 Good morning and welcome to the ninth meeting in 2023 of the Finance and Public Administration Committee. The first item on our agenda today is an evidence session on the committee's inquiry into effective Scottish Government decision making. Before I welcome our witnesses, I want to put a record thanks to those civil servants who met us last Tuesday and are shared with us their experiences of decision making in government. We will publish a summary of discussions on our website in due course. I welcome to the meeting Mark Taylor, Audit Director at Audit Scotland, Ben Thurman, Senior Policy and Development Officer at Carnegie UK, and James Black, Fellow Fraser of Allander Institute. Good morning gentlemen and I'm going to move straight to two questions. I want this to be a free flowing meeting this morning. We have already taken huge amounts of evidence from former ministers and civil servants and, indeed, our adviser, Professor Canis. I'll be asking some open questions and I just want you to feel able to contribute as much or as little as you wish to to those. Some of the things that came out of the meeting with civil servants emphasised key areas such as the need for strong ministerial leadership, clarity of purpose, capacity and capability of departments to deliver, civil servants not being micro-managed and having space to work and clear lines of accountability. All of those might seem pretty obvious, but I'm just wondering if you can advise us to whether or not you feel that those things are delivered in practice in some part or in all, perhaps, who would like to kick off? I certainly recognise the list and the thinking that's behind the list from engaging with the Scottish Government over a long period of time and I wouldn't contest any of those things as being important to the mix alongside that. Just to pick up a two or three from that list, convener, and offer some comments, you'll see from our paper the points of make around accountability and accountability is a really strong feature of how government works. It's in the legislation, it's in all the guidance, it's also very apparent when we engage with government that's real strength of accountability and the importance that government attaches to that. That brings strengths around manageability, it brings strengths around clarity about who's heck to come in front of you and other committees, but it also brings some challenges for ways of working that's often illustrated by some of the challenges that we have in our work, so often when we go to speak about a thing that doesn't neatly land in somebody's accountability we need to speak to someone else and someone else and someone else to try and piece together the pattern and that provides challenges for us as I'm sure it does for colleagues as well, but it also illustrates the challenge that the government has in trying to work within such strong sense of accountability to deal with some of the cross-cutting issues, to deal with the qualities, to deal with climate change. Our experience was to deal with the pandemic and how money was directed during the pandemic. Again through that work we engage with lots of different parts of the government to uncover that, rather than having an overall sense or anybody having an overall sense of how that matters. The important thing, of course, in there is for a government that aspires to deliver outcomes, there needs to also be mechanisms that accountability is shared and a joint accountability to deliver on some of those cross-cutting issues, perhaps we'll deliver into that a wee bit more. The other one I pick up, convener, I'm happy to comment on all of them, but I want to pick up for just now is that real, and again through our submission, that real sense of importance of clarity of purpose, clarity of purpose both at the high level, but also what kind of impact are these policies intended to have, how are we going to know what's going to change beyond we're spending money on a thing to change these inputs and how are we going to measure that and a real important theme of our submission, but a real important theme of the audits that we've worked on over the years is that's where government does things less well, that clarity about what is to be achieved and how will we know when we've achieved it around that both in order to assess that individual policy, but also to learn from that to think, well actually these things work, these things don't work, these things we need to continue and do more of, these things we need to dial back a wee bit. So those are the two things I'd pick out just to get us going, thanks, convener. Okay, Bain. Yeah, I'm happy to pick up on that and some quite similar comments to Mark as well, so I think one of the things we focused on in our submission was that kind of like shift, what ambition to shift towards an outcome-based approach, I think that picks up on the what are we actually being accountable for here and just kind of like picking up on some of the things that Mark mentioned around that horizontal integration across policy areas and how we ensure that we're working in a collaborative and joined up way across government and also that kind of shift towards a more like long-term and prevention-based approach to decision making as well. So I think there's something that we picked up in our written submission that we're very good at being like accountable to like particular targets and outcomes but perhaps less so on the process of actually getting there. So what are our ways of working and how do we hold ourselves accountable to the principles that underpin the way that we make decisions and there are other governments that we sort of mentioned in our submission that have been able to do that. So in Wales they're kind of like five ways of working and actually being accountable to the way that they make decisions as well as the outcomes that flow from decisions and that feels like an important thing in that conversation about accountability. As part of the research into the joint budget review and climate change, I spoke to quite a number of servants across the Scottish Government in different areas and a lot of that research wasn't particularly even climate focused at the start. It was trying to establish what processes occur, where do roles of responsibility lie and so on to try to understand the policy making process across different parts of government. So one of the key words that I would like to bring up is challenge and I think that speaks to quite a number of the items listed earlier. So both in terms of internal challenge and external challenge and also both in terms of informal challenge and more formal challenge. That speaks to a lot of the above because leadership sets that tone of challenge. There needs to be clarity around what sorts of challenge should be expected formally within policy making processes and setting an informal tone as well. There needs to be capacity in order for servants to ensure that anything to do will stand up to the scrutiny of challenge and there needs to be accountability for who is undertaking that challenge. I think that for me challenge is really the key word and it speaks to many of the factors here. Thanks very much for that. I certainly feel that this committee has got a role to challenge certainly in terms of our scrutiny function so I think that that's very much something I would agree with. Do you feel that in your experience of the civil service, I don't know how in depth your individual experiences are but the civil service feel they can challenge ministers. Clearly individual relationships make a huge difference and there will be different personalities and leadership styles. We are not trying to say that people should be in a certain box but there is an ability to talk truth to power and do you think that that's limited? Do you think that it should be more? How do you feel the relationship is in terms of civil servants with that? I think that from my experience relationships are generally pretty positive. I think that usually the difficulty of the challenge comes from both what challenge is made to the civil servants and what they're looking at in terms of appraising different project options. But also ensuring that there's really a culture where I suppose things can be said and things can be got wrong and that's accepted as part of the process that not everything is going to be correct. I think that from the perspective of challenge in terms of internally to what degree our process is being followed and to what degree our process is being followed well is part of the gap where in my view we're challenges not being undertaken to maybe the intended level always. Mark, you talked about what goes well and what doesn't go so well. Do you think that there's more of an emphasis in terms of just politics of what goes wrong rather than trying to bolster what perhaps is going well and what is working fairly smoothly in terms of government? I'm not talking about necessarily the party political aspect of that. I'm talking about within departments themselves and in the government as a kind of coherent unit. The government works over different timeframes. There's always firefighting to be done of course and at the same time and government does look to look to the future trying to make some innovation, trying to make some longer term change in transformation. I think part of the issue and capacity was on your list, part of your issue is the prioritisation within that and how it's not a choice between those different considerations but rather how the right balance is reached between each of those aspects. I think often the balance is against the here and now which speaks to the root of your question where whether it's the politics internally they need to be seen to be doing well, they seem to be making a difference immediately and quickly in some cases and I think often the balance tips towards that area. When there's more of an investment in innovation and when there's more investment in transformation, particularly in those areas, our experience has been two things. One has been that that's not being thought through or articulated as well as it might be in terms of what does that mean, what does that mean for the impact on people and equalities in different groups but basically what we're trying to achieve here and what's that impact going to be beyond the headline of the change that's being looked for and also as I said before at the back end or at the front end but measuring at the back end well how will we know, how will we measure that, what's the data that will correct around that and I think our experience and the Auditor General's use of phrase around the implementation gap, one of our experience of the contribution towards that is that lack of clarity of the thinking at the front end and the lack of collecting of the data, lack of understanding how things will be measured and the priority given on that through. There's a complex set of issues that government's dealing with, I think my overall reflection is that often the hear and now trumps the longer term innovation and change. Well the next question I was going to ask after Ben something next but was actually about capacity because one of the things that the civil service did say which often frustrated them in terms of their departmental remit was the lack of capacity just in terms of the kind of expertise and numbers to actually deliver some of the things that the government wants and indeed the public and others demand. So just the other thing you touched on of course was prevention which of course Ben talked about horizontal working. I mean what this is a thing that this committee's wrestled with and it's got it's coming for well over a decade because of his Mark Taylor says people are looking for instant results it's very difficult I think for government to perhaps persuade organisations to disinvest in one area in order to invest another which may have long term more effective results. How do we try and square that circle in a situation where resources are not increasing? Ben? Is that that for me? That's a really good question and it's the question that we've been grappling with at least since the Christie commission. So I think part of the kind of light pressure part of the answer is around scrutiny and how we scrutinise decisions I think so we did a lot of work off the back of the the STIRC inquiry into bullying and harassment in NHS Highland looking at values in the healthcare system and I suppose like documented a link between the sort of quite narrow like performance targets that are published on a weekly basis and with quite a lot like high level of like public immediate scrutiny around them and the impact that that can have on like decision making in a sort of service delivery context and the pressure that that can create within a service and the the sort of values and behaviours that that can encourage in certain situations and so I think there's like a there's a question about the way that we like scrutinise performance in different contexts and also a question about values as well which I know is something that was one of the questions in the inquiry itself. I think on the on the flip side of that it was quite positive to read I think it was in Audit Scotland's like report the way that values have been embedded into like social security Scotland like quite effectively across everything that they do so there is a maybe a question about how we can like more consistently interpret these across the piece and think about how we how we use that approach in the way that we scrutinise decisions so that we don't kind of create these like previous incentives that can skew us towards incident results instead of more like longer-term goals. I think one another argument between silent horizontal working is accountability which of course Mark talked about I mean who ultimately is accountable when when you do have this working across departments. Yeah and so I mean I think that's the so I think it's a collective accountability isn't it and that's a much more complex thing to achieve across across a big government but I think the any other point that we tried to make in our in our submission was that you know we're getting diminishing returns from an approach that tries to treat complex social problems in in silo so like health poverty education a lot of the kind of key indicators that we're trying to shift a flatlining on this so the way to actually improve people's lives is through finding these points of connection across different policy areas so there's definitely a question about how we achieve accountability in that context and I think we would argue that it's accountability for like shared accountability for outcomes and also principles so the way that we deliver those outcomes so how can we be how can different parts of government be held to account on the things that they're doing to collaborate with different departments the things that they're doing to integrate policy areas the things that they're doing to embed like long-termism and prevention into the decisions that they're making so I think it's accountability for our shared outcomes and the processes through which we get there. Jamie The Scottish Government obviously interacts with a lot of organisations outside the Scottish Parliament itself and in speaking to a former minister there was a great sense of wariness among some of these organisations that they're almost consulted to death but they don't necessarily see government taking forward not just what they want but in the kind of time frame they look to see and so there's a kind of wariness with the lack of perhaps of real participation is that something that you've found and how can that be improved? Yeah so I can understand that feeling as both part of the wariness doesn't come from being approached which of course is always very welcome but rather I'd say sometimes there's a lack of feedback given as to how anything actually changed or even if something didn't change perhaps the reasons for why that happened and because of that on occasion it can feel like sometimes we were being consulted perhaps to tick a box rather than as a serious form of consultation and of course when you're working in an organisation with limited capacity you start to question the the kind of public value of some of these instances so I'd say you know perhaps the wariness is incorrect perhaps they are useful interventions but perhaps also some feedback from the government in terms of when and how those interventions actually help would be would help to to address that wariness. Do you think that example in the Scottish Government communicates with organisations who are looking for funding that do so in a straight forward manner? As I should for example I had one of my constituency organisations a significant funding bid turned down and when they asked why they said well the fund that you apply to was heavily oversubscribed well yeah it might have been but you know does that mean that their application was excellent but it just you know would have there were others that were even better or was it just you know a poor application or wouldn't have been an effective use of resources it seems that they're not really told that you know is that something that you think might be I mean maybe they are in some occasions but certainly in this occasion they were not really told why other than a factor well you know this was the size of the pot this was the amount of this was it these were a number of bids and you just wondering in the in the lucky one selected do you think that's something that can be improved in terms of feedback? Yeah I mean I can't speak directly to that that one measure but I'd say that sometimes there isn't a there isn't clarity over over feedback I think we've seen that not just in the Scottish Government to be honest in the UK Government as well when we're looking at areas like leveling up funding and so on there isn't always a clarity as to to what exactly would help for for for that funding to be achieved and there is a bit of a an industry around how you prepare applications for funding and so on and so how can we make sure that that that funding is allocated on a fair basis rather than purely on a basis of who is moved up to speed and on making those applications? Yeah I mean I was in Glasgow City Council people wanted to apply for a grant you know if they put the word workshop somewhere in their applications and I'm much more likely to get a grant. Well obviously communication is key I'm just wondering if I'm going to move on to colleagues around the table before I do I'm just wondering if each of you could say just to get things moving a wee bit further if there was one improvement to Government decision making you could implement what would it be and we'll start with you James. Yeah so unsurprisingly I'm going to go back to the work on climate change and I think part of the the interest in that was that it was looking at something that affected the whole of Government but was a challenge given the siloed nature of government so how do you introduce change across government was essentially the question with climate change and one of the areas that we kept coming up against was this issue of challenge and this issue that appeared that at times no one was responsible for some aspects like querying value for money in terms of socioeconomic impacts or in terms of climate impacts and so on and if no one's querying it then often under pressure your time pressure it wasn't being done in the first place and that led us to to realise that different parts of government are at very different stages of their journey in terms of policy development. Some areas are quite a lot further ahead of other areas sometimes that's due to the nature of what they're looking at whereas other times it feels like other areas simply don't realise that they're quite far behind in terms of their progression in terms of policy development so in terms of one thing that I saw as an issue was that there seems to be no sense of a centralized view of over which areas are performing better in others in terms of their processes so not thinking in terms of policies that producing or so on but simply just thinking in terms of process efficiency and when you have such different areas in government working to their own standards there's a continuous divergence across time so how was that brought together in a way where maybe everything doesn't have to be done the same but there is a level of standard expected. I think the national performance framework is all to clean that thing. I suppose the question is how do we make sure that actually drives through into individual policies in a way that ensures the standards for making sure that say social economic impacts are assessed for making sure that those are acceptable