately.

I can understand the Government’s position on flexibility, because everyone calls for flexibility. When we had the historic concordat between the Scottish Government and COSLA in 2007, local government often did things that the Government was not happy about, and the Government was getting blamed for decisions that were being taken at local authority level by other political parties that were running those local authorities.

I understand that there is some politics there, but I think that the flexibility issue is one that will not go away. I would hope that the Verity house agreement will allow greater flexibility to enable better service provision, with the resources that we have.

However, the Scottish Government can make savings in other areas. One thing that I have always been surprised about is that people can go to their general practitioner and get paracetamol. I asked a question about that and found that the cost of paracetamol that was prescribed in Scotland in 2022-23 was nearly £12 million, and that the average cost to see a doctor is £56, apparently. Other products such as Calpol and ibuprofen are also being prescribed. Surely we could save tens of millions of pounds from the medicines budget if things that are readily available in local pharmacies and, indeed, in supermarkets were no longer on the list of medicines that can be prescribed.

Research universities are concerned that the golden triangle of London, Oxford and Cambridge sucks in a lot of venture capital. That is why I have raised issues such as proof of concept money in the chamber. We were told that £5 million of Scottish Government money would bring in some £200 million of private investment, but some predictions, such as those about the data-driven innovation initiative, have underestimated how much we could bring in.

The main issue is that we have the potential to take Scotland forward but we are falling behind the rest of the UK. Employment in high-tech areas will provide tax revenue for the Scottish Government to invest in anti-poverty initiatives and other measures, which would be a win-win all round. I am asking about where to invest limited resources to get the best return.

That is helpful—thank you.

There is loads of other stuff that I could ask about, but colleagues are keen to jump in, so I will ask just one more question, which is about progressive taxation. The UK does not have progressive taxation—it takes a steps and stairs approach, which Scotland is tied into because we have limited room for manoeuvre.

Colleagues and I have raised every year the fact that marginal tax rates in Scotland are higher on incomes of just over £43,000 than they are on incomes of £50,000-odd, because of higher rates of national insurance, which we do not control. Given the difficulties of that system, what work is the Scottish Government doing to try to make that progressive, so that the share of income that a person pays in taxes rises as their income rises? As I have said, that is not the situation at the moment, when someone who is earning £55,000 a year can actually pay less tax than someone who is earning £45,000 a year. What is the Scottish Government doing about that?

What further research is being done on behaviour? The behavioural response to taxation was trailed last year, and there is a big debate about the impact of increased taxation, not because of the mistaken idea that people might flee Scotland but because they might choose to work less or might use incorporation or other ways of avoiding paying income tax.

Obviously, we can look at what is happening in other countries, such as Estonia, which, incidentally, has a straight 20 per cent tax across the board. I do not think that we in Scotland will be in that position any time soon, but having six tax bands does not help—having rates of 19, 20 and 21 per cent just seems daft to most people. I understand why that was brought in, but it is a nonsense, is it not?

I thank the cabinet secretary and her officials very much for appearing today.

That concludes our evidence taking on managing Scotland’s public finances, a strategic approach. We will consider all the evidence received as part of our inquiry and publish our report in early November.

We will now have a short break to allow for a changeover of witnesses before we move on to our next agenda item.

You are looking at capital, but the £984 million is resource. It is not going into house construction or anything like that. Of course, the £984 million will, to an extent, have gone towards being spent in local shops. People are not likely to have spent it on cars or overseas holidays. That is why I am looking at whether specific work has been done on the opportunity cost. Maybe Jamie Robertson has some information on that from CIPFA.

We are looking to make recommendations to the Government on where we get the best bang for our buck in tune with the Government’s own priorities, one of which is eradicating child poverty. We look at local government, and you are saying that that money could be better spent on providing local services to support campaigns against poverty and delivering on all the areas that you have talked about—for example, enabling people to get back into work as, ultimately, the best way of reducing poverty is for someone to have a well-paid job, although not everyone in work has a well-paid job.

I am just asking whether you have anything hard and fast on the opportunity cost. It seems to me that you are advocating that, instead of putting additional funding into welfare in the next year—over and above what is currently going into it—that money should be redirected to local government.

Incidentally, being here is like being at an auction—if you twitch, you will get called to speak.

In your submission, you made the quite stark point that, in the years since the pandemic, the number of young people who volunteer has fallen from 52 per cent to 37 per cent, which is quite a significant reduction. How would an indicator help to increase the number of people who volunteer?

Not quite.