 Ddiolch i ddifon i ddweud i gynllun oeddiad amfelysio. Ond wrth gwrs, yn nghwladol, dyfodol, yn hyn amdano i ddorraeth yn y Llywodraeth mewn gwirionedd yn lleol agMA. Rhaid i fod, mae'n cyffredin hefyddo gyda'r c Gallwn y cyfredin hwn yn hwnnw i fodf yn gweithio'r cyfredin hwnnw i'r cérd, yn rhaid i hyn, wrth gan gweld rhaid i fodf i fodf i gael ddweud i gyd ar y cyfredin hefyd, dweud i gael ar ein cyfredin hefyd i gynllun Ffacfinding visit to stock home. Gavyn? I thought it was a fascinating trip and I suppose the lessons for me were two broad themes. The first one is in relation to how we might structure a Scottish Fiscal Commission going forward. We obviously met with the Swedish Fiscal Policy Commission and indeed an organisation called NIER, who do the forecasts and the Government who do their own forecasts. A couple of things really worth thinking about. One is how you resource such a body. There was I think a surprise from most of the groups we spoke to about how our current body is resourced. Secondly, I'd say just the level of flexibility that their body seemed to have and seemed to appreciate and actually government seems to quite like them having so they can take their own initiative on various bits of work. I think maybe the biggest one of all was just the again a kind of cementing of this consensus that whichever body you set up, however you set it up, they have to do their own forecasts if they're going to provide valuable service to the Government and to the country. That's the first broad area. I think the second broad area where we met a number of other organisations including a group called OpenLab was on the preventative spend agenda, an agenda that has huge political support theoretically. Everyone is behind it, but as we know in practice over the last five years or so, there hasn't been even anywhere close to as much progress as we would like in some areas has been a degree of inertia. I just think some of the innovation that we saw in Sweden, some of the approaches they're taking, might just be one of the keys that helps to unlock that agenda once again and push it a bit further forward. So two broad themes, how we might set up our fiscal commission going forward and how we might move forward as a committee or as a country with the preventative spend agenda. Thank you Richard. Usually informative a visit. I think Gavin summed up neatly the key areas which we explored and where we've had the most useful dialogue with the various groups which we met. In terms of the work of the Fiscal Policy Commission in Sweden and the issue around forecasting, they had a plethora of forecasts, perhaps almost to many one might say, but having said that, the issue of having a separate independent body providing its own forecast was seen to be crucial and clearly helps Sweden to have robust scrutiny of its forecast and also from the point of view of the work of the Fiscal Policy Council itself on broader issues regarding economic policy. I think that that was a very useful model to explore. Interesting from their point of view in terms of the issues around independence because both the NIR and the Fiscal Policy Council government agencies, although there seems to be a culture in Sweden where you can be a government agency but still be very independent of government and critical of government and appointments are in effect made by the bodies themselves. Having said that, if you're going to start again in terms of a new structure, a body reporting to Parliament rather than government, will probably be much more in line with EU rules and OECD advice on how you structure such institutions. I think that's something they acknowledged as well. Having said that, one of the advantages they had in terms of the way that they are structured, from our point of view, it would not be the ideal model, was that they had access to the right amount of data. In fact, they had close links between the different organisations with government as well, and that meant that all the data that they needed to make accurate forecasts had access to it. That will be an issue for a Fiscal Commission set up in Scotland, so that's certainly an advantage to which their bodies had. In terms of prevention, yes, as Gavin said, they are having very much the same debate around preventative spend that we are, particularly in health, where there's obviously the ambition to spend more on prevention, but just the same political difficulties in terms of how you remove spending from one area of the service to invest it in prevention. It's clear that there's no silver bullet there, and they're struggling with some of that agenda as well. I think that the very interesting thing, indeed, was the work on innovation, particularly in health services, which we heard about in open lab and from independent consultants and innovation in healthcare. More use of IT, diagnosis through IT systems, to some extent treatment as well, more individual access to health services, using information technology, using iPads, iPhones and all that kind of agenda was extremely interesting. I'm sure that there must be issues there that we can learn from in Scotland, and that's why it was encouraging to hear the open lab centre that you visited, which is looking to encourage innovation and innovative thinking when it comes to developing new services and technologies is working with Queen Margaret University here as well. Those links are already there, so I think that's something that the committee could explore further in the future. I would endorse what's been said by two colleagues. It was a very intense, very productive visit, and what was interesting was to look at the level of, I don't know, consensus in terms of some of the core issues. For example, one of the things that they have in Sweden is a surplus target whereby the budget has to be balanced over the cycle with a 1 per cent surplus. One of the key aspects of that is that all the political parties agree on a maximum spending limit for the Swedish economy, which is quite interesting. This is almost a kind of self-denying ordinance for all the political parties that they won't go beyond this particular envelope that they develop over a three-year period in terms of the upper limit, but in terms of budgets, the surplus target is over the economic cycle, and there are arguments of what that economic cycle is. In terms of the Swedish funding council, I was certainly impressed by the way that they do their work. They seem to be a robust group of individuals. They have, on occasion, challenged the Government, and what they challenge the Government on is not changes in policy, but they challenge the Government on the Government's implementation of its own policies. Basically, what they are there to do is to effectively hold the Government to account as to whether or not the Government is implementing its stated policy objectives. That would be something that would be important for our own fiscal commission. That is something that will no doubt take forward with the cabinet secretary. The issue of innovation is very important. There are a lot of direct examples that we can more or less transfer over to Scotland, although there are some unique aspects of Sweden that we could not. There are certainly a lot of ideas. In the open lab, I thought that it was really interesting because it was the way that they talked about design theory and looking at things from the user's perspective all the time rather than looking at things from a producer thing and doing things that are reverse. What do people want and what policies can be developed to help those individuals or support those individuals rather than develop the policy? That is how it will impact on individuals. That was important. Is it an independent thing or part of the Government? It is funded by three different organisations, such as universities, the Swedish counties and the municipality. The way that Sweden is structured is that you have the central Government, 18 counties and 290 municipalities. We found that quite extraordinary because health is decided at the 18 county level, but welfare is decided by the 290 municipalities. I obviously thought that that meant that we would administer welfare at the 290 municipality level, which of populations ranged from about 5,900 to 1,000 instantly. However, no, it is not about administration. It has developed its own welfare policies, including the amount of money that is paying welfare on a municipality-by-municipality basis. I know that there would be a lot of arguments in the referendum about where Scotland could have a distinctive welfare policy of the rest of the UK, but it seems to have them at that level, which does seem extraordinary from our perspective. The taxation structure has 19 per cent of the gross income that goes to the municipality, and 12 per cent to the counties. Those can vary, but that is in Stockholm. If you have a certain income level, do you then pay to the state? Only 30 per cent of people pay to the actual state, and the state funds things such as defence, social integration, foreign policy, etc. It is quite interesting how they devolve things down to even a fairly small community level. It is a completely different structure to what we would have. It is quite fascinating. The finance committee has 17 members instead, rather than the seven that we have, and eight political parties are represented on that. Given that they meet, apparently, for a couple of hours at a time, I do not think that they have as much in-depth questioning perhaps as we do, so it is not a question of looking at Sweden and saying if they do better than us. I do not think that that is necessarily the case. The municipalities have so much power that we were told by one of the finance committee members that they are trying to build a railway. They have a railway from north Sweden to Stockholm, and they want to put in extra lines of track. One of the municipalities is on the route to Stockholm and far north, and they do not want to. They do not seem to have any national mechanism to overturn that, so it is quite interesting. Those who are not in Stockholm, do you have any questions? Can I just ask what the open lab is? The open lab is an organisation that has been set up by, but I do not think that it was a municipality. I know that it is definitely county universities in the third one. I do not think that it was a municipality. I thought that it was possibly a private sector. However, those three organisations pay jointly for the structure whereby we have staff of seven people and they take on commissions. For example, they were looking at a commission whereby how they could get people interested more in participative sport, because they are building all those great sport facilities and they want to make sure that people use them. What they are saying to the folk is, what kind of sports do you want to take part in those places? What would attract you there? For example, how much would you be willing to pay? What kind of times would be suitable for you? All those things. What they are trying to do is looking at things from an end user perspective and they broadened it out. For example, what was the thing that the guy was doing with the glue in the lab downstairs? They were developing a tourniquet and they were also developing a different traffic management system. Basically, it is a brainstorming thing. Students come in, they do 10 to 20-week courses, they get assignments and they try to develop ideas from the outside in, looking at things from the broadest perspective and then they are trying to come up with the solutions. We have been to Malmo with the local government committee when we were doing an inquiry into the future of local government, so the municipality structure is something that I am familiar with. In terms of borrowing powers and financial powers at county and municipality level and how they are monitored, one of the