for making sure that money spent actually has clear objectives tied to it and those objectives aren't simply to spend money so national performance framework I think sets out a useful way of viewing outcomes that are intended to be achieved but it doesn't really address how policy is made in the first place. Thanks for tearing up the national performance framework there because that was my response. I think one of the more consistent themes through all these written submissions was the need for a kind of overarching decision making tool and coherent decision making across government. I think we at Carnegie think that the national performance framework is that tool and is a way that outcomes based approach is a way to sort of effectively and efficiently manage government's resources. I think our observation which we've talked about in other settings is that we've done the outcomes bit fairly well but we haven't really thought about what sits underneath that so that's essentially the guidance so how are we supporting decision makers to shift towards an outcomes based approach and the skills and capabilities that are needed in order to do that. As we said, other governments have done that so there's international learning out there in what it would take to actually make that shift so if we were to make one recommendation for change in order to embed effective decision making I think it would be to introduce guidance to help people how to make the shift towards an outcomes based approach decision making. Thank you Mark. Thanks, convener. With you having asked for one, I'm tempted to go with prioritisation which we do things important but I think a broader point that kind of stitches together the themes that I've talked about so far. I think there's something about how does government and how do we as the scrutineers think about success and how we measure and identify success and how do accountability arrangements support that including the scrutiny that we all do but also accountability arrangements within government. It speaks to almost incentives in the system, what do people respond to within the system and how can we shift those on so that those responses help deliver the sort of change, the sort of improvement that Christie set out that we would all look to see in terms of how government works and right at the heart of that is radically rethinking how we measure success and making sure that we hold those that are spending money that are making these decisions to account for their performance in the wider sense. Now there's a lot behind that. National performance framework plays a part, I think it's from our perspective it's dropping down a level from that and say put your money where your mouth is about where's money going, what are the things you're looking to achieve with that and how has those things contributed to those over outcomes and those measures and shifting the way in which we all look at that and what we value within the system and that speaks to that you know the kind of short term to longer term tension and balance. Thanks convener. Okay thank you I'm going to open out the session now in the first colleague to ask questions will be Daniel to be followed by Michelle. Thank you convener. I mean I think that my line of question will touch on some of the things the committee has already mentioned but I think broadly based on the conversation we've been having to date I've got questions around how people in government actually understand the categories of decisions and then actually how consistently those are approached and indeed if there's consistent methodologies. So I mean on that first point what has struck me is that when we're asking people in government be that former ministers or officials as to kind of how they understand decisions they almost automatically and exclusively talk about policy and that's if pushed they might start talking about financial decision making and then if really pushed then they'll start talking about delivery and I think the focus is very much in that order and what I think they're not volunteering at all which is quite striking given recent events is anything around commercial decision making. Now I'm just wondering if that chimes with your understandings about about kind of the focus whether or not you think that there needs to be a recalibration of the different types and indeed are those the right sorts of categories or are there other ones that that we should be asking about and I might just go to Mark first given that this probably feels quite odd at Scotland in terms of a type of question. Thank you. I guess where I'd start was I guess agreeing with your analysis that alongside the big high level ministerial policy decisions and it's clear within government that ministers decide policy and that is a mantra and a practical way of operating within government but within that there are lots of used phrase delivery, delivery decisions about the implementation of policy which often conditions how the policy happens in practice and actually makes the big difference and government has different ways of dealing with that where it recognises something as a programme or a project of significance there'll be all sorts of formal governance arrangements set up, challenge processes built into that through to things that are seen as much more operational and individual person will take decisions but all that matters to how policy lands and indeed how financial decisions land in terms of allocation of resources and a lot of the impact that comes from those policy decisions comes from the way in which that functions and there's a real variety of how that functions. I think we've said in our submission that I've certainly been in our experience that it's not the rules we look at the rules and the guidance and it's all the right stuff where things fall down is the way in which that has been applied in practice through the process and to speak a little to your second area and we'll go back to it part of that there has to be flexibility in the system you know wouldn't deny that you can't have the same level of investment to decision making for every level but equally clear our expectation and I can clear an incentive and clear our signals within government about these things really matter that you do these things well more consistently across government I think would help with that a wee bit and just very briefly to kind of pick up on one of the one of the earlier questions around challenge and scrutiny which features here as well if I'm a minister and I will never be and I have no aspirations to be but if I'm a minister if I'm a director general I want to know that that challenge process has happened within that decision making at the lower level and when I get my advice I want it to tell me that that's happened what any any gaps in that have been and how that's been resolved and there's something about how does all that happen but also how does that get packaged to help and support decision making that happens at the top table I'll come back to it but I'd be interested to know from you James as whether or not you think there's anything just to draw it I mean what does the government have kind of sufficient clarity on on its categories of decision making so I think part of it is seeing how those are in a sense a joined up process as well so understanding that that policy leads on to delivery of course and the ability to see that through in terms of having clear separation between them I don't know whether to what degree there is clarity sometimes it does feel quite policy led from what I've seen I think there also has to be a perspective of understanding that it's not sometimes just about doing some of these things but about doing some of these things well so aspects that we've seen in policy making or financial decisions or delivery some aspects of processes might turn as check boxes if they're not treated seriously and at that point they might not be having the intentions that they might have set out to achieve and also in if they do become take box exercises and of course it starts to become rather bureaucratic rather than having its original intention and then following on from that if you're overly policy focused then you might not be considering at the forefront that the policy might not go as intended that you might have to actually monitor you might actually have to evaluate these policies and what we've seen quite a lot of in a fairly consistent basis is often that when we get to the evaluation stage of policy in scotch government the data often doesn't exist to actually be able to evaluate those policies properly and that comes down to preparing in advance you know when you're in a business case stage you have to set out how are you going to monitor these policies how are you going to evaluate them and without that foresight you're left in a difficult situation to actually understand what works so that case about business cases is exactly what I was wanting to come on to next so in Audit Scotland's submission highlighting the issues around Ferguson Marine at you there's a quote here it's not clear what discussions took place between Scottish ministers and transport Scotland about the contract word there's no documented evidence to confirm why ministers were willing to accept the risks of awarding the contract and then in Fraser of Island your submission you say our first priority was therefore to understand how policy is currently made in scotch government we expected to find a structured framework of processes from which we could build from we found no such framework the concerning finding led to us unraveling the various processes and practices currently occurring across different parts of government and indeed you go on to sort of discuss the the the business cases were often formed to the minimum standard so I and I think what that chime is with is we've fired time and time again is that that that that you know these things happen but they happen in very different ways in different portfolio areas so I guess my key question here is and I have no desire to go into talk to the details of Ferguson leave other committees that but I think what strikes me is that while there may be rules as you said Mark that there's not there's not consistent methodologies or consistent standards about how appraisals whether that's about business cases or commercial decisions are being made portfolio to portfolio or even sounds like decision to decision is that a fair conclusion to draw and actually would if you were going to do one thing making a more robust approach to business case development and then scrutiny is that kind of a would that be a sort of a pivotal thing to challenge James you're nodding your head most vigorously so I'll go to you first yeah so I broadly agree with that I would say that inconsistency in in specific ways is okay so different methodologies to achieve the same outcomes is absolutely fine and we would expect processes individual processes to differ across different parts of government simply because they're dealing with very different different characteristics of projects but you'd expect there to be an overall framework you'd expect there to be an overall framework where there is a challenge happening sort of process you'd expect there to be an assessment of the inputs and the outcomes of projects you'd expect there to be objective set out for what they're trying to achieve with the money and you'd expect there to be some sort of assessment in terms of the social economic and climate impacts now of course that has to be proportionate so there is a there is a world where that can become disproportionate and I've heard cases in other governments where solo servants have been having to create business cases simply to get access to software which would obviously be too far the other way but when there are projects where relatively significant amounts of money are being spent on them and they're coming out without clear objectives to simply spend money and I don't understand what the social economic or climate impacts are even in cases where those are very relevant to the project itself that doesn't seem like an efficient way to be making policy Mark, Ben, I will come back to you. I'd like to put this to you in a particular way. Mark, do you have anything to add to that or any insights from from your work at Audit Scotland? So I'd start with the recognition that there is a framework of course. We describe it on our submission starting paragraph 31 but I wouldn't contest what James has said in that the application of that there's flexibility in that framework and the application of that is variable and it's so much so that sometimes it's hard to see how the framework is generally applied. I think it's worth saying when it's applied well it's applied well so we're not saying that government never does this stuff because actually we've seen some areas and we've got some examples again on our submission where it's been done really well and there's real good ways of working around forward resource replacement crossing around the social security devolution those sort of areas which are recognised and identified as specific projects and have infrastructure put around them. I'd also recognise that there's other projects that are smaller and more operational where we're perhaps somebody thinking about this for half an hour is the right way to go and then make a recommendation around that. I think it's that middle ground of how much of this does actually happens routinely and I've pointed to two aspects that are important to that. One is the process and we talked to scrutiny on a number of occasions on the scrutiny and challenge process around that about who's asking show me your business case. I think that within the organisation the thing that goes alongside that of course is then the culture of the organisation that values these things has been important. I would not challenge for a second that every single civil servant understands this and understands that this is important when money's been spent, when policies are being implemented that impacts on people's lives. It's the priority again that's given to that in the setting in the moment and how important to invest in that, the time in that and the construct of that to work through the options to work out what the impact's going to be and to work out how that's going to be measured. I think that's where it, when it falls down, that's where it falls down. Ben, I wonder if the point here actually ties to what you were saying about the national performance framework and that it exists as sort of the right things but actually there's a need here to think about how systematically you weave that in and actually kind of a good business case methodology would be one way of doing that. I mean is that, do you think that that's sort of a fair reflection? Yeah, so I think just sort of listening to the conversation it feels like there's a bit of a distinction between project and project management and kind of more complex like social policy areas and I think the kind of approach to policy design delivery and evaluation I think would be the kind of third bit that would put on your kind of different steps is maybe a little bit different depending on where the level of granularity in the sort of like policy that we're talking about. So I think where I think the national performance framework is useful and the national outcomes is at that kind of more like macro social policy level where we can think about for example like children's wellbeing and all of the like different like kind of policy interventions that are going in to try and improve children's wellbeing so we all grow up like loved and happy and able to like fulfill our potential and whatnot and essentially understand if all of these are kind of like separate policy interventions are having making the difference on the outcome that we're there to achieve and so I think and that kind of like national performance framework and national outcomes and being able to like build the evidence around it is where it kind of is like it has a lot of value. One final question which is that I think if kind of consistency in approach is one thing that needs to be examined you've all I think discussed challenge. I just wonder if that is being conceived and captured in the right way again and our discussions we had with officials what struck me was when we were asking about that they were pointing towards kind of the use of external people and on programme boards and it sounded to me as though even at that level and it was very much challenge at a policy level rather than necessarily challenge in terms of kind of the more granular assumptions and certainly in comparison to my experience the commercial world you know where actually you build in that challenge at that more granular making sure that the assumptions are correct because ultimately that's what you know ensures you have a robust business case. I just wondered you know again is that is that is that a fair reflection would that be backed up by your your your experience in terms of you know looking at these in situations in detail and I'll just probably go from left to right mark if I could go too fast. So I absolutely recognise the value of it. I think what we see is that again well two things one is there's a cohort of non-executive directors in Scottish Government who play an important and valuable role and help provide that challenge process and we see evidence of that at a number of levels to see evidence of that in the overall and overall director general areas about how is it all going around risk management and all those sorts of things and that happens and that challenge happens and we see it and through those individuals involvement and cross-organisational involvement where there's particular high profile high investment projects or programmes there will be a infrastructure that's built around there that allows that challenge and often where there's criticism from Audit Scotland about those sort of things it's the way in which that's been constructed set up and operates rather than the intent to have that because I think that that is built in there and that gets down to quite specific programme and project level challenge. I think part of it is that challenge is supposed to give you a reassurance at one level that challenge is often focused around delivery. I think that there's perhaps less challenge around the front end of why are we doing this thing and what we're trying to do. I think that once we've got past that, I think that the infrastructure set up, that happens, that kind of sense of again policy decision being tablets of stone that come round from ministers and then that they've decided and we need to be doing this stuff. I think that there's less of that infrastructure around that side of the business. Just picking up on that front and so I think just speaking from a perspective of Carnegie and more broadly civil society engagement in providing that critical challenge, I think there's a question about where in the process it's invited in so we've had experiences where we've been invited on to working groups, advisory groups and such like and to sort of later find that the thing that we're advocating for was perhaps not on the table or not within the scope of where the conversation was happening there and that had actually been made somewhere much further upstream and not having sight of that process. I think there's a question around how we're really clear about what people are being invited in to be involved in terms of the decision making and I suppose like having full sight of that process from policy design to delivery and like being able to have like challenge at different parts of the picture because at the moment it's quite often the case that you're able to be involved in like particular parts of it but you don't have that kind of like oversight of like what's happening throughout the policy process. James, what your reflection has been at the end maybe just to put a different spin on it is is there a need to go beyond just challenge and actually make sure that it translates down to more granular level which might not be challenged but just testing as we go on maybe that we're challenging at kind of the macro level but actually are we continuing to do that testing a more detailed level? Yeah I think one of the really important questions around challenges is the what what are we challenging because actually some aspects of challenge are done really well and really comprehensively so looking towards accountable officer templates for instance that was an area of documentation that was from what I saw done across the whole of Scottish Government really well and it was taken seriously and it came right at the start of the process as well or at least was undertaken at