On your point about Audit Scotland, auditing is, by its nature, backward looking, so it is a very different beast. We can distinguish auditing from forecasting reasonably straightforwardly.
I accept that there might be a degree of duplication, but let us look carefully at the sums that we are talking about. According to the financial memorandum, the maximum spend for the Scottish Fiscal Commission would be £850,000 per annum, but the commission would be looking at tax receipts of about £600 million in land and buildings transaction tax, more than £100 million in landfill tax, £4.9 billion in income tax—this year’s figure—and something like £2.7 billion in non-domestic rates.
When we add all of that together, we arrive at more than £8 billion of public spend. Being out by a fraction of a percentage point could make a huge difference. Given that the commission’s total budget will be £850,000, I think that we can easily argue to the general public that it is in the public interest to take a belt-and-braces approach, even if there is a degree of duplication. The level of duplication relative to the size of the sums that we are talking about is, in my view, de minimis.
On the question of checking, I think that the point is dealt with in the Organisation for Economic Co-operation and Development principles for independent financial institutions. The last principle, which comes under the ninth heading, “External evaluation”, states:
“IFIs should develop a mechanism for external evaluation of their work—to be conducted by local or international experts. This may take several forms: review of selected pieces of work; annual evaluation of the quality of analysis; a permanent advisory panel or board; or peer review by an IFI in another country.”
There are therefore clear ways of carrying out such evaluation, but it is not clear to me that with the current format we are getting independent external evaluation. I think that there are blurred lines between the advisory process and the evaluation process. It was unclear to the committee where one started and the other ended, which was one of the reasons why we reached the conclusions that we did.
Coming back to the specific amendments, I have outlined what amendments 5 to 7 do. As I have said, I have attempted to mirror the wording of the draft bill as closely as I can. Amendments 8 to 10 remove the commission’s function of assessing Scottish Government forecasts, which would be unnecessary if the commission was doing the official ones. Amendment 11 removes the definition of “economic determinants”, again because the commission would be doing the official forecasts. Amendments 13 to 16 are technical in nature and reflect the changes made in amendments 5 to 7.
Presiding Officer—convener, I mean; I gave you a promotion there—I think that the committee made clear in its report why it reached this particular view. It was because of the quality of the evidence that we received, particularly from Dr Armstrong, Professor McGregor, Professor Peat and Chris Stewart. The current set-up leads to blurring. It is unclear where the challenge function stops and the evaluation function begins, and there are legitimate concerns that we could end up with advisers as opposed to an independent fiscal institution.
The commission has said to the committee on the record that it does not look at numbers or outputs, and it was unable, when I put the question, to say what would be classed as not reasonable. That caused me huge concern. By having the commission do the official forecasts, we avoid the optimism bias that can plague any Government; it removes the inbuilt incentive to be optimistic. Ultimately the commission needs to be independent and—just as important—needs to be seen to be independent.
I move amendment 5.