things that we have spoken about is how any additional borrowing powers would be monitored and the discussion around bail-out and what mechanisms exist there. Was there much information as to how that works in the Swedish context? You have to have a balanced budget. Basically what it does is they overspend in the first year, then they have to make that up in subsequent years, so they have to have a balanced budget, both at county and municipal level. It is similar to the rules that apply currently to the Scottish Parliament and the budget has to be balanced? Not in an annual, not in every single year. If you overspend in year one, you have to pay it back in year two and adjust your budgets. I do not think that we explored that. We did explore that. They can borrow for capital but not revenue, so for infrastructure they can do it on a prudential basis for capital but they cannot do it for revenue. The Swedish Fiscal Commission, is that what it is called? Fiscal Council. What does that look like? You suggested, Richard, that they had more access to agencies and other departments. Is there any similarity between what we are trying to do here and the funding and the work? I think that it provides a model that we should look to. The six members of the board are generally economists. We met the chair, who is a professor. They publish a report annually in spring, which, as the convener said, looks to the Government's policy, whether it is meeting its stated policy intentions through its economic policy and its budget approach. It does not do its own forecasting in a sense that it has forecasts that it relies on, which are produced by the NIE, the National Institute for Economic Research, who are a Government agency. We are very independent of the Government as well, and so it looks to those forecasts and then it will make comment on those forecasts. Are those a Government agency? Fundamentally, they are drawn from academia and they themselves their board basically make recommendations to the minister about who should be appointed to the board when there are replacements made. For as long as I am aware, the finance minister never turns those recommendations down, so it has a degree of independence. Although the European Union would say that it would be better if it was fully independent of the Government in terms of that level of scrutiny, and I did mention that, but as I said, there is a culture in Sweden where we have Government agencies, but they are seen to be very independent bodies. One of the interesting things about the Swedish budget is that when they decide on their maximum expenditure, they have 27 departments, if you like, in which each of them is given a maximum as well of budget. All together, there are some 500 appropriations, so you get smaller budgets. Within the 27 headings, they are just within the relative appropriations. For example, although transportations are really done at a county level, they have some national transportation, so they will be able to have different things, perhaps where it is rail, airport, whatever, and they can adjust budgets within that. However, the important thing is that they do not break the maximum amount in terms of each of the 27 categories. They have incidentally reduced their debt considerably to 30 per cent of GDP, which is 75 per cent in the 90s. They had a bit of a high in Europe, but now it is one of the lowest. Decheged GDP ratios. Folks, we will get the Cabinet Secretary General and continue. Our next item of business is our final evidence session on Scotland's fiscal framework inquiry, in which we hear from the Cabinet Secretary for Finance, Constitution and Economy. Mr Swinney is joined today by Government officials, Sean Neil and Stephen Saddler. I welcome our witnesses to the meeting and invite Mr Swinney to make an opening statement. Thank you, convener, and my apologies for detaining the committee earlier on this morning. I welcome the opportunity to take part in this inquiry on Scotland's fiscal framework. I have looked at the summary of evidence given with interest and note that there are common themes emerging related to both the process for agreeing the framework and the substance of the issues to be agreed. Those concern the need for transparency and openness and the need for accountability and parliamentary scrutiny. The agreement needs to be fair and sustainable, and to achieve that, the structures and working relations between the Scottish and United Kingdom Governments need to be reformed and made more effective. We need to look at how we work together to reach an agreement as well as tackling some of those complex issues. Taking those points in turn, I also agree that transparency is a necessary requirement for the effective operation of a fiscal framework for Scotland. That is something that I want to seek early agreement on with the United Kingdom Government. As noted when I last discussed this issue with the committee on 28 January, there needs to be a balance between what can be discussed in public and with the committee, while undertaking negotiations with Her Majesty's Treasury. It is certainly my intention that the committee's advice of as much information as can be provided in as timid as a manner as possible regarding the sequence of measures that are being taken. I have also been clear that effective parliamentary scrutiny of the framework is important and that the Scottish Parliament will want to be assured that a robust and coherent fiscal framework is in place before it gives legislative consent to the Scotland Bill. The fiscal framework needs to be fair and it needs to be workable and understandable, so it is important that both Governments can come to a shared understanding of how the various elements should work and what the implications may be. The elements of the fiscal framework that are currently not well defined, the principles of no detriment, have been perhaps the most obvious. The UK and Scottish Governments must work jointly to address this. As Lord Smith noted in his report, there should be a shared understanding of the evidence to support any adjustments. That means that both Governments will need to give careful consideration to how we practically embed this into an agreement on the fiscal framework that is clear, fair and transparent. Finally, the Scottish Government agrees with the Smith commission recommendation that we need to review inter-governmental machinery to make it more effective and efficient. Smith recommended that the memorandum of understanding between the UK Government and the devolved Administrations be reviewed. This work is under way, led by the Joint Ministerial Committee Secretariat, which comprises officials from the UK Government and the three devolved Administrations. In tandem to this, I will look to agree with the UK Government the most appropriate governance arrangements to take forward the bilateral work on the fiscal framework, including the role of the Joint Exchequer Committee. Effective parliamentary scrutiny of those arrangements is important, and I hope to be as transparent as possible about progress. In terms of where we are now, I met with the Chancellor of the Exchequer on 2 March to discuss the implementation of the financial elements of the Smith commission agreement, including the fiscal framework. We both agreed that Scottish Government officials should work jointly with the Majesty's Treasury officials in the period of the UK election to advance progress. That allows officials to prepare a draft work plan and timetable for approval by UK and Scottish Government ministers as soon as possible after the UK election, and that work is progressing. I hope to meet with the Chancellor of the Exchequer on Monday to discuss the next steps in this process. One thing that you did not really touch on is the future role of the Scottish Fiscal Commission. That was something that we took some evidence on, and you are probably aware that members of the finance committee have just returned from a 2D visit to Stockholm. We met the Swedish fiscal council and there is quite an element of consensus among the committee, and certainly among our witnesses in terms of going forward with the Scottish Fiscal Commission. For example, most of the witnesses agreed that the fiscal commission should be responsible for providing independent analysis. Rather than just being able to comment on the Scottish Government forecast and not being able to do that more effectively, they should perhaps be able to do that themselves, according to best practice guidelines produced by the OECD. There is a widespread consensus that the Fiscal Commission should also be able to have a role in challenging the Government on the route that it is taking and its fiscal sustainability in the short, medium and long term in order that the Scottish Fiscal Commission should be beefed up to provide people of Scotland with more objective macroeconomic projections. Just to let you know that the Fiscal Policy Council of Sweden, where it's remit, includes to assess whether fiscal policy is in line with healthy long-term sustainable growth, leading to long-term sustainable high employment. Effectively, what it does is it analyses the Government's own policies to see whether they are delivering what they said they would do. What is your view on that? Many of those issues have been considered in the previous discussions that we have had around the Scottish Fiscal Commission. All of the issues that you have raised are issues that I am certain will be considered when we look at the outcome of the consultation that is currently under way on the Scottish Fiscal Commission in putting that on to statutory footing, which will be a bill that the Government intends to present in the final year of this parliamentary session to fulfil our commitment to put the Fiscal Commission on to statutory footing. There are, of course, a range of different opinions about what is the proper and full role of an independent fiscal commission, where I am absolutely in agreement with the committee and the body of evidence that you have highlighted, convener, is that the commission must be independent, it must be practically independent and it must be seen to be independent in all of its actions. That has been uppermost in my mind in how I have taken forward the establishment of the commission. Of course, I have made clear to the commission that whatever resources and approaches and arrangements that they need to have in place to guarantee that independence, the Government will give sympathetic consideration to providing. When we then look on to the role of the commission, I suppose that is where I have set out to the committee before my view that the role of the commission should be to essentially validate and question the forecasts that are made by the Government. I do that because I think that that is actually a more transparent reflection of what actually happens here. If I look at the evidence that Edward Troupe, the second permanent secretary to Majesty's Revenue and Customs, has given to the committee on 21 January, said that although the OBR is praised for its independence and its distinctive forecasting ability, it is really HMRC that are giving the numbers to the OBR in the same way that they used to give the numbers to the treasury. I think that that is a pretty honest reflection from Mr Troupe of what the arrangements are. I would rather accept that that is the transparent honest reflection of the arrangements rather than try to say that the OBR or the Scottish Fiscal Commission has some independent capability to generate all that information and to come to this independent conclusion when in fact that is not really the case. What they are looking at is work that has been undertaken by HMRC to feed into the assessments made by the OBR. My view has been that it is a more transparent approach for the Government to produce the estimates, pass them to the