a time as intended to. So there is a bit of a what's there what's being challenged so from that side the franchise that appeared to be actually challenged fairly well but from a the understanding of other impacts that are being challenged in terms of value for money for society or wider impacts the feeling I got was that challenge was very patchy across government. Some parts of government for instance transport Scotland seem to have a much more robust way of informally and perhaps informally challenging within within the area some of the more technical details or some of the more specific details whereas other areas didn't seem to have that that culture of challenge within for actually looking at these social economic impacts or other impacts so there's the what and then there's also the when when does challenge take place because if challenge takes place too late there is an incentive where someone might not want to overly challenge a project if it's already got a direction set. It's very difficult to to realign a project if it's been challenged fairly late on and so of course that comes down to a little bit around who's been challenged and do they have sufficient clout to actually make sure that challenge is is understood to be important. Thank you for that. Better leave it there. Thank you Michelle to have followed by Liz. Good morning. Thanks for attending today. Perhaps following on from the area you were highlighting there James around challenge I'm interested in culture and some reflections within that and I noticed in the Audit Scotland submission mark where you referenced the issues around the early learning and childcare policy and you set out you know that there wasn't any proper options analysis on certain potential impact against cost no evidence of improved outcomes and so on so I wanted to explore I mean that's the what but why and to what extent that particular example you think was related to that programme or divisional culture and in general terms how culture affects decision making so perhaps start off with you Mark. I'll confess to not having a hands-on experience of our particular audit around that but certainly aware of the broader issues which is and without without commenting on on that particular policy because as I say not on the site is on it but what can happen is that there's a clearly understood desire to have a particular policy implemented and the focus is on implementation rather than thinking through exactly those sort of questions around what comes with that policy in the round and what is the contribution implementation of that policies looking to make in the round so in that case it was about investment in the number of hours of preschool care and a significant project and a significant investment and incidentally we'll soon be reporting an update on process around that but in that particular case that was the focus and we found there was less working through of so what does that actually mean and what we are trying to achieve through that and we've highlighted again on our paper sometimes there's tension in that so so is this about getting parents back to work more flexibility their contribution to the economy and or is this about quality of care early learning into early years intervention support for children where's our focus what we're trying to achieve so there's absolute clarity about hours time scales lots of questions about implementation and what it meant for the market and all those sort of things and less focus about where does this impact and I'll use the shorthand of on our outcomes in the national performance framework more generally and how does this contribute to that in a very specific way what are the specific things so we all get the mother wheeled in apple pie aspects of that but specifically this decision in this policy what what are we doing with this what are we trying to do and how will we know when we've done it beyond the headline our investment and spend amongst that so I think that's a great illustration of what the challenge for government is around these sort of decisions and where we often feel the analysis falls down the thinking falls down and James is afraid value for money I think from our perspective it's really hard for government to demonstrate value for money at the end of a process if it's not worked out exactly what's this going to achieve and how are we going to measure it alongside the spend so that it can demonstrate the balance between impact and outcomes and the spend that's been put in place there and it's a really important aspect that at the front end culturally which is the root of your question that that sense of us understood of government understanding value for money proposition in the round and being able to fall through on that to make sure that's delivered has to we think go up the the priority set the cultural ways of working in the organization and so coming to both James and Ben what are your reflections of how the culture within a programme or policy development affects outcomes yeah change first yeah so as part of the research to the joint budget reviews on matters like climate change it became pretty clear some some way into the process some way into the project that process wouldn't have to be introduced and so of course when you're thinking about introducing any processes you have to make sure that the processes are actually going to be undertaken that they don't become bureaucratic overheads and that they actually intend what they aim what they intend to achieve and so we spoke to quite a lot of so servants about their policy making processes and it became pretty clear pretty quickly about the the lack of capacity they had in order to not just take on any new processes but actually to achieve the processes that they already were meant to be to be undertaking and part of that comes down to a culture around speed of policy making in my view and the a lot of so servants fed fed back that they felt like the prioritization was to deliver policy quickly there is less prioritization on the extent to which processes should be fully thought through or perhaps simply the culture of speed led to the second choice being made so i think speed of policy making is a big part of the culture that's being set out there's also then comes down to the prioritization aspect so to what extent are things like impact impact studies done impact assessments done properly to what extent are they being taken seriously to what extent is actually making sure you have monitoring and evaluation to what extent is that being taken seriously as well so that comes down to a sense of prioritization that so servants obviously feel like that isn't their priority right now so then that's the second part of culture i think the third part of culture is actually the extent to which culture is set by governance and leadership and currently the scottish government has a structure where it doesn't have a treasury which is quite a different model to other governments and there are some benefits that culturally in my view there is a lot more collaboration in terms of openness in government than some other governments but there's also a drawback in terms of oversight in terms of some of these processes so how you kind of marry those advantages and disadvantages together in a way that you address on those disadvantages will have an implication for whole of government culture okay thank you and ben do you want to come in on that yeah so i think um i mean yeah again it's hard to speak to the specific example i think more broadly it's um it's quite hard to comment on on why there are these kind of differences in in culture and the way that we make decisions across different government departments except to say that that is something that we've definitely observed so in our um that the work and the evidence that we gave here into the previous inquiry on the national performance framework we found that the way that people use national outcomes to direct policy and the way that people gather evidence to understand whether they're making a difference is inconsistent across different departments it's quite often applied after the fact actually rather than being used to make decisions in the first place and similarly on the values in the national performance framework as well the the extent to which they're embedded in in the culture of light departments and directors is also pretty inconsistent and so i think from our perspective until there is um i suppose like clarity about what we're using as a decision making tool to have that kind of like strategic and collaborative approach across government then you will see these kinds of inconsistencies in the way that we try to work towards outcomes and and the culture that we're kind of developing within different departments and you've quite naturally led me on to my next wee area to explore i mean i know that you said in your submission um despite the rhetoric of wellbeing there's work to be done to put national outcomes centre of decision making so i had a question around that and perhaps for you all as well is how are in your experience risk and uncertainty managed because i do wonder whether they're the the different you know given the cross cutting nature of the national performance framework it intuitively makes it less certain in terms of outcomes and where you have greater risk that can often be an inhibitor it's easier to make decisions about a tiny wee bit than across a piece so a general question about how how does risk and uncertainty impede effective decision making maybe you should go first since i've done that yeah absolutely so yeah i think we but yeah i think it's really important i think we picked out a couple of things in our responses the the risk of um i suppose like path dependency so just want to continue on the same path to end up and with sort of like diminishing returns which we've talked about a little bit and um the the risk of um of incurring future costs so like how do you get that balance right between like policies um to try and um mitigate immediate harms and um like policies that are more sort of like prevention focused um for i suppose like for us it's not it's not entirely clear how these things are being considered in um in a lot of decision making process and i think we were quite um like explicit about that in our in our written submission like we we don't we don't see a sort of like transparent approach to appraising risk in in the way that decisions are made i think we have a like broader concern that the kind of immediate costs appear to take precedence over over like longer term impacts and that's you know something that kind of like precludes a more like long-term approach and a more like prevention based approach but it's really and that is linked to the kind of like short-term cycle and decision making which has also been like talked about in this committee but i think it's really difficult for us to understand how that is actually being brought into decision making without having that kind of like transparency from from an external organisation's perspective aren't you want to come in this yeah always enjoy talking about risk i think i start with the recognition that nothing government does is risk free and even if there is a risk free option you know the risk is of the of the opportunity cost of the things not done and so absolutely decision making is about balancing those risks and absolutely when a decision is taken and has been implemented there are risks to manage and sometimes mitigate but sometimes live with in the implementation of that and particularly if the government aspires to more innovation and transformation it needs to take risks so absolutely i think i'd probably recognise a wee bit of the way ben's characterised things is to and to develop that a wee bit is i think government and i've worked with government for a long long time longer than i care to remember and i've really seen a significant improvement in risk management as a discipline and a way of working through that period and increasingly discussions and scrutiny and decision making is framed in terms of risk i think often the focus of that though is again at the implementation end we've decided to do this thing what are the risks that will get in the way of doing it rather than the front end of what is the balance of risk that we are taking on in undertaking this and the best example that i would give you around that is the government's i'll use a shorthand of industrial strategy but intervention and companies that get into difficulty and the auditor generals the current one and the previous one have reported and made recommendations around the framework for the risk that government takes on and how what government's trying to do when it intervenes in companies and looks to try and do that and and how it frames those decisions and i think that's an example of how government doesn't do that front end risk balancing very well or if it does it it doesn't do it very transparently in a way that it's understandable and articulated about exactly the sort of things that ben was talking about is what are our longer term trade-offs here what risks are we running by not doing things or doing it this way and to to try and assess and use the language of risk at that front end i think that's done less well and just before i bring james in i just a quick question for you how much evidence do you see of proper risk management in terms of disaggregation risk probability outcome and so on from a almost an academic perspective do you see that routinely being done i mean i've come across examples speaking to ministers where there doesn't appear to be any awareness of how to disaggregate risk and i don't know if that's something you've seen before bringing in james so so within the processes of so so i can't speak to what ministers are involved in are not involved in other than i would i have seen examples where miss ministers are i reassured at an appropriate risk management processes in place full stop in terms of the segregation point the assurance i can give you is it is routine within government to have risk registers that assess probability that assess impact and to manage that actively and that is built in as part of the system we again where we criticize risk management we don't criticize generally there is none we criticize the application of it and how well that's working in practice in a particular setting but to give you the reassurance that that approach to risk is inherent in how Scottish government does business the question is how granular do you get so what we see is the top level of that we see the project level of that and we understand that that's fed by discussions at a managerial level what's less clear is is the middle management really care about this stuff or is it a kind of a more processy thing but to give you that reassurance that yeah it is in that way of working james just to finish off in a way of time computer thanks yeah uncertainty in general so yeah i mean there are lots of different types of risk and uncertainties within within what the government does so you have risks and uncertainty in terms of delivery which would rely on first of all strong business case setting out the potential for those to occur and what would happen in those situations you have risks and uncertainties that you look at in an economic appraisal where you look at risks and certainties around whether or not you're going to deliver the the impact you expect which of course again relies on an overarching business case framework to exist and then you have methodical risks so so my submission i pointed out the one around the peatlands emissions where it could potentially have a much larger impact than just simply on one policy my sense is that there wasn't always that joined up thinking of when you have examples like the peatlands emissions of how does it impact on government targets in aggregate perhaps you could see the climate change plan as being one vehicle for that when we have a costed plan in the in the next round but for other socioeconomic impacts the government may have targets for how we actually have an aggregate understanding of what those risks and certainties may impact isn't clear to me that that's always being assessed okay thank you thank you thank you list to be followed by Douglas morning can i ask about data because it was put to us by two former ministers and one civil servant last week that when it comes to good quality decision making in government is absolutely essential that there is good quality data available if they choose to ignore that that's another matter but actually having it available is critical to good quality decision making do you find that there are gaps in the data that is necessary to put before government ministers is there anything we can do to improve that happy to come in on this one so one of the big themes of our reporting over the the medium time the recent past is is this issue and the absence of data and i guess it functions at two levels one is the front end and one is the back end about delivery and what's what's the evidence of delivery i would make the connection between the two you know in a learning government there's something about one is we've delivered these policies and and gathered and established data about implementation what do we take from that and how do we feed that back in at the front end around the next decisions that come along either in this area or more generally so absolutely there's the data gaps and the absence of data it is a regular issue a we sidebar that perhaps more can be made of the data that is available sometimes and sometimes i hesitate to use word excuse but was one of the explanations why there's gaps and maybe a broader look at the data might be more helpful in terms of the question about what do we do about it i mean i'm strongly of the view that as decisions are taken yes they need to be strongly informed by the available data but also to build at the outset a sensible how are we going to know how are we going to capture data around this so that we know that the things that we say this policy is going to do is in place and put those systems in place to do that has benefit in that particular area as i say but also contributes that wider some of knowledge data to inform future ministerial decisions can i just ask before i come to other two gentlemen can i just ask when you say that perhaps there is a case for making better use of the existing data what is it that can act as a barrier to making better use of that data so i think i think a good question and a complex question i think i think some of the things that we've touched on as a between us as we've gone through about time pressures the need to to be seen to do something i think some of that squeezes that front end data analysis out or can squeeze in that front end data analysis i think there are possibly some cultural issues about that that again we need to take the time to find out what the data is and what it's telling us in this particular area at the front end and i think there is something about generally when government sets off to do something a team is tasked to do it and the first thing that the team will say is so what data is out there let's go and find out is is there an opportunity to have a bit more of a a data store a comprehensive go to place that pulls together that sort of information that was a touch on the national performance framework that was the aspiration behind the national performance framework and still there are a number of measures which the committee has recognised in the national performance framework where you know there is still no data set associated with those like high level measures james can i just ask when it comes to something like phraser valander in i have to say i think scotland is blessed with an awful lot of you know good policy people who are putting the facts in place for the government perhaps we need a few more of these but nonetheless i think the ones that we do have are pretty objective do you find that when you make submissions for a very objective analysis of the economy let's say does that go into the right circles do you think in terms of ensuring that civil servants and government ministers who are going to make some pretty big decisions about the economy is that reaching the right quarters do you think it's sometimes difficult to tell to be to be frank we always hope that the analysis we do is read and is useful and at times we've had we have had analysis has led on to discussions of governments and we had had we had seen there some change but it's not always readily known i think just going to your point i completely agree the about the good quality data influencing decision making i think one of the things we have to bear in mind is the extent as well as to what