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I thank Professor Heald for his submission, which is a useful insight into the context and purpose of the Scottish Government’s spending review. Professor Heald, my reading of your submission is largely that the review is the right thing to do but that the framework document that has already been published by the Government does not go into sufficient detail on the context and dynamics. Is that the correct reading of what you are saying?

Could you elaborate on the context that has been created by Covid over the period of the review? What are the dynamics of Covid recovery that the review should address, from the point of view both of economic scarring and of what public services will be dealing with?

I want to follow up on your point about the structure and composition of the income tax base in Scotland. In response to a question from the convener, you discussed the particular issues around the intermediate rate and how that works. You said that research had been undertaken. Could you point the committee to that research? This is a pivotal but underexamined point. Are there things that we should be looking at in relation to that issue?

Emma Congreve, I have a question for you about addressing child poverty, which is one of the explicit objectives of the review that is being undertaken. We also have statutory targets. Given that it is such an explicit and overarching objective, will you provide some context for how we are proceeding against those statutory targets and whether we are on track to achieve them, even with doubling the child payment?

Sure—but you do accept this, though. I understand how we got here; it is a matter of reconciling the budget from this year into next. What if we had not got the information that you have just provided orally, that there was a gap? In future years, we should be aiming not to require that narrative to reconcile one year’s budget moving into the next year’s budget. Is that a fair comment?

I have two things to say about that. First, I understand the how. Secondly, it is not about the information that you have provided, but is about how the situation presenting that information is being managed. That is the critical difference. I hope that minister accepts that it is a good illustration of the point that Audit Scotland and others have made that it is incredibly difficult to track and manage from the budget through to announcements through to outturn through to consolidated accounts.

As somebody who has run a business, I recognise and am very familiar with the difference between budget forecasts and cash management. However, when they are so far apart, it always causes concern, and that should be investigated. Do you recognise that as reflecting the broader point from Audit Scotland? That follow-through is the important point.

The level of delta was about £600 million—that is what we get if we add £98 million to the £511 million—which is 15 per cent, crudely, and that is quite a big variance between the budget and what you are saying the actuals will be.

In a similar area, examining the context again, I think that the whole committee was struck by the Scottish Fiscal Commission forecast of employment growth and wage growth, and what that was going to do for the medium-term outlook for income tax revenues and therefore the block grant adjustment. It looks as though, within the next five years, we will receive around £400 million less than we would do under the Barnett formula. The other aspect that sometimes gets missed in the commentary is our social security commitments, so the totality looks like a shortfall of about £700 million.

Do the documents that have been produced thus far have sufficient focus on that medium-term issue? Is there sufficient analysis of the linkages? That shortfall is not just an outcome; potentially, levers are available that could impact wage growth and the number of jobs in the economy. Are those sufficiently examined in the documentation that has been published so far?

Some of the responses to the consultation identify another aspect, which is how well money is spent. Is another element the principles by which the decision making is carried out? “Subsidiarity” is a bit of an obscure word, but do you think that at least some consideration should be given to ensuring that decision making happens as close as possible to the point at which it takes effect? Would COSLA like to see that being taken into account in the review?

I will move on to the Scottish Property Federation’s submission. As a former retailer, I was pleased that the federation highlighted the issues that that industry faces. The specific point is that we cannot rely on non-domestic rates, but there is a broader point, which is that the framework document treats resource funding as fixed and uncontrollable. To my mind, there is insufficient examination of what things the Government can control to increase its revenue. The primary one is income tax.

That problem is set to increase, as set out in the Scottish Fiscal Commission’s forecast. Does the Scottish Property Federation have thoughts about what sorts of things need to be included? What levers and dynamics are at play in the economy that the review should take into account?

I will ask each of you a question. I will begin with Alastair Sim, and I will pick up from where Liz Smith left off.

In your submission, you state that, since 2014-15, the teaching grant has declined by 13 per cent. Will you bring to life for us the practical impacts of that? I think that your submission is saying that that slow decline cannot carry on. If we are sitting here in five years, and that trend has straight lined, what will be the consequences for higher education as a sector and for individual institutions?

I will ask a direct follow-up question to that. Obviously, institutions cannot charge fees for tuition but will that lead to a situation in which they charge fees for things for which they can? For example, will they increase accommodation fees or fees for access to other things on campus that are not tuition?