Fiscal Commission. As I have said to the committee before, the Fiscal Commission essentially has a veto on the forecasts that I bring forward. I could not sustainably stand up downstairs in Parliament and say, here are my forecasts and the first question members would ask me is, well, have they been validated by the Fiscal Commission? If I was to say no, then I think that my forecast would be in some difficulty. Essentially, the Fiscal Commission has that ability to test and veto the forecasts that I make, but they have been made on a transparent basis where we have shared the workings and the methodology with the commission. The final point that I would say in relation to the issues that you have raised, convener, is on the point of what is the role and the scope of the Fiscal Commission. One of the examples that you cited, convener, was that the Fiscal Commission should be there to judge the long-term sustainability and workability of the policies and proposals that are taken forward by the Government. Again, this is going back to the discussions that we had in the Fiscal Commission process earlier on in this parliamentary term. I rather think that that is the business of Parliament. I think that that is the business of Parliament to challenge the Government about whether or not elected members, elected from throughout the country, to challenge the Government as to whether or not the Government has got its policy framework correct. I do not think that it is the role or the scope of an appointed commission to raise and consider what are fundamentally political choices for which ministers are accountable to Parliament. Members of Parliament have the opportunity to challenge and scrutinise those as a reflection of the proper and true function of Parliament. I do not want to labour this particular area too much. It is just one question. You talked about the forecast that could be vetoed by the Fiscal Commission. What would be the criteria for vetoing that? You said that my forecasts were not evidenced by the material that I had put in front of the Fiscal Commission. When the Fiscal Commission reported last year that, on two occasions, the estimates that I had made were reasonable, I judged that to be a fair basis upon which to present those forecasts to Parliament. If the Fiscal Commission had come back and said, we cannot verify those numbers and we do not agree with those numbers, I think that I would have been in a somewhat more difficult position. One of the things that they have in Sweden that we do not have here in Scotland is a much more comprehensive area of data and statistics for many obvious reasons. It is an independent state with full access to all those information sources. We took evidence from the officials, as you know, on the issue of data. There are considerable concerns that you have known for years about data and the quality of data. For example, the basis for calculating Scottish VAT, paid by Scottish households, is a household expenditure survey pulling three years' responses and a sample of 500 Scottish households a year. We have been told about the SNAP proposals, but what is the Scottish Government doing to ensure that the data that is available is much more robust than it has been in previous years, if we are going to take some very difficult decisions in the years ahead? It is important to look at this in different components, convener. The income tax data is currently generated by survey material, although we are working to strengthen that. That will obviously get stronger whenever the Scottish taxpayer base is defined, which is a process that will be taking its course and will be effective from the 1 April 2016. The start of the tax year is in 2016-17. On one of the elements of the Scotland Bill 2010, there is a shadow period of at least two, but perhaps three years of duration, which will assess the relationship between actual tax collected and the forecast that has been made. Steps in place on income tax to strengthen the data that is available in the new territory. The other aspects of taxes devolved—we have the collection arrangements on land and buildings, transaction tax, we have the collection arrangements on landfill tax—will begin to generate more refined projection data as we see those taxes taking their course. On the only other—obviously, there are aggregates levy and air passenger duty, which will have their own mechanisms for collection. The only other area where data is relevant in relation to the current range of Scotland Bill powers will be on the asignation of VET. There is quite a bit of work that has to be done to get clarity on the most robust basis for assigning VET, because it is not a variety of different ways by which you could undertake that calculation. It is important that we have that subject to a lot of scrutiny and consideration to ensure that we come to the correct conclusions on that particular point. In terms of correct conclusions vis-a-vis Barnett, one of the things that witnesses have expressed concern about is the Treasury data. Their calculations in terms of Barnett are not always published. If they are, they are published in such obscure and Byzantine publications that they become very difficult for even academics to track down, as opposed to ordinary members of the public or even parliamentarians, I am just wondering if, in your discussions on intergovernmental machinery, the Scottish Government will be pressing for greater transparency in terms of the Barnett formula. It is in our workings and the publication of some of the calculations that the Treasury produce, because there often does not seem to be any rhyme or reason why specific things come through Barnett. How do they come to the conclusions that they come to? We interrogate data very closely at spending review and financial event times to verify that a proper and full calculation has been made of Barnett consequentials. There is an explanation of the basis upon which the comparability factors are applied between different budget lines within the United Kingdom budget. For example, on health expenditure, there will be budget lines in the UK budget for which we attract 100 per cent comparability for Barnett formula purposes. There will be others, for example, on local government, where local government finance is undertaken in a different fashion in England to houses undertaken in Scotland. Our comparability factor on local government finance, if my memory serves me right, is somewhere around about 20 per cent. If I then go to defence expenditure, our comparability factor is zero on defence, so there is a rationale for whether it is, for example, zero, 20 or 100 per cent comparability. That is a process of work that my officials are habitually involved in making sure that we are satisfied that those comparability factors reflect a proper assessment of the eligibility for Barnett consequentials. Beyond that, we look, as I said, at every financial event very carefully at the allocation of consequentials and to determine whether those comparability factors have been applied in the proper fashion. That leads to additional scrutiny of whether the correct judgments have been arrived at to ensure that expenditure has been allocated in a particular way that can deliver particular consequentials. In response to the question, would this benefit from more transparency than, yes, convener? I think that it would benefit from more transparency. Many of those issues are tied up with the delivery of the statement of funding policy, which, as I have rehearsed with the committee on many occasions over the last eight years, is a source of great dissatisfaction to me the way in which the statement of funding policy has arrived at. The whole issue of transparency was a major one that so many witnesses said. I mean, for example, there is considerable doubt among respondents on whether it is possible, indeed, to create a fiscal framework that meets all the objectives that are fair, transparent, effective and mechanical, and should fiscal studies consider that any system meeting both of the no detriment principles can also be transparent, effective and mechanical. How do you feel about that statement? I think that a lot of that depends on how extensive the no detriment principle is applied. If the no detriment principle is applied beyond the primary change of devolution of the power or responsibility and an appropriate transparent block grant adjustment is made, then I think that it would be difficult—unless that approach is taken—to fulfil the various criteria that you set out there, convener. There is another question, which is about how we arrive at block grant adjustments. Again, we have discussed before in committee just looking at the land and buildings transaction tax debate and the landfill tax debate. We had a difference of opinion with the UK Government to the tune of about £60 million, which reflected in excess of 10 per cent of the tax that we believed to be able to be generated because we used one methodology and the UK Government used another. The methodology that we used, I felt, was more soundly based because it was based on individual transactions within Scotland rather than a subset of a UK-wide picture. I have to say that I found it quite difficult to get UK ministers to accept that we might have a better methodology than the Treasury had come up with. I think that this is quite a fundamental issue as we go through all of this discussion. Is it possible? Is it conceivable that we might come up with a better, more reliable mechanism for assessing the tax than the Treasury? Is that possibly imaginable? I do not think that it looks to me to be particularly tangible a prospect from the UK Government's perspective. I was very confident that the methodology that we put together was based on the creation of a model that was driven by Scottish property transactions, not by a subset of UK property transactions, where we know that the property market is fundamentally different from Scotland and to the rest of the United Kingdom, particularly because of the effect of London. I think that there has to be, to address your fundamental question, a willingness on the part of the Treasury to recognise that there may be another organisation that has a better methodology of arriving at a particular conclusion. I have switched to boring for just a moment. We have quite a variety of different suggestions in terms of boring. You will know that Scottish Futures Trust supports, for example, a prudential regime. The IFS is not quite so keen on that. However, there is an agreement that it should be sufficient and boring to allow budget smoothing and to cover any forecasting risk in any kind of economic shocks. I am just wondering whether the Scottish Government's view is on boring at this time. For example, do you believe that there should be no limit or do you think that there should be a limit set? I have to accept that we are part of the United Kingdom, so our arrangements have to be compatible with the fiscal framework of the United Kingdom. I think that that would be to fly in the face of a constitutional reality. There has to be a compatibility between our approach on borrowing and the framework in which we operate and the framework of the United Kingdom. I think that there is a need for three key elements to be delivered in relation to boring. Firstly, there must be credible opportunities for the Scottish Government to invest for the long term through a distinctive approach on capital borrowing, which meets our requirements. We have, as the committee will appreciate, taken a different approach on capital investment to the rest of the United Kingdom. I want to see that opportunity entrenched in the post-Scotland Bill arrangements. Secondly, there has to be enough flexibility to enable the Scottish Government to deal with the greater financial risk that we will be carrying because more of our budget will be