biases we have towards where data does exist we there is often a natural bias towards trusting something that we have data on versus something we don't have data on so to what extent does that become a risk in policy development if we consistently don't have data on something to what extent to be overlooking it so for example biodiversity and that's led to a number of changes in in HM treasury guidance for use of things like benefit cost ratios and essentially we have to be careful about not placing too much weight on what we have data on to let on what we don't have data on but also to what extent is there a recording of when we don't have information because that that missing information might be a regular occurrence so for example some of my colleagues did an evaluation of the small business bonus scheme and one of the challenges they found is that the data that needed to exist for that evaluation didn't exist readily and that would have been some sort of business database I was just going to say that the first point you raised about biodiversity is a classic example because that data that you need won't actually exist until years ahead which is maybe slightly different from the business case for you know whatever you're deciding about business rates that data potentially does exist you know you might not have it but in the biodiversity case the data that you need on which to base policy might not come from another you know five ten years I can think of the case about Merlin's when we were having that debate last year a year before to what extent is that a really serious problem for government in trying to devise policy making when that data effectively there's nothing they can do to get it certainly very very challenging and timing is really key for data we spoke earlier about the timing processes but actually when you're able to introduce data is going to influence some of your policy options potentially or your decisions being made now for some data that that can be made early and some data might take several years to make so the government can maybe think about understanding where those data gaps exist other data just by the nature of some policies must be collected while it's operational and there is a mixture in terms of evaluation as to what is available and what won't be. Thank you. Ben, do you have any questions? Yeah I'm just echo everything that's been said about the challenges in sort of making policy like particularly thinking about the national indicators and the challenges of sort of like setting policy agendas when there are gaps and some like really quite significant likes in the data to the extent that it's very hard to use them to shape decisions that you're making in 2023 if the last data set you have is maybe pre-covid for example and there are examples of that. I suppose the other point that I wanted to make because I think in this conversation we're talking broadly about statistical data in like population level data sets is that there are certain groups in the population that are unseen in those data sets and there's basically an equalities point here and we know that it is often the same groups that will will be unseen in data on housing and data on education and data on health and poverty and so on the same groups that are kind of risk being ignored in the way that we appraise data and the way that we make decisions accordingly so I think and one of the things that we put in our submission was about the need to shift towards a different approach to understanding data one that includes more co-produced evidence one that includes non-statistical evidence as well so that we can kind of bring these experiences into our policy making conversations and ensure that we're you know in a moving in a policy direction that ensures that everyone has what they need to live a good life. Thank you. Thank you. Douglas to follow by John. Thank you, convener. I just want to pick up on a point that Daniel Johnson made earlier about business cases once again in your submission it said you know a minimum standard or even missing entirely and I guess it also links into what Liz Smith was saying about evaluation and if there's no business case at the start how can we do an evaluation or a post-implementation review and why would it be that business cases are missing I guess. So in terms of the why I think this comes back to the culture and speed in a time pressured situation it might be that some things are done to a minimum standard or that processes are done retrospectively or so on and we see this quite a lot of cases with a lot of impact assessments where they take place right at the end in fact as as long as it's late as they can be clearly they're not having the intended impact if it's too late at that point to then go back and change anything. So the why is a big question but I think part of it comes down to the speed of policy making. I can understand that when we've got things like you know homes for Ukrainians for example or you know dealing with the pandemic but I think everything else you know I'm from a background you had to have a business case so why is it not the same in government? Yeah that's a good question. So one of the challenges is I don't know exactly what's happening in government I was on the discussions I have with civil servants as to what they're saying so it's it's always difficult to ask what's happening across the whole of government within all civil servants at all times but yeah business cases are incredibly important to setting out your objectives incredibly important to setting out your time skills your delivery what you're aiming to achieve in terms of your impacts and the expected impacts and of course that feeds into your likelihood to achieve wider government targets and so on. So they are very important and I would say it's critical as well to making sure your policy is evidence informed if you're not doing business cases fully you might not be monitoring and evaluating evaluating your policy if you're not monitoring evaluating policy then there's no link back into new policy development to improve the next set of policies. Mark do you want to come in? Yeah thanks thanks for the opportunity I guess just to add some reflections to that why is it not happening I think the first thing to recognise is often it is happening and often it is happening well but where it doesn't I think there is a volume question here you know so that the amount of decisions that government is making inevitably drives that question about sometimes not the full evaluation can be done and that comes back to the capacity point that convener asked us about right at the outset of the discussion I think there is something for the organisation for Scottish government about prioritisation there's something about how are we making sure we're focusing on perhaps fewer of the right areas to be able to do things better rather than a kind of spreading themselves too thinly in some cases and I think the capacity question at the heart of that is the ability of government to prioritise and I think business case variability if we can use that shorthand is probably a symptom of that the ask that we all place on government to do lots and lots and lots of things and sometimes therefore it falls down I think at the heart of that well where we've seen good business case development what happens is resources are identified and targeted and focused on doing that from the outset of a particular area so it's something about how government decides to invest in business case development in area a and not so much in area b and that happens globally but also happens at a kind of departmental level a dg level and there's some questions probably to explore about how do those decisions get made and are those related to what government sees as its priorities overall because you know in your submission you know there is good examples you've mentioned you know the fourth cross and being one I think from what I read and Security Scotland Social Security Scotland has well been another but I guess you know what's been in my mind recently is national care service for example where we've been asked to approve quite a lot of money but there doesn't seem to be a business case I don't know in terms of Audit Scotland whether you've seen a business case for the national care service or whether that's been something that's been lacking so we're not there that yet is the short version in terms of the audit audit view of that absolutely in our sites I think what I can offer is the conversation that we previously had at the committee about some aspects of the financial side of that not being as well thought through and it's a commit an issue close to the committee's heart and absolutely would recognise that and our submission to the committee would recognise that that point. Okay Ben did you have a comment on that or? Yeah I mean it's hard to comment on why business case is not happening in particular examples but I think I've come back to that point about prioritisation and incentives so if we are we're talking about capacity issues and we're talking about the volume of things that government has to deal with and if the incentives are not there to ensure that that kind of understanding about outcomes and using that to set objectives and build in that evaluation process from the very beginning through a business case or another framework if that's not really prioritising and incentivising the way that people are held to account then that would be the thing to drop off so I think there's something about you know what what do we value in the way that we're making decisions. Yeah and I think you've mentioned in your submission some evaluation being post hoc I think it was a term used. Yes yeah so that I mean that's obviously a process that needs to start at the very beginning when you're setting a policy direction how will we what would success look like and how will we know if we get there and if that's only happening at the very end of the process there's we're risking missing quite a lot of important learning I think. Okay thank you. Mark one final question for you and that was around record keeping and transparency. I think from reading your submission there were the examples where it's been done well but then I guess there's other examples and the new vessels 8 to 1 and 8 to 2 for example is you know where it's not clear what discussions were taken or you know who did who made the approvals. Do you have a what why is that happening then? So I think where it works well what happens is the records are generated by the process so you have a project board you have a project process you have business cases at multiple stages and it's worth saying that business cases it's kind of not a one-off event it builds up through time there's different levels of detail around that so in those if I can use the phrase well controlled projects or programmes record keeping is built in and often there's a quality system that even is driven by record keeping and there's a real clarity and I think in those occasions there's a real benefit to not just us as scrutiny bodies yourself as a committee and a public transparency around that but there's a real value to government and management of the project that they know where they're at and what's going on and it's clear and they know where that record is and to go and consult that often where people change and the like. I think the flip side of that is where record keeping is almost a byproduct of the classic example is there was an email somewhere and this is not necessarily just about the fairies you know that kind of sense of casting around to find something and a sense of how it was banked in ways of communication that we all now use you know if it's on a whatsapp group it's if it's in an email and you know we all do that but where how does that get sucked out banked packaged in a way that has the same degree of accessibility that the project management approaches have I think that that's that for us is one of the fundamental questions that comes out not just from that experience in that audit but more generally about how that's captured and not just for the benefit of audit because it does make our life easier if we can go to place and there's a thing but also for the benefit of government itself to know where it's at and how things have been decided. So as a committee that's something that we should be asking for is a review of that and a more formalised approach of record keeping who made the decision how it's stored would you agree or? So I think and I would hesitate to make direct suggestions to the committee but I think what's clear is I think it's important that that there is a record of what's been decided and why for big things and that those things are the basis of then of communication with the wider public about what's been decided and why. Speaks to the convener's earlier point about you know applications why did we not why were we not made successful I think there's a whole range of explaining decisions as well as setting out what the decisions are as a really important part of government and I think it would make it easier well better for us as a committee but also better for the government to justify the decisions that they've made. Thank you, convener. Thank you, John. Right, thanks convener. Well on the theme of transparency we did also have a witness say that they felt that too much transparency was harmful to decision making because it stopped civil servants being frank with ministers if everything is written down. How would you respond to that? So I would distinguish between the discourse and the outcome. I think what's important that's written down is this is the decision and this is why it's been made. I think some aspects of that are important to capture you know options considered why things were discounted those sort of things but that's not to say that every discussion every consideration every investigation into particular areas needs to be banked but I think it is fundamental important that when things are decided it's clear what's been decided, who decided it and why. Okay, Mr Black. Sorry, oh, Mr Thurman first. Yeah, okay, thank you. Yeah, I think that's exactly what I was going to say. I think it's not a question about everything like being written down and really sort of like burning some bureaucratic exercise but I think there is a really important like democratic point about being able to communicate to citizens and relevant stakeholders how decisions have been made like with who's involvement and you know the reasoning behind that. I think there's also something about the quality of decision making as well in that transparency point. So our work which is cited in our submission on budgeting for children's wellbeing there was like quite a clear point in that report that to open up the process of like essentially setting budgets because you know there's a sector in the children's sector out there who are like crying out for more involvement to bring in all of the kind of knowledge and evidence they have into the process to shape policies that would improve children's wellbeing and if we're not being transparent about how decisions are being made, how budgets are being set, how it's being evaluated then we're kind of neglecting that real wealth of knowledge that exists in Scotland which could be supporting government to do its job. Right, I think I'll come back to that but let Mr Black come in first. Yeah just with a caveat that haven't worked in government but so but having dealt with a lot of civil servants, right civil servants, I think we have to bear in mind that sometimes there's a trade-off between transparency and the ability to have a frank discussion and so we have examples of for instance freedom of information act and that can sometimes induce a bit of fear into civil servants as to making sure that everything's being recorded and that it can change the way that things are being discussed perhaps sometimes for the better and perhaps sometimes it might affect that frank discussion. So how that balance is made is difficult but as Mark was saying as well there's potentially a focus more on the outcome so one of the things I referred to in the submission was around what the New Zealand Government's doing in terms of proact of really releasing their cabinet papers. Now that doesn't include full discussions what happened it just includes what was decided and why. I don't take a particular stance on whether that's good or bad but I thought it was a quite an interesting approach in terms of transparency. Okay thank you. Right, Mr Thurman you mentioned children and young people and I was going to come on to that anyway because we've had different evidence one being like from the Children's Commissioner on different people well first of all on communication that the decisions that are being made should be communicated better to the general public presumably therefore in the kind of language that's used and that kind of thing so I'm interested in your thoughts on that but also that actually children and young people for example should be more involved in the decision making and I mean I just wonder you know when we come to discuss the national care service or the budget you know can we really is that realistic? Yeah so there's yeah a couple of points questions so I think the yeah I would agree with that sort of broad comment about the importance of like being able to clearly communicate decisions to the people they affect and to the relevant sort of like stakeholders and the way that you do that has the capacity to either build or undermine trust in decision making and we know that that's like critically important for our democracy right now and then I think that needs to involve a bit of the decision making process as well as the actual decision yes exactly yes so how how decisions are made and I think that that connects to the how you involve people in shaping that decision so you know there's a lot of public consultations that go on and so that I think there needs to be so we we would definitely advocate for greater citizen participation in decision making it's something that we are advocating for right now with the kind of review of national outcomes and there would be other kind of like policy areas in development where we think there needs to be greater involvement of the people these policies but there's something really important about how you invite people into the process and how you communicate how you know what they say in that process has or will shape decision making and and making that sort of like feedback loop of kind of like essentially democratic accountability so like we created this this process where we invited your views and this is what we heard and this is how we're going to act accordingly I mean sorry to interrupt you but I mean do you not think there's always sometimes the case that somebody gives their views and then the government or the committee or whoever says well we've heard your views we've considered them but we disagree with them but people think they haven't been heard absolutely but I so I can't think of any examples where I've heard that being sort of like communicated just clearly as you do there so and I think if people but if we were able to have those messages that you know we've we've heard your views and this is why we're not able to act on that particular part of it but this is how we're able to act on these other parts I think would that's the kind of openness and transparency that we would like to see okay does that make that make sense to me yes I'll we could go on along I don't know if I have the ability you want to come in on that point Mr Taylor very briefly the communicating decisions better to the general public I think one of the things I'd recognise is that often decisions are packaged either for Parliament or for subjectively for media and you know positioned and I understand that and I'm not just criticising that because that's a really important part of that but there also has to be the more objective more straightforward communication particularly to those that are affected and almost taking the politics and spin out of it and it's easier said than done but I'd recognise that point on the on the involved in decision point I think just very briefly there are understood and well known participative budgeting processes there's an expectation from the local government under cakes that in particular areas it's not something that's been featured of the Scottish Government's budget but there are approaches that do allow exactly what you asked about John Mason about you know being involved in budget decisions there are examples where that happens one of the phrases that's quite often used is evidence-based policymaking and it's a big question of what we mean by evidence here for in my view evidence doesn't mean just quantitative studies of of impacts it means also the more qualitative side of trying to understand or speaking to people and understanding who's going to be impacted and getting views so if we're to to to use that definition then making sure that children are involved in policies that might affect them is a form of evidence-based policymaking yes I think I'd probably agree with that as well mr Taylor again from your evidence I mean and it's been mentioned already today that the decision-making around the Queensford crossing I think you're quite positive about but the the 600 hours or whatever early learning and childcare you're less positive about now is that just because one of them is a bridge and it's pretty clear if the two sides join up it's a success if they don't it's a failure whereas with early learning and childcare it's just a little bit more vague so so so there's a degree of that I would recognise but also I'd recognise in our assessment of the decision-making around the Forcer Policemen crossing there's a big component about that about what the engagement with the local communities was and what some of the wider knock-on effects and benefits of construction of the bridge was and that that also being part of the project so there was a there's a big physical thing to be built and there we can see it and it was built and the costs were within budget etc but also within that report there is quite a lot of detail on that wider aspect which also applies to bridge building about about what the wider implications for outcomes were and from memory one of the things that we did say there that was unfinished business was the classic thing of going up back and and and and showing what the effect on the local economy actually has been retrospectively and quite whether Government have got there or not yet I don't know I think on the early line on childcare yes there is there is more complexity in there but almost a bridge building approach has been taken to that policy which says it's about ours in this place and it's about a very narrow in our view articulation of what the decision has been about and what the impact of the decision will be because you also said there that might be conflicting aims between what's best for the parents and what's best for the kids yeah so that was not in our view and I say we've done a number of reports in this area and we'll look to report again soon but in terms of our historical reports there one of the things that we identified or that hadn't been fully worked through would be the shorthand that it would give for that okay mr Thurman one of the points that came up in your report was kindness and I mean can you build kindness into the civil service or is that not just an individual thing you can sit in there drawing on so we did a lot of work on the role of kindness in public policy and like you know really pleased to see that value statement at the heart of the national performance framework and that sort of vision for a country where everyone's treated with kindness dignity and compassion and from our perspective I think that has to start with with government to be successful and you know there are certain things that you can do to create the conditions where that value kindness or we can talk about relationships or other other words but where that will flourish and you know we we saw I mentioned the steric inquiry again like an example of a set of conditions that did not encourage kindness and that did encourage certain behaviors that had quite a detrimental impact on staff working in that situation and the patients that they were there to serve and there are other examples I think again like the social security where values have been embedded into the way that people interact in that service and that's had an impact on the quality of the service that they're delivering so I think there are you can't go around telling people to be a little bit nicer to each other but there are certain things you can do to do with the spaces that you have for collaboration and discussion to do with the way that you hold people to account and scrutinise them whether it's a punitive approach or a learning approach that would encourage or inhibit kindness okay mr black can phrase of all under measure kindness we can certainly try yeah so part of the challenge here is about measurements it's about how do you actually have objectives and actually make sure that the government has a way to to work towards those and just touching on your earlier question for mark I would say that there are certainly areas in government where some things are easier to others there's I teach economic praise with students and there's a reason why I teach them a transport project rather than a project such as child care and part of that is it's easier to conceptualise and if you think about trying to come up with a number for the climate impact of a transport project you have to make some assumption about the number of cars crossing a bridge whereas the climate impact of a child care project is a much less tangible concept so what I'd say is yes can differ a lot across government and sometimes that can drive some of the differences but also sometimes it's not about the important thing isn't about coming up with a number the important thing is working through the process because in working through that process you start to see how you can do things in different ways okay I'll give you the last word mr Taylor auditing kindness very short just to reinforce the point that Ben made so we have seen in social security that the ballot there was a deliberate the government set out deliberately to instill a certain value set and we've reported strongly on the fact that that we've seen the evidence that that worked so I think there's a case study there that does set out and instill a particular set of values and ways of working within a new business area that it's possible to do that and help set that culture okay thank you very much we've gone over time so Danny was going to ask a further question but we'll have to call it quits there I'm afraid so I want to thank our witnesses for their contributions today we will continue taking evidence on effective Scottish government decision making at future meetings we'll now take a five minute comfort break before moving on to the next item on our agenda the next item on our agenda is an evidence session with the Scottish Fiscal Commission on their Fiscal Sustainability report published last week welcome to the meeting Professor Graham Roy chair Professor David Ulf commissioner and John Island chief executive of the Scottish Fiscal Commission and tend to allow around 75 minutes for this session and before we open up to questions from the committee I invite Professor Graham Roy to make a short opening statement good morning Graham good morning and good morning committee and thank you very much for inviting us to give evidence on our fiscal sustainability report published last wednesday and in the report we project Scottish government's spending and funding out to 2072 2073 with a particular focus on demographics and trends and the cost to delivery of public services and the balance between spending and funding allows us to assess the long-term fiscal sustainability of the Scottish government's current tax and spending policies and importantly many of the sustainability challenges that Scotland faces are common across the UK indeed all high income economies like Scotland face pressures of rising costs of public service delivery and an aging population moreover the fiscal framework between the Scottish and UK governments means that managing the challenge of fiscal sustainability in Scotland is a shared endeavor between the two governments and it's important to note therefore that the issues we identify would exist under any constitutional settlement but under the current settlement many of these challenges emerge through the impact at the UK level which in turn feeds through to the Scottish government's budget via the block grant what also matters from a Scottish perspective is where our outlook might differ from that at the UK level and feed through either to higher spending pressures in certain areas or to relatively weaker devolved tax revenues and if you just look at that differential risk earned under current Scottish and UK fiscal policies we estimate if public services in Scotland are to continue to be delivered as they are today we project that Scottish government spending of the next 50 years will exceed the estimated funding available by an average of 1.7% each year but taking account of what the OBR have said may need to happen across the UK to move towards a more sustainable position we estimate that over the next 50 years the average budget gap for the Scottish government would be 10.1% of devolved spending each year underpinning these calculations is detailed work which uses projections for Scotland's population and economic growth to develop our assessment of Scottish government spending and funding for example our projections for Scotland's population follow those produced by the national records of Scotland and in our central projection the population of Scotland falls by approximately 400,000 over the next 50 years driven largely by the low birth rate our long-term economic projections are determined by the supply of labour and productivity and to help with transparency we have aligned our productivity assumptions with the OBR and we show that spending in public services will increase because of pressure from an aging population but also crucially evidence of the rising costs of delivery and spending on health is projected to go more quickly than other services increasing from around about a third of total devolved spending at present to about half in nearly 50 years time I'd like to thank the committee and its predecessor in the previous parliament for their support as we developed this project and as we look to future work can I refer you to the letter I sent to the convener last Wednesday that contains an overview of our thinking around next steps happy to take any questions convener thank you well you'll be glad to know there's going to be a few questions obviously I'm not going to hog things too much because time is going to be against us today more than I had hoped but first thing I would say is with regard to the fact that you intend to produce one of these every five years the office for budget responsibility for starter producing these in 2011 and is producing them every year so given the fact that you know we have there can be significant changes when a five-year period a change of government a pandemic for example brexit river do you think that's something you might look at the future to try and change so that rather than being on a set time frame it might be in response to specific events so I think it's a really useful question and in part I think is is the answer to this is really the demand for this sort of work and is do people find this work useful and where can further insights or more regular insights add value to that and two things I think are worth considering one is the areas that we've identified that we haven't covered in this report and actually where might that be useful for us to focus on climate change being an obvious one where potentially some further work and insights around that would be helpful and secondly you're right that the our planning or at least our thinking initially had been that we would do a big set pace report like this every five years but clearly things will change you know change of government change of priorities change of economic conditions and is our scope for us perhaps not do a large detailed in-depth rebuilding of all our modelling but actually think about how we can do updates on a on a more regular basis and I think part of that as I said coming back to the first part of my answer really is I think about the demand for this is this something that is helpful that is informing the debate around Scotland's budget and public finances and I think it is but that's slightly biased but if it is a sort of thing that helps inform the work of committee and government then I think that then helps us very much in our resource conversations internally but also with the government about this is something that adds value to the debate well can I say from a personal perspective I think it is very healthy and I certainly I know Liz is nodding in that spirit because she beat me to it because she we both submitted first minister's questions for this Thursday and Liz was selected to ask on which I hope to perhaps come in the back of but certainly there's a you know I think this is a good starting point and you're right the OECD has actually reviewed it and I think they've seen it very positively also they talk about for example other things being added such as as well as the climate change you mentioned you know and health and poverty and they also looked into intergenerational fairness which I think is something that the economist talks a lot about but perhaps not many other people do certainly not as many as should do but the reason I was asking about the five-year situation is because if we look at paragraph 215 in August 2022 the paper on trends in Scottish population at that time you know you were forecast that the forecast was for Scotland's population to fall to 4.6 million by 2072 and yet only six months later the projection is that Scotland's population will indeed only fall to 5.1 million which is good news but that's a dramatic change in six months and one wonders given that this is a fifth year projection you know and there's who knows what bumps are going to be along the road how difficult it really is to to to to see whether or not the these projections should in fact be be taken it's kind of not quite to ambush a stone but in the the series is which should be taken so it's a it's a very fair point a couple things I would say about that one is the one of the key messages I think we want to try and get through this is that we can play around with some of the assumptions but it doesn't alter the core message about the the relative scale of the challenge that we face and one of the things that I'm really keen to communicate is and where I see the valley in a report such as this is that it's actually really useful now and again to take a break from the day to day discussions we have around budget to look at the very long-term challenges that we see coming down the line and many of these challenges are are resilient to the specific assumptions that we use in that so that's the first point I think the second point that you make around the changing in assumptions and again that potentially adds value to more regular updates rather than a full republication but actually where potentially evidence has changed that we can then we can then amend and keep these as relevant as as possible the specific example around population there's a there's a technical reason why we made that amendment first of all we were we were we were consulting about getting people's views on it and we had some feedback about the relative population projections in there but I think the most important thing was that we were really keen to try and make sure that you used the same broad assumptions that the OBR were using around their population so we weren't essentially talking about apples and oranges in that and at the time when we published this first thing before we actually did the numbers in august they had a much more a cautious forecast about what might happen to international immigration in the UK so we followed that they've then become a bit more optimistic about that given recent evidence that the ons have published around international migration so essentially we've aligned with that so that explains one of the key reasons why we've had a slightly more optimistic assumption about population but it does come back to your point that actually as things change whether that be on key elements of our projections either be population or a new fiscal strategy by the UK government about what they might be wanting to try and achieve with the long run at that point that's where it's probably useful to update this analysis and to essentially show how the messaging has changed potentially at the margin but it won't change the overall story yeah i mean i think the overall story is critical because i think it's quite clear that governments have to look very seriously at what's like to happen i mean i think that one of the things that grabbed me was the fact that you're looking at a 72 percent increase in output in the 50 years but a 218 percent increase in health expenditure good news we're all going to live longer bad news it's going to be a lot more expensive to actually treat is because of new treatments more expensive treatments introductions of technology etc and governments north and south of border have to take serious cognisance of those developments but and just in terms of the population numbers i noticed that there's a divergence in terms of the very interesting graph that you actually have figure 2.4 which looks at how over 25 years middle-odhan will see a 31 percent increase in its population and inverclide a 16.2 percent decrease uh now i know that you're not looking at population by local authority you say that quite clearly but it's interesting that the nrs is predicting sorry national records of scotland is predicting a two and a half percent increase in population over that period and you're predicting a 0.5 percent increase which is obviously a difference of over 100 000 people across scotland so i'm just wondering if you can explain why there's a significant difference between yourselves and the national records of scotland i'm just trying to find out a bit of the report page oh yeah so 19 yeah so some of it um so i guess the first point is that we are we we project we go slightly longer than when we are looking at obviously out to seven 20 72 so there's a slight difference in terms of um slight difference in terms of the timing that we use in in in that context and we also use um we we we broadly again to be consistent with what the obi are doing we broad we use slightly different assumptions around what's happening to migration and international migration which then means that we have a slight difference between ourselves and and the central protection from from nrs in in that context but again it doesn't really but again it doesn't really change the overall story about the relatively weaker growth in scotland's population projected relative to the relative to the rest of the uk and crucially that aging in in the population there and um one of the things which i think just building on your general question about the potential changes in population and how that might come through one of the things that i think that potentially we might do in future reports is actually just show how the relative range of projections in terms of outcomes might might be dependent upon differences in assumptions we make about population and it will show the relative difference in there but it won't show the overall change in fiscal stance which is the which is the core message that we're making i mean one of the things that you have mentioned in the paragraph 2.8 in page 16 is the fact that you know that you expect to have scotland to have projected net annual inflow of around 19 000 people and about 9 000 of those will be from the rest of the uk now one of the issues i've expressed over the months and years is a fact that a lot of the people who leave scotland tend to be highly productive educated in their 20s and 30s and a lot of people who come from the uk are retiring to their gyle and buta or whatever it is or are in their own constituency or with a nice view over the clive scale when they are west cobrade so i'm just wondering whether the kind of impact in terms of overall economic performance is impacted by not just the number of migrants and this goes back to the OECD's point about intergenerational differences whether that's been taken it whether you intend to take it into account more in future. So on the general question i'm going to get David attempts to come in and listen it so in the general question what we do around these projections around migration so they are drawn largely from long-term averages around where migrants have come in to scotland so in part that's our share of international migration into the uk and then long-term averages of migration from across the rest of the uk into scotland and we use the profiles of the age based on that historical evidence that they feed through into into our modelling i think then we start to get into the questions which i think you're looting to i think then come around to what are the potential changes in the long run that you