dependent on taxes raised as opposed to the block grant delivered. There has to be greater ability to deal with that risk. Finally, there has to be sufficient flexibility to reflect the changing dynamics of the constitutional arrangements to take into account the fact that we are taking forward more distinctive fiscal responsibility within Scotland and having greater control and flexibility over boring is an essential component of that. I mean to a degree that a relatively higher level of boring in Scotland would mean boring in the rest of the UK would need to be lower in order to meet a particularly boring target and maintain market confidence. That is something that a number of witnesses put forward and the system is establishing a number of countries. What I said at the outset is that we have to accept that there would be a requirement to operate within the UK's fiscal framework. The question becomes whether or not we are actually being given any more material flexibility as a consequence of those boring arrangements or whether we are essentially having to operate within a particularly restricted framework. That, I suppose, is the key question that has to be determined by the boring arrangements. Canada, of course, is a country where there were sub-state legislatures who do not have a boring limit set by the federal government, so it is actually possible within that. I think that, for me, to look at the reality of the financial framework of the United Kingdom, the legislated for fiscal mandate of the United Kingdom Parliament has legislated for, and to pragmatically reflect the political outlook of the current United Kingdom Government, I could argue for that, but I would rather argue for things that I have more chance of winning. Indeed. Do you believe, though, that the Scottish Government, if it does borrow, should be able to borrow on the open market? Thank you. Just one last point before I allow colleagues from the committee in. We talked about the adjustments just briefly earlier on. We have had a lot of evidence, particularly from the Institute of Fiscal Studies, about adjustment mechanisms and how difficult it is going to be to ensure that any adjustment mechanism, even one that is reviewed periodically, will not potentially have a major downside for Scotland because of differences, for example, on income tax. The proportion of income tax raised in Scotland relative to the UK, for example. I am just wondering what kind of method of indexing the Scottish Government would prefer to see implemented. Is that something that is still under discussion? Yes, issues are under discussion, but if I go back to the discussions that I had with the UK Government about land and buildings transaction tax, I appreciate that a lot of water has gone under the bridge since then, but the original command paper of the UK Government said that there would be a one-off adjustment on the devolution of stamp duty and landfill tax. My interpretation of one-off was that there was just one, and that was it—a sum of money done in the story. It became clear that the UK Government's view was that there had to be a one-off adjustment and some form of indexation. There were other things that they tried to apply, which we managed to see off, but what I eventually accepted was that there was an argument for indexation, and I made a suggestion that we should relate that to the GDP deflator. There are various mechanisms that could be used to reflect, to update block grant adjustments and to keep them in line with changes in values. There are a whole variety of mechanisms that could be used if we decide to go down the route of indexation. I have to remind the committee that the original proposition from the UK Government was a one-off adjustment and no indexation. Yes, indeed. I will not go into that any further, because I am sure that colleagues will come in on that. I would like to thank you for the answer so far, and I will open out the committee session to colleagues. The first person to ask questions will be Richard, to be followed by Mark. I would like to return to the future of the Fiscal Commission. I accept what you said, Cabinet Secretary, about the role of the OBR in effect. It is using Treasury forecasts in terms of its work, but it strives to be that, just because the OBR is doing it that way, it is not necessarily going to be the best system for Scotland in itself. Also, we know how important having accurate forecasting will be for our own fiscal policy going forward. On that basis, would it not make sense to empower the Fiscal Commission to generate its own forecasts for two reasons. First, because if it is going to review the Government's forecasts, surely it needs to have its own forecasting role itself. The best way to do that would be to produce its own forecasts. It seems to me also that the experience that we just had an insight to in our visit to Stockholm was that the independent body providing forecasts and the National Institute for Economic Research, those forecasts were not wildly different from the Government's forecasts, but there seems to be a good check and balance in terms of providing accurate forecasts. Is not that something that would be worthy for the consideration given the Fiscal Commission that role as it goes forward? I do not want at this stage, convener, to close down any discussion on this point. There is a consultation under way, so I happen to be in front of the committee midway through a consultation process. I am giving my opinions as they are today, but I stress that the outset of answering Mr Baker's question. I do not want to, perhaps should have said this in my answer to your questions, convener. I do not want in any way my remarks today to be perceived as closing down particular options, and I will consider all of those questions. I think that Mr Troup's comments to the committee are helpful in the sense that they clarify the nature of the OBR process. When I look at the example that Mr Baker has given me about the example in Sweden, essentially what that involves is the Government doing the work and the Fiscal Commission doing the same amount of work. That is rather resource intensive, whereas the way that I have taken things forward is to say that the Government will do the work, but I will ensure that the Fiscal Commission has the ability and the capability to interrogate and scrutinise all of the work that the Government does to its independent satisfaction. I have acknowledged really quite clearly today that I would be unable to sustain a fiscal forecast that was different to the conclusions that were arrived at by the Fiscal Commission. I think that it is a pragmatic question about whether we need to set up I would have to do the work, because I am the finance minister and I have to do the work to calculate what I think is going to be in the forecast. The question is, do we need to set up a comparable infrastructure to the one that I have to use to generate these numbers, or can we give the Fiscal Commission absolute access to everything that we do and every way that we do it, so that it can verify that there is a robust process and that it arrives at a reasonable assessment as a consequence. I politically make it clear to Parliament that I essentially accept that what the Fiscal Commission says has a veto on my projections. I thank the cabinet secretary for his answer and I also appreciate the point that he has made that we are midway through the commission and I am grateful that he is not wishing to close off any avenues or any considerations around what comes back in that consultation process at this point. I think that it is worth saying that there are obviously examples across Europe where what is being used by such bodies is in fact independent forecasting rather than the Government's own forecasting. One of the issues that has come up again and again, and the convener mentioned it too, is access to data. Indeed, the Scottish Government's own officials came at one point and said that they had problems accessing certain data from the UK Treasury from HMRC. Is that something that the cabinet secretary has raised with the chancellor directly or is that something that you think would be worth raising with him because having access to appropriate data for the Fiscal Commission and indeed for the Scottish Government is going to be crucial moving forward? Before I answer that question, can I just highlight one of the points that the Swedish Fiscal Policy Council made to the committee in written evidence in 2013, in which it said that its role is not to make economic forecasts or budget estimates but instead to assess and make independent judgments? I am not quite sure that the Swedish Fiscal Commission is... The Fiscal Commission is the one forecast made by the National Institute of Economic Research, which is a separate body from the Government's agency, because that is a separate body from the Government who made their own forecasts. That might provide... In a sense, I suspect that some of that is dealt with by the arrangements that we have in place for the verification work that is undertaken by the Fiscal Commission. As I said, we can consider those points. On the question about data, we regularly discuss with the UK Government questions of data access. In my discussions with the chancellor, I have not personally raised those, but they are essentially part of the official discussion that we have about having available to us the quality of data. Of course, that was an implicit part of the discussions that took place around the block grant adjustment on land and build those transaction tax, because I was clearly advancing a set of forecasts based on an evidenced model that I thought was of superior quality to what I was dealing with from the UK Government. We will, of course, continue to advance that argument, because we need to have that quality of information. Of course, when it comes to, as I said to the convener, the issues around, particularly, income tax calculation and VT as a nation, there is a necessity for us to have really good quality data in that respect. I think that you have already touched on the importance of having transparency around the mechanisms at which the various issues are decided and could mean a no-detriment policy. Do you agree, cabinet secretary, that, in terms of how the mechanisms function between the two Governments, that there is regular reporting by yourself to the committee on their operation and, indeed, by the chancellor or the appropriate ministers at the UK level to committees in Westminster? Yes. I think that the mechanisms have got to function more effectively than they have functioned. The Joint Checker Committee has not met since 2012, and I think that that is deeply unacceptable. However, I think that it did not meet, over that paper, for a whole variety of reasons, probably not least of which the referendum was happening. I think that there was a difficulty of getting a meeting of minds around the table, if I could put it that, as gently as that. However, that has to be a meaningful framework. I spent a long time discussing with UK ministers, along with Mr Crawford, the remit of the Joint Checker Committee, because I was determined that the Joint Checker Committee operated on a different basis to how the statement of funding policy has arrived at, where the statement of funding policy is discussed with me, but it is agreed between the chancellor and the secretary of state for Scotland, and I am not a party to its agreement. I find that absurd. The Joint Checker Committee has got to operate on some basis that gives me some ability to be able to get to a point of agreement, as opposed to agreement being explained as where the Treasury has decided that this is the way that it is going to be, and that is what gets applied. The Joint Checker Committee has worked—the line of argument that I have taken has been to get that committee to