can make to make scotland more attractive to people to come in how does that relate to relative economic performance how does that relate to delivery of public services and all those all those sorts of things and we know historically that scotland has for well over a century until the last couple of decades been a net exporter of people in particular net exporter of of younger people and that's actually one of the dynamics that shapes the population projections that we have for scotland at the moment because we haven't had that continual inflow of younger workers that other parts of the uk have had and that's why our population is on average older than the rest of the uk and that means if you've got a lower birth rate that's why it then feeds through to slightly slower population projections for scotland relative to relative to the uk so how do you attract more younger workers into your economy is one of the key i guess the key policy implications of the of the of the what the report is suggesting and what the report is saying i don't know where you want to add to that david well just bear in mind this is our first report so we are we are just trying to paint quite a big picture as to what's happening out there in terms of population growth and other factors driving current policies into the future we have fatted in some of that composition of migration it's not reported in detail in the report but it is in our thinking there but if that's a fact of which you think which you would bring out more strongly in future reports that's a useful steer to us to think more heavily about how we identify all these factors and bring them out more clearly in the work that we're doing and the report that we were very conscious there were many many factors at work here we wanted to try to get a report which told as clear a message as possible so we tried not to over complicate the story too much to give people the impression that you could get almost any number you wanted by which assumptions you made here i mean i think it's an excellent thought provoking report actually i have to be honest with you i just think it's you know that these wee things would be would just early tweaks which would be very helpful now one of the key aspects that we've talked about in this committee and indeed with the sfc over the years has been productivity and there seems to be a kind of a and you're looking obviously from a primarily from a demographic perspective and how scotland's own current projections is likely to continue to have a level of productivity below that in the uk far into the future so what impact would a just a 0.1 percent increase in productivity have and what role does policy have in terms of being able to increase our productivity and so on so the modelling that so we've not i've not we don't have a back of the envelope ready reckoner that says for every 0.1 percent you you get this and it's something we can it's something we can look at one caveat the one really important caveat i would say around around that and just to understand how our how our modelling feeds through to that is that and first of all we've aligned our productivity with the same assumptions from the obr again just as dave was saying to get consistency so we're focusing on the big messages if you increase productivity and you grow your economy that obviously increases the tax revenues that you can raise and it potentially encourages people to come and live here in scotland but also there's another effect which is that if productivity rises you'd expect people's wages to rise in the economy overall and but in order for public services to essentially keep pace then their wages will rise as well and spending on on health service and education you'd also expect to rise as well so you're not shrinking the public sector to the size of the economy and so therefore it's not necessarily you know a kind of an exact win simply by just having higher productivity in the economy it doesn't doesn't mitigate fully the challenges you have with an aging population and potential declining population and rising costs of delivery it can help at the margin but the way we've modelled this is to assume that we think that the public sector would broadly you'd want to maintain that relative share of the economy and you'd want to continue to pay public sector workers in line with growth rates that were happening more broadly in the economy so productivity can have an impact and it can feed through to to helping with dealing with some of the challenges but it's not the only it's not a silver bullet you can't just rely on the hope that that is that that is going to give you or a public policy magic wand will lead that through to it it doesn't fully mitigate the challenges you have an aging population and rising costs of delivery am i talk to it so sorry I think what Graham was saying is is true of many things in this report there are two sides part of our two facets to any given issue so rising productivity is good from the point of view of growing gtp growing tax revenue but as Graham says the assumption we make here is that rising productivity in the economy shows up in higher salary and wage costs in the public sector so it drives up spending in the public sector so it's increasing the funding side on one hand but it's increasing the spending side on the other and it's looking at the balance of these factors and how they play out on both sides of the funding and on the spending that's important yes I mean I notice you haven't said you know that your projections don't incorporate the establishment of a national care service but you're predicting the social care spending to grow by 135 per cent per person and indeed that would be fueled by increased wages now obviously I want colleagues to be able to come in so I'm not going to give through this whole document you'll be glad to know I just want to finish in terms of the questions I'm going to ask on the annual budget gap because I think this is probably one of the most interesting and important parts of the entire document I mean so for example in paragraph 5.8 you talk about the in the fiscal frame what the Scottish Government is more control of expanding than its funding and you talk about the funding gap equivalent to around one and a half billion in today's prices and to address this the Scottish Government would have to consistently reduce spending or raise devolved taxes throughout the next 50 years but you also talk about the fact that the UK Government is able to fund its gap which is also significant and indeed you talk about public sector net debt for the UK reaching an astonishing 267 per cent of GDP in 2017-172 so I'm just wondering if you can maybe talk us a wee bit through this annual budget gap and the implications for Scotland and indeed the UK of it. Okay so it's a really important question because I think understanding what this budget gap means and how its interpretation is really crucial so Scotland the Scottish Government's budget is quite different from most other fiscal authorities that we might be thinking about fiscal sustainability say as an independent country where you're issuing debt and you're borrowing in international markets because typically what happens in a fiscal sustainability report is that you then look at how sustainable that debt position is over time and that's what the OBR do for the UK and I'll come back to that point because that's then a crucial bit that feeds through to the Scottish element so we don't have that I mean the Scottish Government has got relatively modest borrowing powers and the Scotland reserve but they're not really about borrowing structurally over a long time they're largely about day-to-day management of the budget process so the Scottish Government essentially has to run a balanced budget year on year and what we do is we say okay if the Scottish Government and the UK Government continue with their policies as they are at the moment and we have the aging population rising costs what would be that what would be the average gap between spending and funding over the next 50 years and that's where that 1.7% number comes from that's the £1.5 billion and it's clear it's not a gap that would actually happen because the Government is not allowed to run that gap they would have to make the changes before there and that's the point we make about the adjustments that we needed year on year just to balance that but crucially that's only one part of the equation because we know that OBR as you said say that the UK fiscal sustainability you know is going to lead without corrective action going to lead to debt to GDP rising to well above 250 percent of GDP and therefore isn't sustainable so the UK is going to have to make adjustments to become fiscally sustainable and what we've done in the report is to say okay let's take the OBR analysis and essentially assume that the UK becomes fiscally sustainable how might that feed through to the block grant and then in turn what would then be the implications for the Scottish Government's budget as a result of that and that's where that 10% number comes in the average change that needs to come in over that over that time period and crucially the key point is it's because it's a shared risk so many of the challenges that Scotland faces of an aging population of rising healthcare delivery or something that's happening at the UK as well so when the UK makes these adjustments on behalf of the UK as a whole then it necessarily feeds through to the Scottish block grant and the Scottish budget so the 10.7% number is actually the 10.1% number is actually the really important number to focus on because that's the totality of the risk that's faced the 1.7% number is essentially the differential risk that we estimate within a Scottish context but David I don't know if you want to add to that. Well just to reiterate the points here because it's really important to understand this the fourth thing is that as Graham says in many other countries that have fiscal sustainability reports they can warrant debts governments can borrow on international markets and that means that a lot of other studies use the debt to GDP ratio as their measure of sustainability we couldn't do that here so we had to come up with a measure that no other fiscal sustainability report had used so we came up with this fiscal gap measure the annual gap between spending and funding as the measure we were going to use so that essentially is what's behind the debt to GDP ratio because of that if the funding is higher than spending then you're going to have a the debt to GDP ratio going down if spending is higher than funding it's going to be going up so the direction of change of debt to GDP will be picking up this annual budget gap that we've got here but we're the only people who use that as our primary measure of the lack of sustainability because we can't use the debt to GDP ratio as a way of doing that but there's an important corollary of that which is if you're using the debt to GDP ratio as your measure of sustainability to some extent you have a choice as to when exactly you address that sustainability challenge because you can borrow on international markets Scotland doesn't have that same choice so as these budget gaps start to materialise in Scotland policies will have to be initiated to try to address that because you have to run a balanced budget so it's a really central point this that we were forced to use the budget gap measure because we can't use debt to GDP but it has a powerful implication for future policy making and Governments in Scotland will have to grasp this nittle in a very important way. What's said in paragraph 514 is that the bulk of the sustainability risk is with the UK Government in this scenario the UK Government of a deficit and its primary balance for almost all years of the projection the deficit will gradually grow reaching 11 percent of GDP by 2071-72 so the UK Government clearly has to take corrective action which will obviously impact upon Scotland. To understand where that comes through it comes through a variety of different channels so if you take for example the fact that pensions for example are reserved as people get older the cost of pensions is going to increase so all ours remaining equal that means that other budgets are going to have to be squeezed in order to compensate for the fact that pensions are increasing. The majority of the Scottish budget still comes through the Barnett block grant so as the UK faces pressures on an ageing population on healthcare and then make adjustments there that means that other parts of public spending are going to be adjusted which in turn feed through to Scotland via the block grant as well so the direct effects through the block grant and devolved similarly devolved areas but there are also other pressures that come from an ageing population and rising costs which indirectly will impact on Scotland as well and that's why the majority of the risk in that context is at the UK level. Okay thank you I'm going up now I'm going to open up the session now and Daniel will be first to be followed by John. Thank you very much convener. First of all can I just echo the convener's points I think this is really useful and important report I think one of the interesting things about the time frame is that taking us out to 50 years gets us very close to the the inflection point globally where deaths start exceeding births which I think the UN protects somewhere in the 2080s so this is a global issue not just a particular European or Scottish one but just on on what we the discussion we've had so far. First of all can I just ask you say that you've taken the assumptions around productivity from the OBR the gap between Scotland and our UK is that purely down to demographics in terms of your assumptions? Yeah there's a there's a chart let me just see so yeah it's probably the most interesting chart on that is there's a figure 2.6 which essentially show what is happening to Scottish GDP and what's the driver to that and then and there's two key elements to that broadly speaking our GDP grows in line with productivity and what's happening to your workforce and what we've done is to again to try and simplify things is to essentially follow the OBR assumption on productivity and then essentially just have our differential assumption about what's happening to population and then therefore the workforce and what you see therefore is because of our workforce the 16 to 64 population projected to decline that acts as a drag on Scottish GDP growth and because it's a bigger decline in the UK that acts as more of a decline in the UK. Now there is an important question about whether we think that Scottish productivity might be higher or lower than the UK over time there's an interesting question about potential interactions between the size of your workforce and the age of your workforce and productivity and whether you think that's good or bad in there we don't we set all of that aside just for simplicity and and just focus on the on a demographic element and that's the driver of the gap between Scotland and the UK. Thank you very much for that clarification it is helpful so I mean I understand the points you're making the previous sets of answers about productivity not being a silver bullet but on the basis of what you have said in the report I mean might we would be fair to say that there essentially are the key parameters here are your level of spend and your level of taxation on the one hand the immigration and therefore kind of the net population growth and then finally productivity and if so strikes me that on the first three of those things we've got quite good measures but on that last one do you think we have enough focus and insight on that in particular do we need to focus much more carefully about the kind of productivity per capita and the distribution of that productivity both geographically and across the population so a couple of things so one is I wouldn't I wouldn't want to get impressed that productivity isn't important in that context it's the way we've modelled it is makes the point that we assume that productivity leads to higher wages and we share these wages between the private and the public sector and now clearly you could depart from that and assume that some of that productivity growth is just providing additional revenues which in turn let you let you fund higher public spending without increasing wages in that context and one of the things that faster productivity does and greater prosperity there is give you more flexibilities around all of that to potentially make some some bigger choices in there and the key thing is that with a with a potentially shrinking workforce the only thing that's left around growing your economy is productivity and the point again so that we fully understand what we're saying here faster productivity leads literally enables you to have higher spending so in other words more public spending higher wages for people in the public sector and then therefore greater prosperity as a result of that what we're saying is that it doesn't necessarily automatically close the gap because what's happening is you're spending more money on it and you're increasing demand so both are rising but faster productivity leads to a more prosperous economy which in turn means that you can spend more on these things over time and that then gets into the broader debate which I know you've spoken about over number of sessions about how do you turn the handle on productivity what's the potential sector mix of productivity what's the variations on a regional basis about productivity and how can we solve that productivity puzzle at a UK level but also a Scottish level and turn it from being you know growing at levels that are much slower than they have been historically so I mean and also I think the balance between private and public sector productivity also becomes really key for exactly those reasons as well just finally I mean it strikes me you know we're not alone and I think countries such as Japan and Finland I think have had a much sharper focus on on these issues than perhaps we have I mean do we need to do more international comparisons both at that sort of quantitative level but also maybe the sort of policy and qualitative level as well to better understand this challenge do your your point is entirely right that you look around the kind of high income economies like Scotland so Europe, North America, Japan and they all face the same they all face the same challenges of an aging population and rising rising costs for delivery and one of the things we need to keep reminding ourselves is that that's positive the fact that we're living longer the fact that we're able to access greater technologies and health that is a good thing but it comes with a cost and that's what we need to that's what we need to face up to and to think about and we've looked at for our purposes we've looked at a lot of countries that have started to do these fiscal sustainability reports and then think about how they potentially will respond to them and I think that's where it gets into the really interesting phase about what do you do around the policy responses there we have seen in recent years these reports particularly having an impact on things like pension outlook and there's obviously interesting events in France at the moment going through some of these issues but again one of the things that I think we mentioned quite a lot or want to mention quite a lot when we're discussing this is that the numbers are so big and have such a magnitude there isn't one automatic silver bullet it isn't just an extra year on pensions that can save you and it can save you some money and it can push things out but it's a combination of everything about what's happening on the economy choices over public services relative to others what do you do around things like pension age what do you do around prevention and healthcare and is there anything you can do to try and reduce some costs on healthcare over the long term and it's that balance and mix which is interesting and I think that's where looking at what other countries are doing and some of the countries that are maybe ahead of us in these pressures like Japan like Finland like some countries in Europe that all have a greater pressure on this and seeing what lessons they're learning from it would be really helpful thank you very much yeah there are currently eight million empty houses in Japan and in mid-term countries or mid-range economic countries like in Eastern Europe Bulgaria and places like that they've got huge out migration as well as massively falling birth rates and they don't have the strong economies that we have in relative terms just one thing before i like jonan the document and we keep talking at these meetings about 