create a mechanism that fulfills what the Prime Minister said in his speech the day after the election, where he said that he intended to govern on the basis of respect. Those principles need to be applied into the workings of the Joint Checker Committee to make it meaningful. I absolutely accept that there has to be transparent reporting to both parliaments in that respect. On the issue around transparency in the operation of the Barnett formula, we took evidence last week from Professor Alan Trench and from David Phillips of the IFS. Professor Trench said that, in relation to this year's budget, there is no particular reason why historic data could not be provided. David Phillips of the IFS said that he had managed to get hold of the spreadsheets that the UK Government uses to do the calculations, and could not see a reason why, subject to people agreeing with it, they should not be published on the day of the budget. Have you made any representations to the UK Government around publishing the Barnett information, and do you think that they should publish it alongside the July budget that we are expecting to take place? I do not really see any reason why not. I think that I would perhaps have to explore what other information was being sought here, but certainly what the director general of finance receives on the day of the budget from the UK Government is a spreadsheet that shows the changes that are being announced by the chancellor to public expenditure and how it is judged by the treasury to be applied through the Barnett formula. That will go through a number of budget, and it varies depending on the degree of change that is being announced. It goes through the different budget lines. It goes through the currency, CdL, RdL, OdL, AME. It sets out the perspective of those changes for future years. For me, that is a crucial document, because that gets poured over by my officials to make sure that it is a proper reflection of what has been announced in the House of Commons, and that it takes into account all the changes that we would consider them to be done. We then also verify that, when it comes to the various technical mechanisms for the transfer of that money, that that is scrutinised as well so that we do not have a public announcement level and a technical change level to budget arrangements in the House of Commons that are different. For the record, my experience has never been a difference on those points, but we do that verification nonetheless. I am not sure, and then the comparability factors are in the statement of policy, which is already published. I would certainly be happy to explore what more information individuals believe should be published to enable that judgment to be arrived at, and what I eventually report to Parliament. When I report to Parliament that I believe the consequentials from the budget to be x and y, that is as a product. I probably don't publish the letter that comes from a Treasury official to the director general of finance. I can see no reason why that could not be published on the day of the budget. I certainly would have no objections, but I would have to accept that that is a correspondence—a Government to Government correspondence. I would have to check that that was able to be published with Treasury consent, but I do not see any reason why that could not be published. Further on the issue of transparency, you have highlighted the discussions that you had around LBTT and the block grant adjustments. In terms of the lead-up to the decisions being taken, there was obviously a change made at a UK level that altered those discussions materially. Has there been any indication around the approach that the Treasury is likely to take, given the significant change to tax powers being devolved that it is likely to come as a result of Smith, but also with the Scottish rate of income tax that is coming in advance of that, around how the budget process works, because I know that there have been some frustrations expressed around the ability of the chancellor to stand at the dispatch box and produce a rabbit from the hat that nobody expects, while this Parliament itself is in the middle of a consultation around rates and bandings? I have not explored that with the chancellor. To be fair, the chancellor operates within a United Kingdom parliamentary environment around budget handling, and I operate in a Scottish Parliament environment for budget handling, and they are very different. It is not for me to say to the chancellor that you have to change entirely your whole way of budget handling in the United Kingdom, because the Scottish Parliament does it this way. I could certainly make that argument, but we will see how I get on with that one. There are perhaps some questions that this Parliament needs to think about, given the fact that we are taking an increasing number of tax decisions, the extent to which the Parliament is confident that its arrangements probably protect Scotland from what the committee has looked at in the past of the question of gaming. I think that the committee used that terminology. Are our arrangements in some way able to be undermined because of the ability to exercise some decision making in a different Westminster context? I am just leading on from that into the intergovernmental relations point. The IFS last week seemed fairly certain that the Treasury would adapt itself to the new circumstances of devolved tax powers, but other evidence that we have received suggested that it was unlikely that the Treasury would change the way that it does things, and I think that you might have been hinting at that with your answer. Do you think that the way that the intergovernmental relations are developed and how formalised they are might have a greater influence on Treasury behaviour? I think that this is a cultural question. I think that it is a question of whether or not it can be accepted that the view that we put forward as a devolved administration or that we may be able to arrive at as a proposition could have as much, if not more, validity than something produced by the Treasury. That is a really deep cultural question. That is what I will be expecting to come out of this process. We cannot satisfactorily operate on the basis that we just have to accept what the Treasury says. If that was the case, why would we bother developing better and more informed mechanisms if we just had to accept what the Treasury said as the last word? I think that there is a cultural question. You can have all the rules that you want. I fought very hard to get the Joint Exchequer Committee remit structured around the basis that we should arrive at an agreement about the issues. To me, that is the right way that it should be structured. I have accepted to Mr Baker that I cannot say that the Joint Exchequer Committee has functioned in a proper and effective fashion since it was established, other than to get to that point, because the agreement that we reached about the block grant adjustment and landability of this transaction tax was a one-to-one discussion between myself and the former chief secretary to the Treasury. If we are going to have good orderly transparent arrangements that we can report upon to Parliament, as Mr Baker was correctly arguing for, then we have to have a basis of working that accepts that there may actually be a better way of doing this than the way suggested by the Treasury. Finally, on to the no detriment principle. You are given an articulation of how the no detriment one works, because there is no detriment one and there is no detriment two. If that is applied, there could be the more mechanical process in terms of calculation of future Barnett formula. There has been a lot of discussion about how no detriment two can work in principle and in practice. That is essentially that, through the exercising of policy, there should not be a detriment created and if there is, there may need to be some compensatory factor. Some of the discussion is revolved around how you could determine cause and effect that a policy taken had been the ultimate factor in a detriment being created, but also at what point the detriment would materialise, because it could be that a decision—if you take APD, for example, as a very obvious example—a decision on APD that is taken in Scotland could be argued to have a detrimental impact to perhaps Northern England airports, and there has been some discussion as to whether that would be the case. It could be that any detriment that is created real or otherwise does not materialise until several years down the line. At what point, then, does the compensatory mechanism kick in? Have you given any thought as to how no detriment two can work in practice? I think that no detriment two is fraught with difficulty. I think that it is perfectly conceivable how no detriment one operates. It is a transfer of power and responsibility, and there is a financial adjustment that has to be made there. It has to be agreed, and I think that that is a tangible way to proceed. I think that there are two principal arguments against no detriment two. One is that it is almost impossibility to agree without significant dispute and debate, and I think that the IFS made that point very clearly to the committee in its evidence last week. Secondly, there is a philosophical question about whether it is justified or not, because if we are taking on a responsibility and we make a success of it, then we should bear the fruit of that, I would have said, and if we get it wrong, then we have to bear the consequences of that. I am confident that if we operated on the basis of whether we exercised our responsibility, it was devolved to us and we did not get it right, and we then went to the IT Kingdom Government to say that we did not get it right and we would like some support to deal with that. The UK Government would say that it would not. I think that it undermines the point of devolution that there should be the ability for there to be any consequential account taken of the implications. The one possible exception to all of this is the question of for stalling, where the UK Government accepted that the actions that they took in changing stamp duty land tax when they did would have an effect on our revenue generation in the year 1 of LBTT. That is where they have accepted a direct financial consequence of their actions at the moment of devolution, which has been taken into account in the for stalling discussions. It feeds into some of the evidence that Professor Heald had offered to the committee around the potential, as you have mentioned, for tax gaming. Given that the Treasury itself would have a much wider array of income leavers at its disposal, it could make changes that might material affect Scotland, but it could compensate for them through other taxes, which were not at the behest of the Scottish Parliament to change in order to perhaps offset any detriment that was created. I think that that gets us on to a wider discussion about the appropriate levels of powers and responsibilities that are held by the Scottish Parliament. Mr McDonnell will not be surprised that he and I share a view that those powers are responsible that they should be broader than they currently are, which enables a Parliament and a Government to take a broader range of decisions that are reflective of the circumstances in which we find ourselves. However, I do not think that that could be captured in the no detriment principle. It is essentially captured in the approach that is then taken to public expenditure, and that would apply through the Barnett formula. At the time of the vow, to paraphrase it, Scotland would become one of the most, or the most, devolved fiscal region in the world. That, I think, suggests politically, at least, that there is quite a high expectation of Scotland given those extra powers. In the Cusperch recent paper, there is a concern about only being given power over one tax and being responsible for living within our means without being given responsibility for the ability to grow the economy of further powers. That is certainly something that has been in the chamber here and arguments that the Government has made that Smith commission does not go far enough. Are we in a position now in these negotiations to correct any of that or to raise those issues? We have that opportunity. When the Prime Minister came to Edinburgh a few weeks ago to meet the First Minister and myself, he agreed to consider further proposals that we would put to the UK Government beyond the agreement of the Smith commission, and the Scottish Government will supply those points and proposals to the UK Government. They would be along the lines of the points that Gina Huckabee raises about needing to establish greater balance within the proposals that emerge from the Smith commission. Do you accept that, if Smith was enacted as it is, Scotland potentially could be worse off? What the Smith commission report does is that it places greater responsibility on the Scottish Parliament and the Scottish Government, and it conveys greater risk to the Scottish Parliament and the Scottish Government. Therefore, we have to have in place the mechanisms to enable us to balance that risk and to ensure that risk is effectively and carefully managed for the benefit of the people of Scotland. Criticism has been that the Smith proposals were put together very quickly, perhaps too quickly, and were ill-considered in a sense. Do you feel that that process is still going too quickly? Do you believe that there will be enough time given to negotiate into a better set of proposals? I cannot prejudge what consideration the UK Government will give to the additional proposals that we make to extend the powers of the Smith commission, but I can only take the Prime Minister at his word that he said that he would look at them in good faith and consider them. The parliamentary process for the handling of the legislation on the Smith commission report is becoming slightly clearer to us. It is not absolutely crystal clear, but it is becoming slightly clearer. There will be a legislative process at United Kingdom level, which will be taking place over the next few months. We will have to wait and see exactly the time that is allocated for that to make sure that it is done properly and adequately. There will be a couple of other major issues that will affect the handling of the issue and whether appropriate time is given to them, which will relate principally to the fiscal framework and its significance in relation to a legislative consent motion that this Parliament will be asked to support. I have been absolutely crystal clear with the committee and the UK Government that we will not put a legislative consent motion to the Parliament until such time as we have an acceptable fiscal framework in place. We have to make sure that there are a lot of big issues in the fiscal framework, as the committee is quite understandably hearing about, and we need to have the opportunity to properly consider those questions. On that point, if the case was that what you were proposing and was accepted by the Scottish Parliament as a proposal was rejected by the Westminster Government, what happens after that? Would the Parliament have to live under the Smith as accepted by Westminster or put forward by Westminster, regardless of whether we were in agreement with it or not? It would depend on a number of things. It would depend on whether the Parliament was prepared to pass a legislative consent motion. That would be one important point. If the Parliament was not prepared to, the question would then be for the UK Government if they were going to ignore the Sule convention and apply those changes without the consent of the Scottish Parliament. That has never happened before, so we would be in new territory. I think that that should be avoided. Perhaps I could just ask one more thing. The Smith commission, as I assume, is unacceptable to you, or do you see it as unworkable as it currently stands, without developing further powers? No. My position on the Smith commission is that the Government accepts its conclusions as a further devolution of additional responsibilities to the Scottish Parliament. It has to be translated in full into legislation, which it was not in January in the draft clauses and it was not last Thursday with the publication of the Scotland Bill. That process has to be completed satisfactorily. There has to be a fiscal framework that goes with it that enables the Scottish Parliament to exercise those responsibilities with due ability to deal with the increased risk that we are carrying by the exercise of those responsibilities. Those will be two key judgments in how we take forward our handling of the issue. You have a couple of questions on block grant adjustment already in relation to Smith. Block grant adjustment in relation to LBTT and landfill tax for 2016-17, where are we with that at the moment? We have no agreement in place and no discussions have happened about it. Are there any discussions on the agenda? Is there a meeting lined up in order to do that? I suspect that they will be part of the discussions that we have about the wider fiscal framework. One of the points that the Treasury ministers were anxious to ensure was that there was no essentially a read across from the one-year discussion that we had about 15-16 into wider provisions. Assignment of VAT, we have really been told by experts that there are two broad ways of doing it. You can do it by place of consumption or place of production. We have not really heard an alternative to either of those two. Does the Scottish Government have a view at this stage on how VAT ought to be assigned? One of the issues is that I will be looking carefully at the implications of different methodologies as part of the discussions that I have with the UK Government on this question. As a matter of principle that you do not have a view at this stage and whether it should be one of the... I am sure that Mr Brown will understand that it is a rather material point to negotiation. You were asked by the convener a little bit about borrowing and you gave some of the background to the issues that would have to be considered about borrowing with Smith powers and anything else. Does the Scottish Government have a view at this stage on the likely quantum, the likely amounts, or are you just really talking about principles? I set out earlier on the principles that I think have to be taken into account. We have a borrowing regime that enables us to borrow for capital investment purposes in addition to our CDL allocation. Secondly, we have to have the ability to borrow for the revenue risk that arises out of exercising the degree of responsibilities that we are carrying. Thirdly, there has to be sufficient flexibility for the Scottish Government to make judgments about the most appropriate level of borrowing, notwithstanding the fact that I accept that we have to operate within the constraints of the UK fiscal environment. The principles are clear, but the Scottish President does not have a view or is not willing to put on the record a view of what sort of figures you might be talking about. As a matter of principle, you have said that you are living within the limits and so on, so you do not think that you would get terribly far. As a matter of principle, do you think that the Scottish Government should have unlimited borrowing powers, or at least limited only by the markets or those who would be prepared to lend to you, or should there be some form of limit put into whatever fiscal agreement is reached? Philosophically, I believe that the Scottish Government should be free to exercise appropriate and sustainable borrowing limited by its own judgments. That is philosophically where I come from. However, I accept that there is a UK fiscal framework, a UK fiscal mandate and that there is a political outlook of the UK Government that I cannot ignore in terms of trying to give the committee answers to what I think is going to be realistic settlements of the borrowing question. I have heard three theories at the committee about whether or not the Scottish Government borrowing should be underwritten ultimately by the UK Government. Some have said that it should be underwritten, some have said that it should not be underwritten at all and others have suggested that it should be underwritten to a certain limit, but anything above that limit is publicly not underwritten. Does the Scottish Government have a view on whether some or all borrowing should ultimately be underwritten? My view is that the Scottish Government should only undertake borrowing that it considers to be sustainable. Therefore, the judgments that we arrive at have got to be sustainable fiscal judgments about the borrowing that we incur. I think that everybody would accept that point. Should there be in the kind of fiscal framework explicit that ultimately it is underwritten? Markets will obviously take a view and that could reflect the rates and so on. Should it ultimately be underwritten by the UK Government or should there be something within the fiscal framework that says that it is not underwritten? That is entirely a matter of judgment for the Scottish Government. I think that that is a very material point of negotiation within the fiscal framework. I am here to be as helpful as I can, but there is a negotiation to be undertaken. In terms of other points, you have been asked by a number of members about the fiscal commission. You have said that there is a consultation going on just now and that you are listening and open to ideas. It may have been an unfair impression, but the impression that I got from you was that you actually had pretty fixed views about forecasts. I am giving you a chance to perhaps my interpretation was unfair and incredible. I did get the impression that you do have fixed views on whether or not there should be independent forecasts. I have given the committee the caveat that there is a consultation under way and I am looking at it. Equally, I cannot deny that I have come to the committee relatively recently and given a pretty firm view that I believe that the Government should do the forecasts and the fiscal commission should challenge them and verify them. That is a crystallisation of my position, but I am open to consideration of the issues. Many of the judgments that I have to manage is whether costs within the public sector are justifiable. I have to incur the cost of having in place the necessary expertise to provide me with robust fiscal forecasts. Essentially, some of the debate is inviting me to do is to make provision for that twice. Generally, I do not like making provision for things twice within the public purse. Generally, the finance committee does not approve of that in its scrutiny of my actions. I am simply saying that I am trying to take a pragmatic way that enables the work to be done for it to be challenged, scrutinised, investigated, interrogated and, ultimately, to have the ability to say that it is vetoed without us incurring the cost twice. That is my pragmatic view. If the committee takes a different view to that, I will of course consider that. If the consultation exercise takes a different view. Ultimately, I am the person who has to defend the cost involved in doing that exercise twice. 