16 to 64 year olds but why 16 to 64 year olds given the pension age is going to change and will be well above you know 65 for the for the bulk of the period of what i'm talking about i think that that's just shorthand we actually do include in in this work the fact that put of people over the 64 participants in the labour force so we we're just using it as a convenient shorthand to let us get that handle on the relative population movements okay it'd be good to change the 64 to whatever the pension age is 67 i'm trying i'm trying to think about that okay jon thanks so much convener is to pursue i think some of the areas that the convener was asking about i'm looking at page seven under fiscal sustainability paragraph 24 and it talks about the obr's suggested paths for reducing the projected UK government deficit and so you've modelled a scenario where the fiscal tightening is applied evenly across areas of UK government spending and taxation now what does that actually mean i mean does that mean that half of the gap comes from spending and half comes from taxation because that would have an impact on us obviously yes so yes again so what we do in that central scenario is essentially a a relatively straightforward thing of saying this is the adjustment that's needed at the UK level if half of it's made up of spending half of it's made up of tax what would what would the figure be for for scotland if you look at on page 50 there's a box 5.2 where essentially what we do is we we essentially vary that assumption by saying if they put it all on tax then the feedback to the scottish government is slightly less the negative hit to the scottish government is slightly less if they put it all on spending then the hit to the scottish budget is is larger in that context and again i guess the one of the point that we're trying to make in all of this it's still a very large negative number depending on irrespective of what the UK government would do around spending and tax and it's clear an assumption that we've made there so but the actual story doesn't change that the UK has to make this adjustment and that will feed through to the scottish budget as a result could i just add that an important issue here is not just whether it's spending or tax but also whether it's spending or tax in the reserved or in reserved areas so this diagram that Graham has just pointed you to we've probably had more discussions about that diagram and almost everything else in the report because it was a question of how do we convey a message without complicating it too much here and having lots of different lines for lots of different assumptions so we just went for a very simple message of let's just do the average average across tax and spending average across reserved and unreserved and show the picture for that case we don't know what the UK government's going to do but we just thought we want to get a really clear message out here and as Graham says that's the line that the new committee and everybody else should be focusing on it's not the smaller line the 1.7% is the 10.1% line you'd be focusing on right okay well you've kind of underlined what i was thinking because i mean the 1.7% would be the absolute minimum and our best or however you want to look at it whereas as you say the 10.1 is the where we're more likely to be i mean what is the 1.7% mean in terms i mean i think you gave us a figure but you know what would we have to raise income tax by to get 1.7% or what would we have to cut expenditure by to get 1.7% yeah i think there's a there's a discussion of this john can can you can find it where we talk about that but just can i just come back to one point you made the 1.7% being the best possible outcome that would assume that the UK became unsustainable physically unsustainable and that's the key point this is that it's like a step and it's a step in the process so we assume that Scottish Government and UK Government just keep continuing spending as they are just now with the changing demographics and rising costs then Scottish Government would still face a gap of 1.7% because spending would run ahead of funding but that is based on the UK Government essentially spending an unsustainable manner and we know that they'll have to they'll have to adjust so that's why in many ways the easier way to think about it is to flip it around and say the total fiscal risk that Scotland faces is that combination of Scottish Government risk and UK Government risk which is the the 10.1% number of which that total that 1.7% essentially the differential risk that Scotland faces because of additional pressures demographics et cetera relative to the UK as a whole yeah i suppose i'm emphasizing the 1.7 because that would be as you've just said differential and in a sense that's what we have to worry about and what we can decide on because i mean if the UK cuts expenditure 10.1% well we'll certainly all complain about it but we can't do anything about it well so yes the point being is though it would immediately feed through to the block grant and it would suddenly land at the door of policy makers here in this parliament about how to allocate that and how to to feed through to that so i don't think it's not it's something where you can you can think about how you can potentially close the gap relative to the UK which would be your 1.7 but that full-on adjustment at the UK level will still feed through to the choices that this parliament has to make around prioritisation of spending so we'd have both the cut to the block grant which we'd have to put into practice plus the extra 1.7 or exactly yeah and just again just again just a really i'd like David come in a second but just a really important point i think about language in this context we're not talking about cuts in block grant so this is public spending will still rise it's just that it's not going to rise as quickly as the demand on spending will go so we you know we are projecting the economy will grow we are protecting its public public spending will rise in real terms it's just that the demand on that will grow more quickly which means you're going to have to relatively prioritize in other areas because another thing between this is to say that the 1.7 is a figure that comes because scotland is on the whole relatively insulated from some of the pressures that are facing the UK so as Graham said before pensions have fall entirely on the UK Government one of the big drivers of lack of sustainability that the OBR identified was the loss of fuel duty as people switch to electric cars that has a big impact on revenue at the UK level it doesn't affect scotland so and as Graham also said that in the front of the driving hire health spending in the UK they have to be met from tax revenue whereas we get a block grant in scotland sorry bonnet consequentials for that so we get some of that spending coming through both on the funding side and on the spending side so whereas to some extent more insulated so the 1.7 shows the position in scotland given that it's on the whole relatively protected from some of these factors that are driving lack of sustainability across the UK and the 10.1 really reflects what the long-term sustainability pressures are facing the whole of the UK and scotland together right so just to clarify again so i mean the 1.7 yes you say we're relatively insulated that is the Scottish Government budget is insulated but not the people of scotland because the people of scotland will have to pay more vat or some kind of electric car duty or something to help as part of the UK doing the 10.1 yes okay that's helpful thank you on migration a i think the figure was that we're getting less than five percent of the UK migration now maybe you're the wrong people to ask this but why is that the case and can we do anything about it so what we use is so we use the average over time so that and that is a historic average in terms of scotland get a smaller share of of of that migration part of it i think comes back to the point that the convener was making around it you know the the inflow of where people go to locate if it's particularly international migration going to looking for opportunities and luck the pool of london within that context is always is always a dominant factor within within the UK within the UK economy turning that around again if you can get a higher share of international migration that's coming into the UK to locate in scotland and different parts of scotland then yes then that that then in turn helps you will will help you boost the the migration flow that you have in you have in there but we haven't we haven't looked at what you could do or what that is we just look at we've just looked at what the evidence has been about where that where that number has come from can i just just sorry to go back but just on your question about the numbers on that you didn't answer that in your previous question but on page 49 that turns the percentages into into actual raw cash terms to give you an idea about the scale of the adjustment okay that's helpful i confess i have not read every word in the report i can have focused on certain chapters let's say so i'll go back to the chapter i had read so on page 44 there's a box 4.2 and it's just i'm struggling a little bit some of it seems a little bit counterintuitive so i was just going to ask you to explain some of that so for example a first paragraph under the the charts it talks about a scotland tax revenues would grow by an additional 5 per cent by 2072 73 because of the larger pool of scotland taxpayers but the block grant adjustments would increase four times as rapidly due to the impact of greater population growth in scotland relative to england northern Ireland yeah i'm struggling to understand that so this is so this is really important and i think perhaps the easiest chart to potentially explain this is actually on page 43 because this gets to the heart of the fiscal framework and how the fiscal framework has been has been set up so again thinking about what we do here so we assume essentially broadly the same assumptions as they'll be around earnings growth across the across scotland in the UK so we assume that we're both they were our earnings are essentially growing the same as they are in the in the rest of the UK if the rest of the UK has a bigger growing population then total tax in the rest of the UK will run ahead of the growth of total tax in scotland simply because there's more there's more people there and that growth rate will go ahead what really matters remember though for the fiscal framework is the block grant adjustment which is uh index deduction per capita and it's the per capita bit that is really important here so if you're assuming that people's earnings are growing at the same rate as they are in the rest of the UK but you have a falling population then essentially the denominator in that calculation is going down which means the ratio is going is going up and that's the essentially the protection within the fiscal framework that scotland has of declining population or slower growing population relative to the rest of the UK so total tax total tax grows faster in this in this example that we have here total tax goes faster because English and Northern Irish population is growing more quickly than it is in scotland but because we've got falling population the tax per capita essentially cancels that out and in the scenarios we've got here it ever so slightly moves ahead in in scotland's favour and that's the the whole debate around the fiscal framework and the the benefit that scotland gets from the method or the protection scotland gets from that method of being uh deduction index deduction per capita okay and my final point then is kind of i think linked into that to some extent in talks when you say you assume the age distribution of income tax revenues remains constant and older taxpayer base would partially offset the fall in tax revenues yeah so again what again what we've done in our assumptions is essentially is trying to assume as as neutral a position as possible where earnings growth stays the same across the the UK and in scotland but we know that older workers tend to earn more than younger workers so we hold that assumption still there and because scotland's got slightly more older workers and it particularly in the initial period then that leads to higher earnings in scotland you know relative to the rest of the UK because we've made that assumption about essentially higher earnings growth as you become older you know pay increases you move through increments you have more experience and that leads to higher earnings and that's an assumption we make again for simplicity it's an important question to think about whether that holds and that is potentially a risk in there that if you uh if you don't have that same level of growth or potentially if if you have sectors that are in decline in that context and you might face a squeeze so that maybe older workers more experienced workers don't get that pay premium that we see they might have forced to take a lower paid job i think possibly exactly yeah and and that would then start to feed through to our projections about what we're saying about income tax etc and it's a really important debate and again coming back to david's point though again for simplicity what we assume is that we just assume it's the same as it is at the moment if it changes then that is an additional factor additional risk that could potentially feed through to to that relative position okay thanks okay thank you rosh to be followed by douglas thanks community i should plug up i've got an event with the presiding officer 25 past 12 so if we run over a wee bit apologies but i have to slip out early just come back to the point on productivity and i should caveat this by saying before i ask you for something else like colleagues on the committee really appreciate the huge amount of work that's gone into this but on the productivity projections have you or would you be able to for illustrative purposes project what the impact would be on the the deficit at the 1.7 and 10 figures if our productivity instead of running on what's currently projected to where to mirror the eu average the oecd average etc because going back to the convener's point around policy choices here everybody in their grand has at some point come up with a plan to boost productivity and none of them have really worked as a question of how much effort should we continue putting into that compared to trying to pull on other policy levers to address the deficit we as we haven't done it it's it's something that can be done now the modelling is has been done i'm looking at john before he thinks in terms of having to prepare for the medium term financial strategy and the additional requests there but it's certainly something that we can look at and then right back to the committee and and even if it's a relatively stylised this is this is potentially if we rerun it with a slightly different productivity that this is what the number this is what the number would be and in report we'd want to take a bit of time to interpret that because as i said one of the things that that the way we set this up is that we're assuming essentially that the higher productivity is feeding through to greater prosperity so greater wages in the public sector greater demands for or at least resources available for public spending so it will largely cancel out to an extent but it does open up a question about that relative balance i think as mr johnson said about the relative balance between public and private sector in that context so it's certainly something we can have a look at and we'll get back to you on but i think it's one of your questions that is interesting because it's about the question of where should the user committee be trying to focus your efforts and thinking about things and if we can help you understand if you could push on this this would be the effect you could push on that that would be the effect that might help you as a committee to understand better where you can go on this absolutely thanks very much and the report notes that in terms of the growth in the block grant that's largely going to be driven by increased health spending in england if we were to assume that the consensus in scotish politics continues to exist that health consequentials go straight into scotish health spending i presume that's going to result in the relative deficit in the non health everything other than health area areas of of scotish government spending being worse than the overall headline figure has any work being done on trying to disaggregate that and look at what what the sustainability of all of our non health spending would be so a couple of a couple of things there is actually a bit of a discussion about the relative comparisons with health in england i think on page 36 and what we essentially do is we take again no change in policy so we basically take the current projections the current position on health and then push it forward and no relative and no change no change there and you see that scotish public scotish spending on health per head runs slightly ahead of it is in england now what so in that what inner projections for around spending we're essentially assuming that health spending continues to grow in line with current policy what we don't do because this starts to stray into then the policy debate is that if you face a funding gap then how might you then prioritise where that where essentially plugging that gap comes from and that gets into questions about how do you re-prioritise from some areas to others so and if current policy is to prioritize health over other areas then that would suggest that that is one element that you would do or where taxes would potentially come from etc etc so we don't do that we don't go into that because then that starts to then move into policy choices of future governments all we're simply saying is if you keep the current health policy constant and then push forward with the rising costs and aging population that's the number that you would get in terms of spending pressures thanks yeah that's relevant in terms of your questions of preventative spend etc but we can keep launching more money into health but it's not going to reduce demand but the challenge for us is then taking money out of health to put it into prevention is is politically challenging and just one final question looking at your projections around growth in local government tax revenue and I accept this is more of a political question and you might just want to avoid it completely but it feels like we are relying far too little on local government tax bearing my you know that is essentially in scotland I think we rely too much on devolved income tax through local government tax certainly the powers we've currently got that's where we can tax wealth property etc that there's more latitude for us about local government taxation there but the projected growth from local government tax is minimal the overall share of tax revenue from local taxes is relatively minimal do you have any concerns that given the overall issue of fiscal sustainability here there's not enough discussion going on about what to do with how to potentially reform local taxation okay so I will probably try and dodge some of that because it does get into into policy questions about what government might what government might do but I think a few general points maybe David does as a chief economist at HMRC will probably have some views about this as well I think that what we do in here is we essentially again for simplicity is essentially assume that local government taxes basically grow in line with with the rest of the economy so we're not we're not taxing more in this context again because it's all about policy and neutrality in here but it has a funding gap so then there's a question about what you do with that funding gap and you mentioned we've already spoken about how you might prioritise within budgets in terms of health and education which might go down because of the demographics in terms of local government but then it comes to the big question about where do you raise the revenue for this if that's one of the elements you want to look at and there's a question about again within Scotland's fiscal framework how much you can tax income just because it's one element of the tax system and you can you can put additional pennies and rates and bans etc but you're talking about raising hundreds of millions of pounds maximum and we're talking about potentially billions of pounds of additional pressures coming down the line so again the nature of this fiscal framework means that's your big revenue raiser but you're constrained in that because there is only so much you can do simply by arithmetic so then that starts