99.9 per cent of the time, I am with you. That is always an exception. Prove the rule, isn't it? For me, it is about making sure that there is backup and that there are checks and balances. When you are only talking about two taxes, for example, the consequences of getting it wrong are smaller. Once we get to a stage where there is income tax, for example, where there is assignation of VAT and so on, the consequences of getting it wrong grow. The point that was made to us pretty strongly by NIR in Sweden was that, in their view, it was extremely difficult to validate somebody else's forecast if he hadn't done his own forecast initially. They felt that, if he hadn't done a reasonable amount of the workings and thought carefully about the models and the assumptions, he would be hampered in judging somebody else's forecast by simply looking over their workings. Let me make two points in relation to that. The first point is to go back to the point, one of the points that Mr Baker made about the discussions—I think it was Mr Baker, or maybe the convener—about the fact that, when the Swedish exercise was done by both parties, there was very little difference, if any, between the forecasts. One of the points that was actually made by the Government was that the fact that another body was doing those forecasts made them much tighter in terms of their own forecasting and made them much more disciplined and accurate in terms of their own forecasting, because they knew that there was another body looking over their shoulders, so to speak, looking at the same data, coming to maybe much the same conclusions, but it tightened up their operation and enabled the forecast to be more accurate because they knew that there was an independent body with full access to the media and well respected that could do that. That brings me to my second point, which is the way in which the Fiscal Commission has operated to date and how it can operate in the future. During the summer of last year, I did not just send the Fiscal Commission a sheet of paper and say how do you like these numbers. The Fiscal Commission had the opportunity to interrogate the model that we had put in place to calculate these taxes and to scrutinise that to their satisfaction. I make it absolutely clear in the record today that anything the Fiscal Commission would want us to ask to their satisfaction, they can ask us and can scrutinise and interrogate about our approach. Ultimately, I accept that the Fiscal Commission has the ability to go to Parliament and obviously to the media and say that we do not have confidence in the forecast that the finance secretary has put forward. For me, that is disastrous news if that was the outcome. Exactly the points that you make, convener, about my officials and myself having to operate on the basis that we are subject to very firm scrutiny on this question and that we have to be reliable and robust about what we are doing is the obligation that the Fiscal Commission places upon us. I will not dwell on that because, for the simple fact, I think that it will be a far longer debate for another day at the end of the consultation period. Just to say the view, I think that there will be a better position to judge your forecast, in my view, if they have done some of their own workings, too. For LBTT and landfill, we basically got a statement saying that we endorse these as reasonable. I did not get the impression from them that they could have come up with alternative numbers. They could have questioned some of your assumptions, but my firm impression was that they could not have come up with £250 million instead of £260 million or so on. I profoundly disagree with that point. This is a significant point for us to have, because it gets to the nub of what I think has gone on here. If the Fiscal Commission has said, we believe that if there were two extra letters in that sentence, we believe that those figures to be unreasonable, then I would have to go back and run the numbers again. That is all that it would have taken for them to say that we believe that they are unreasonable, and I am back to the drawing board. I profoundly disagree with the argument that there is nothing else that the Fiscal Commission could do, because I would have then had to go away and work on those numbers to get to a point where the Fiscal Commission had the confidence to tell Parliament that those numbers were reasonable. They are accurate, or they are not accurate to the degree that they perhaps should be? The Fiscal Commission, by the use of that terminology, was giving a clean bill of health to the estimates that the Government had put forward. That is what we asked them to do, and that is what they did. If they did not think that that was the case, they would have said so. Pick another number. For example, you said that we think that it is going to be £250 million that we will collect. My impression was that they would not have been in a position to say, no, we think that it is £270 million, or we think that it is £230 million. My impression was that they could simply look at the modelling and say, yes, that seems reasonable. My impression was that they could not come up with an alternative figure. I may be wrong, but that was a pretty firm impression that I got. They could have asked us to look again at particular assumptions, and we could have run the numbers again. If they said that we think that your estimates about property price growth in Scotland are wrong go away and do it for x per cent rather than y per cent, we would of course run the numbers. Because of the interrogation that they had undertaken of the model, they would know all of the assumptions that would underpin the model that we had put together. They could have challenged anyone about property prices, about number of transactions, about value of properties, about incidents of sales. They could have challenged any of that and got us to run alternative numbers. I will not do that. I mean, we clearly disagree slightly, but I think that it is something that we can explore in greater detail when that is the only item. In terms of the other question that the convener did put you about, the Fiscal Commission, though, was the idea that they could give some kind of commentary on the fiscal performance of the Government. I think that you seemed to resist that because you felt that it was a role of Parliament. I simply put the question, though. Do you not think that the OBR doing that has enhanced parliamentary scrutiny at a UK level as opposed to detracting or somehow usurping parliamentary scrutiny? I think that the way that I responded to that earlier on, I think, was in the context of an assessment of proposals and policies, which, to me, is the territory of Parliament. That is what Parliament should be considering. Essentially, undertaking independent economic forecasts is a perfectly permissible role for a Fiscal Commission to undertake. One of the points that struck me about the committee's consideration of the concept of the Fiscal Commission some time ago was that the committee wished the Fiscal Commission to be established, which I reflected in the way in which it was taken forward. The fact that it was going to have responsibility to look over just two taxes at that time—land and buildings transaction tax and landfill tax—was that we remained open to developing the role of the commission as our responsibilities were extended. That is the basis on which the consultation paper has been constructed and the draft bill has been set out. In terms of no detriment or no detriment to, as it seems to have been called now, you said earlier—I've written this down—that it's fraught with difficulty your questioning whether it's justified and so on. Did you make those points during the Smith discussions? Obviously, it was in the agreement that you were involved in that agreement. Did you make those points at that time, or have you now looked at it and thought, actually, that this is a bit more tricky than we first thought? What's your stance on that? The words of the Fiscal of the Smith commission are words that I signed up to at that time. As I have looked at—certainly, what I would say I had—that I thought was the most important issue, because it was uppermost in my mind in terms of what I contributed to the Smith commission, was about block grant adjustment, because it was a particularly—well, I think I've made it clear to the committee—it's been a pretty fraught process. Essentially, the primary consideration that I had was to make sure that that was correct. As I now look at the detail of the Smith commission report and the concept of there being some further calculation beyond, I think that that's a calculation that is more fraught with difficulty. In terms of the block grant adjustment, you said that, starting with LBBT, originally there was no indexation, but you've proposed indexation to the GDP deflator. Was that not always implicit in it, or are you saying that the original idea was that it would just be that sum of money always not even uprated for inflation? In the command paper that was published to implement the Kalman commission report, I don't have the precise wording in front of me, but I've provided it to the committee before. The wording was something like, there shall be a one-off adjustment when these taxes are devolved, and that was it. I interpreted one-off adjustment to be a cash sum that was debited, and that was it. The UK Government then opened up the argument about indexation. Indexation to the GDP deflator is really too much of a departure from what was originally proposed. It does seem quite reasonable. It was an attempt by me to try to get some agreement of a reasonable basis for proceeding in the block grant adjustment, in which I thought that I was perfectly entitled, and Parliament could have required me to hold out for what was in the words of the command paper, because that was the basis upon which the legislative consent motion was given by the last Parliament to the Kalman commission proposals. Obviously, we do need indexation for the income tax powers, and for the SRT, I think that it's to the income tax base of the rest of the UK. Is that your favourite option for Smith? I mean, there's been some discussion of indexing it to the revenues rather than the base, do you have a view on that one? What we successfully argued during the Kalman commission proposals that we should move to what was essentially the hotel mechanism, and we argued for that, and we secured agreement on that. We think that that's the most robust mechanism for doing that. That's the base, so you would want to do that for Smith as well. I suppose that one of the other issues that's come up a bit in the evidence is how population changes should be taken into account. Should it be per head or should we just allow for the fact that we want to get the benefits of growing our population if we can do that? That's in a sense that some of that gets into the no detriment to argument, that if we are growing our population and there are benefits arising from that, I think that we should see the fruits of that. It also relates to the wider argument about fiscal responsibilities and how we should be able to exercise those to ensure that we retain the benefits of growth in the population within Scotland. So the corollary of that is that you wouldn't seek to be protected from the possibility that the rest of the UK population will expand more quickly than Scotland's? I think that this is another of the wider range of risks that we take on as a consequence of those responsibilities. If we are taking on those risks, we have to have mechanisms in place that enable us to manage those risks and to deal with those risks as different outcomes begin to materialise. When you propose new taxes, the most striking one recently has been national insurance. Do you work out a policy position on block grant adjustment as part of that? Obviously, that could work positively or negatively in various ways. In saying some of this goes back to what my answer to Gavin Brown about 2016-17 on block grant adjustment, we don't have an established block grant adjustment methodology for the devolution of the new taxes. We've come to an arrangement about 2015-16 but we don't have a mechanism in place for later years and that's essentially the core of the fiscal framework that's got to wrestle with those questions. Can