to open up questions about well where else might you raise revenue from and some of that's a Scottish question about things like local taxation and others but some of it is also a UK question as well about what's the future of taxation in a world where you might have significantly different pressures on public spending you've had historically and that gets into lots of questions which is taking place at the UK level about things like carbon taxis, wealth taxis and all those sorts of things as well but I don't know David do you want to maybe add something? Just to say two or three things one is that what we're trying to do here is look at fiscal sustainability at the kind of aggregate level in Scotland without trying to differentiate too much between local and central government spending and funding because we thought that was a first useful starting point and the problem with trying to think about what happens if we did this what happens if we did that is that it gets us into an area first of all trying to produce projections not forecasts on the basis of endless possible policies and we don't do that when we're forecasting enemy we only forecast policies when they're actually firmly announced and we just didn't want to complicate the message by thinking about what we could do lot all kinds of different variants on this if we did this or we did that so I think it's a question of trying to keep the central message clear trying to just paint a picture of what's happening and then basically say it's up to politicians to think about what they do about this once that turns into concrete policies then we can think about forecasting the likely consequences of that but trying to just endlessly speculate about all the possible variants on this I think was an exercise we didn't want to to go down we said we want very clear messages here and not allow people to pick any number that they wanted from a basket of numbers that's our job we affect the number we want yes thanks for that that's all for me computer thank you douglas to be followed by liz thank you convener i had a question about participation rates obviously understand over 65 that you know the participation rate would drop quite significantly but has there been work done on participation rates of like between 50 and 65 and where do we in terms of scotland where do we stand compared to the rest of the uk and that sort of participation rate because as you said earlier graham that's probably the highest earners that you actually still want in the economy to actually be feeding through your tax income you're right there are a couple of things one is that and we've discussed this in previous economic forecast reports where we've seen a drop-off in participation rates in scotland relative to the rest of the uk particularly in that middle part of the of the age distribution and that's one of the key drivers of why the income tax revenues haven't been as high as isn't the rest of the uk and there is that big debate that is going on at the uk level about what's potentially happened post pandemic about participation rates in that crucial age group potentially falling back and that's the exact opposite i think of what we would be saying that support we need to do is that we need to get more and more people to be participating in the economy for longer as life expectancy has gone up but also as they are the crucial points in the earners that matter there and we know as well that participation rates across the uk have increased in the sense that unemployment is now at a record low level in scotland it's not at a record low level but it's the inactive bit that is that is really crucial in there we can make some changes again around boosting participation particularly for older workers and that will have a positive impact on the numbers but it won't change the overall trend which is ultimately driven by that aging element and the and crucially the the rising costs within there when you get into policy questions around participation as you move older there's some interesting stuff increasingly around not just how you're dealing with an aging workforce but how do you deal with people who are aging in jobs and the potential additional pressures and challenges and health conditions that we will all need as we get older and how do you make the workplace environment more conducive to people as they get older if you're going to try and encourage more people to stay in the labour market but that again is that again is crucial because it's one element of yes you can boost your population by migration but also you can produce the impact increase the impact by what's happening to participation and is there been any work on how we're doing in that age bracket compared to the rest of the UK or are we better or worse or just the same? I can't recall that we had something in the last was opening in the forecast yeah which we can dig out and send my recollection was that in the in the key part was across the working age bit it was scotland hadn't been doing as well recently compared to the the rest of the UK but it's particularly in the 30 to 40 age bracket but we can dig out that chart that we have. I guess that would explain people retiring early in this we're retiring really early yes yeah and it gets into so retiring early it gets into health conditions coming back I think that the point about prevention as well and health cares and we know that the slightly you know poorer average health that we have in Scotland compared to other parts of the UK and internationally means that you know we've got many more people as they get older into their ffifties are actually leaving the labour force for our health relative to relative to other places and that acts as a drag on on the ability of the productive staff of the workers. Is the waiting list in the NHS we have quite good evidence that because of the waiting lists in the NHS people who have relatively mild conditions and might have persevered in working those conditions are turning serious and they're withdrawing from the labour force and not only that they're often sometimes then claiming disability benefits of certain types so there's been a rise in claim for disability benefits associated with that increasing waiting list in the NHS and that's been a phenomenon in both Scotland and in other parts of the UK as well so there's this interaction here between although we're spending huge amounts of money on health we're still having rising waiting times in the NHS and that's having knock-on implications for both participation and its tax revenue but also for claiming disability benefits so it's a quite a complex picture so if we reduce a waiting list we get more people back in the participation to boost their economy in both ways. In terms of the demographics I think Graham Ewing mentioned at the start what we're seeing in Scotland and the UK is not unique how do we compare to other countries in Europe you know France and Germany for example is that work being done? The broad picture is the same in terms of aging population is something which is common across European economies and all and high income economies and again a large part of that comes through baby boom generation then the children of the baby boom generation and that just easing out and birth rates falling throughout all that entire period so essentially you've got this bulge in the population coming through and then it's starting to it's starting to ease off and that aging in the population is is a big driver of that and as we spoke there's some countries that are ahead of us in this so countries where they maybe wasn't significant in migration through the second part of the 20th century like Japan and some Scandinavian countries where you've seen the aging of the population more rapidly coming through and in that regard Scotland is actually in a better place than some of these countries in terms of the relative aging of it and the potential future decline of it but and so these challenges are not different there's not something which is unique to Scotland here and again that's one of the key points that we're trying to say in the report is that these challenges aren't unique to Scotland but they are challenges and that's why we need to get ahead of them it's just often we hear that is because because of Brexit that we've got you know a much worse situation than everywhere else but that doesn't seem to be the case then everything here is everything here is the long term that and that's the thing again in many ways you know things like you know slight changes in migration assumptions again back to the convener's very you know point at the start about the change that we made assuming relatively low levels of migration coming in we've uplifted it so we think we get more people coming in through migration doesn't really change the story because this is your stock of population changing over the long term and also you know permanent increases in costs so and it's giving an example you know our assumptions here you know talking about the the 10,000 international migration every year 9,000 from the rest of the UK that's against a stock of a population of five and a half million it's not from a fiscal sustainability point of view it's not going to radically change the picture we get there there's in a broader question about what does that mean in terms of productivity and skills and all those sorts of things but the big questions we're talking about here are driven by structural dynamics in our economy that are not unique to Scotland but are things that have been shaped over 100 150 years and the last question you know when we look at the figures about the 16 to 64 year olds and the rest of the UK seems quite constant but we are dropping off quite considerably you know what is it is that down to migration or is it down to birth rate in the rest of the UK higher than Scotland what do you say so it's a number of factors part of it is so again the chart i think is on page 17 we we see that part of it is that the fact is a starting point so the fact that we've got slightly older population than the the rest of the UK as you push that forward then you get that that decline happening earlier also slightly lower birth rate on average in Scotland relative to the rest of the UK again so that drives and pushes that forward and as i said a lot of this stems from essentially changes that have happened over decades into Scotland's population relative to the rest of the UK so you think about the 20th century apart from the last decade in the 20th century scotland and it was net exporting of people it was there was an outflow of people from scotland whereas the rest of the UK you had the inflow of people coming in internationally there and you see that scotland's share of the UK population has gradually ticked down over the last 20 30 years as as as century population growth has increased in the rest of the UK and population growth in scotland has either been stable or or actually increased at a slower rate and essentially that's it's like the stock it's that structure of the population that we have now if you push that forward in terms of its aging and and birth rate that's why you get the the situation where in england it's relatively flagged but in scotland it's projected it's projected a decline so i guess that should be an area where the government are really focusing on to try and reduce the almost like the brain drain from from scotland and try and attract more people from the rest of the UK up to scotland as well yeah and to be fair in this it's probably in something which the parliament this parliament has actually spent a lot of time thinking on since 1999 so you don't remember jack mcconnell and the fresh talent initiative and the pressures that we had there and actually that early period scotland did really well in terms of attracting international migration because of the opening up of EU borders and and the inflow and that's had a positive impact on scotland's population so you look back to the late 1990s and there was i remember the talk about scotland's population potentially falling below five million within a few years but then it's increased because we've had that inflow which in turn has helped with boost of birth rate et cetera so i think the discussion about our population is something which is i think it is really important and i know it has been important for the last for the last 20 years do you think we don't know what to add more to that yeah about going back to the point that convener raised at the start just getting more people on the rest of UK may not solve this problem if what we're getting are retirees and we're losing still using the young people the central question is how do we get more younger people to come to scotland that's a question to be focused on yeah i think convener has mentioned in previous meetings that often people leave scotland to work and then come back to retire and that's something we need to change yes indeed i mean i think you know you know i know you've said that in migration of 19 000 a year what isn't that significant but i think if you're only having 48 000 babies born i mean that is quite significant that would be about 27 28 percent of that total i mean two million people left scotland's net in the 50 years before devolution but we haven't done much higher birth rates so that's why the population remained static so because the birth rates fallen so significantly if we still had the out migration we had then would be in real war michelle sorry Liz sorry apologies you've said in quite a number of your projections now that the the size of the increase in the health spend which i think you're saying estimating will just be under 50 percent of the change when it's about a third now plus obviously the increase in the social security spend could ask do you have any views on what scope you think there might be for public sector reform in the economy to try to address the increase in the size of the the costs that we're having to cope with a couple of thoughts on that there's a really interesting chart i think on page 27 we show what the drivers are of of health there and you see that some of that is the real earnings growth of productivity and that's what we've spoken about that if you've got a growing economy you share that out and public sector wages grow with that the demographics are really important in the short term and i think that's where that in many ways you know we're aging we're all aging and and that is going to feed through we know we demand more public services as we get older but we know that the the challenges that we face in particularly in scotland of actually demanding healthcare for longer because of issues we've got around health inequalities and unhealthy life expectancy in that regard so things like that that you do there potentially lead to potentially savings which that would then be potentially be redirected elsewhere and that gets into the whole debate about prevention and Christie and all those elements but i think another point there will we talk about the the pressures on health spending more generally and the we have been there of coming in about one percent over the long run and that's the rising costs of just delivering on healthcare now one thing you can do is you can think about what reforms could we do to minimise that increase in cost and there's questions about productivity and the health service and the like but what's quite interesting is that we we looked at a lot of evidence internationally about the pressures on health costs and this isn't something that's unique to the UK and it isn't something that's unique to Scotland and it isn't something that's unique to a public or a private sector delivery of of healthcare it's something that is essentially kind of built in to healthcare and the way that healthcare operates and the unique nature of it so it's it's things like as we improve technology in most sectors as you as you as you introduce technology costs will fall down but actually in healthcare it tends to increase costs so if you have new ways to detecting illnesses or if you have new ways of delivering procedures then essentially that what happens is that well you demand more of it because that's that's a nature of healthcare systems and as you develop new drugs for example to cure things like dementia and dementia and other and other illnesses then demand goes up for that so cost rise of that there's potential reforms you can make around that but actually what we find is that this is something which isn't isn't just going to come from reform it's something that's built into the nature of how we deliver healthcare and demand on that I don't actually think it there is much scope for being able to reduce costs because as you rightly say if we want a world-class health service these costs are going to rise more than they are probably in the rest of the economy actually that's been the nature of health service costs for a long time in the non-health non-social security aspect of the economy do you think there is scope for reform elsewhere that could help some savings it's not an area where we look at in the report because again what we're doing is just doing the projections into that and what we do in the report largely in the non-health elements is that I anything that's not really linked to demographics we essentially assume it grows in line largely with the with the economy to come up with the totality in there one exception is education where we push through the younger the drop in the younger population so so it's less of a pressure in that context but I guess the general point and this starts the straight out of the report is that one of the implications or one of the hopes that I think that our report like this starts to have the conversation about is that what we're what we're saying is that not just in Scotland but in the UK the system that you have for public services we're built around a structure and a cost base that is going to look quite different in the next 20 30 40 years so you need to have a conversation about how you potentially reform that and some of that can come through efficiencies but some of it is also going to have to come to quite big debates for a country about what do you spend money on what do you prioritise what's your tax system and how do you what's the balance between raising tax and spending there because the system that was built as you see from our projections and population it was built around a structure of our population it will look radically different over the next few decades one area where there might be some more discussion is the whole issue of social care for the elderly and the balance between getting people out of beds and the NHS and then to social care but that's a debate that's been going on for decades and governments have kicked it down the road time and time again it's the one area where there might be some potential to get some control of some element of health costs but as Graham says the drivers of health costs are so fundamental here the small reforms are not really going to get a lot more thank you very much of that Simon yeah I mean in terms of health it's got to be a lifestyle changes whether it's tobacco drink you know what the food we I mean in north Asia where I live the average age at which a person tips from good and to bad health is 56 so people may live in the future 10 years longer but six or seven of those years might be in bad health so it's about trying to ensure that if people have 10 years longer they actually live maybe 12 years in better health so they actually increase the age even even with that additional lifespan so I think that's where the prevention agenda really comes it comes in I want to thank everyone for their contributions very thought provoking I apologise that members have left it's because they've been invited to lunch with the moderator of the general assemblage of Scotland so it was unfortunate that it coincided we've been trying to plug tomorrow's seminar I'll give another plug for tomorrow's seminar 8 30 tomorrow for vacant roles and an interesting presentation by Graham on this fiscal sustainability report and no doubt many good questions from those gathered so thank you very much and just before a closing meeting I want to put on public record my thanks to our colleagues from the Welsh finance committee hosted the second meeting of the inter-parliamentary finance committee forum on Friday it was extremely interesting and valuable about some of the common challenges we face in undertaking scrutiny on a cross-party basis and I want to thank the clerks for their hard work and indeed patients on on the Thursday and Friday I think they've aged significantly as well that's it so we'll publish a short statement on the meeting and I'll close this meeting thank you very much