I just ask you—I don't know if this is strictly relevant but I'm curious about the national insurance—is that just more revenue that would be spent on anything or is it particularly tied to the devolution of particular powers? It's about providing us with the ability to influence one of the key costs of employment that employers will wrestle with and to try to use that to encourage and to boost employment within Scotland. So it wouldn't be tied particularly to the devolution of particular welfare powers? No. Sorry, that was probably not strictly speaking relevant. I mean, you said in Smith that you were mainly focusing on the block grant adjustment. I mean, I don't suppose you want to be coupled too often with George Osborne but it appears that he was saying the same thing when he gave evidence in the Treasury Committee and that he was relaxed about tax competition and it was mainly about the block grant adjustment. So do you think that there's going to be much disagreement around that particular issue of no detriment? Well, I took some encouragement from the Chancellor's comments to the Treasury Select Committee that he and I were perhaps looking at the same issues and dilemmas and how difficult it would be to calculate those. I think that the IFS quite correctly highlighted that there's a lot of difficulty contained in some of those arguments. But was it clear from the discussions of the Smith Committee that they did have a much broader view of it? I think that what the Smith Commission was looking at was, yes, the block grant adjustment, but secondly, the fact that if we took particular policy actions and we made a success of them, we bore the fruit of them and if we took bad decisions, we carried the risks of that. I think that that's what was in the Smith Commission's mind. I don't think that there was a sense and the point about, you know, there's been a fair no detriment application, no detriment principle, which I think, my judgment of that at the time was that members of the Smith Commission were looking at that from the point of view of what happens when the power gets transferred, that you don't get it transferred with an advantage or a disadvantage, you get it transferred neutral. Okay, now we're interested obviously in transparency and how the negotiations take place, but I suppose that I was also interested in what you said about, you know, the legislative consent motion around the fiscal framework. So, I mean, is it kind of guaranteed from the UK Government that they won't seek to introduce any of the things that we've been talking about into the legislation, which will obviously be the preserve of the UK Parliament, or if they do that, that those bits of the legislation would require a legislative consent motion. Has all that been agreed, as it were? Essentially, what has been agreed by the UK Government and the Scottish Government is that we intend to implement the Smith Commission recommendation that there requires to be a fiscal framework put in place. That has not been proposed to be put into statute, and it certainly doesn't form part of the Scotland Bill that's been published. So, and that is really what work has been, what the Chancellor and I discussed in March, is what's been going on in discussions between officials while the United Kingdom Parliament was dissolved, and it's what really will be picked up now. I've also equally been clear with the UK Government that the fiscal framework has to be in place before we ask Parliament to consider a legislative consent motion because of the significance of the issues within the fiscal framework that would affect Parliament's view on whether it wishes to give legislative consent or not. I mean, do you see the Joint Exchequer Committee having a role in this, or is it just going to be minister to minister, basically? I think there could be a meaningful role for the Joint Exchequer Committee. Essentially, the dialogue that's going to take place about the fiscal framework will be amongst the players who are the members of the Joint Exchequer Committee. Whether we call them Joint Exchequer Committee meetings or not, I think it's perhaps relevant to answering Mr Baker's point about what's the transparency about those negotiations, but, largely, I expect those discussions to involve the chancellor, the chief secretary and myself. Any transparency around that? I mean, will there be any publication of what happens? What I've said to the committee before is that I want to be as open as I possibly can be with the committee, notwithstanding the requirement to conduct a negotiation with the UK ministers. This is probably stretching it a bit as well, but I was interested in your letter on the NPD hub programme, and I wondered if that kind of classification of expenditure is public or private. Do you see that as having any relevance to negotiations with the UK Government, or are they just being affected by the same requirements from Europe anyway? They are, yes. They've got the same issues and the same relationship to the Office for National Statistics in coming to have you in these matters. Would it have any effect, eventually, on the Barnett formula, if some of those things are classified as public expenditure rather than private expenditure? No, they are. Thanks, convener. Last but not least, cabinet secretary, I thought you were very generous to the Westminster system as a whole when you said that you didn't expect them to change really much, given despite the fact that the whole of the UK now is facing a different system with budgets and all the rest of it. I mean, I just wonder if we are storing up problems for ourselves, because if we take something like income tax, they control the whole income tax system, they set the bottom rate, which is effectively the personal allowance, which is effectively a nil rate band, and yet we are expected to set our budget first and somehow hope that that nil rate band and the rest of the system won't have too much of an impact on us. And potentially we set our budget and then they come along and do something in March, completely different, hits our budget. I mean, would we then have to go back in April or May with a supplementary budget? I think, I don't want in any way to suggest that I find this acceptable. I kind of come to the view, it's the reality of what I put us out there. You know, there's a UK government that can has a different budgetary framework to the Scottish Parliament. The Scottish Parliament could decide to change its budgetary framework to give us more of a chance to operate on a level playing field with the UK government, and that would obviously be up to the Parliament to determine if that was the case, so that Parliament was able to exercise. Now that we've got wider responsibilities, we would be able to exercise them in a different fashion to the way in which they have been historically exercised. So I think there are ways in which the Parliament can decide to react to those. They are not really issues for me to initiate. I'm servant of Parliament on those questions, but I think it's certainly a question that the France Committee could consider if it wished to do so. Yeah, so you certainly wouldn't object if we were to say quite strongly that we felt that really the UK should be setting the bigger framework first and then we should be building on that. That would be a reasonable position to go. I mean, we had some quite strong evidence from some of the witnesses we had. Professor Jeffrey said that really England needed to be disaggregated from the UK, certainly for budget purposes, if we were going to really make the system as a whole kind of work. I mean, is that again something that you would think was positive? I think there's going to be a whole series of dynamics that will arise out of the changes to the financial arrangements that will follow from the changes to the constitutional arrangements. That's why I don't think that the process of constitutional change has in any way reached a conclusion because there will be more issues that get raised out of the application of first the Kalman powers and then the Smith powers, which will require further consideration. I mean, we've talked a bit and you've said yourself how important it is to reach agreement with the Treasury, but I mean, we are in a devolved situation and it seems to me that the power still remains with the Treasury and at Westminster given that. But again, we've had witnesses who have said when there are disagreements and disputes, there should be an independent arbiter who could then say, well, this is, you know, you're saying the block grant adjustment should be X, the Treasury is saying it should be Y, the arbiter decides that it's somewhere in the middle or whatever. Is that a possibility? I think that there is a case for that because I'm expressing the hope here that listening to the Prime Minister talking about the fact that he governs with respect to the devolved administrations, well that view must take into account the fact that his government may not always be correct in the judgments it comes to. And, you know, I simply cite that, you know, I wasn't, when it came to the block grant adjustment on land and buildings transaction tax, I wasn't simply saying, you know, the Treasury weren't saying here's a number of 526 million and I was saying, oh, I've got another number, it's 461 million and I haven't any basis for coming to that number. I had an entire model based on Scottish property transactions, which they didn't have, which built up a position of what I believe was a reasonable estimate based on the actual property market in Scotland. So, I think that that should have been taken more into account than just saying, well, you know, we've got this gap. I felt we're a much superior model that would allow us to make a judgment about the amount of revenue that would be generated. But, I mean, at the moment, the reality is that they're big and we're little, they've got all the power. If they've got a nice chancellor, then he'll listen to you, and if we've got a nasty chancellor, he won't. Well, I think that that doesn't take into account the Prime Minister's commitment to govern with respect, which is what we'll hold on to. Okay, that's—you're fairer than I am, I think. If you get it, I'm going to be very missed. Going back just to the Scottish Fiscal Commission, I don't know if I take a slightly different line from my colleagues on the committee, but, I mean, in the first place, I did get the impression of them that they are—have been struggling a bit with the amount of resources, not just financial resources, but people resources, and they've all had to put a bit more time into this than I think they had anticipated. And that's just with the two small taxes, although I accept they're still, I suppose, settling in. And I would have a question about the amount of resources they might need. I mean, in the first place, do you feel they've got enough resources at the moment? I've made clear to the committee and to the commission that I will be sympathetic to the resources that they require. We've set it up on the basis that it's independent of government. It's housed in the University of Glasgow. We're grateful to the University of Glasgow for their hosting of the commission. I'm very grateful to the commission for their contribution, but if they require more resources, then I will happily consider what resources they require. I mean, I've heard, obviously, the arguments from some of my colleagues that somehow it's better that, you know, we have two yourselves produced as the government produced the forecasts and then they do it as well or somebody else does it. But, I mean, it seems to me the counterargument is that if you've got very strong checks and obviously it's got to be adequately resourced, then checking on what somebody else does is equally valid. I mean, my model would tend to be Audit Scotland, who don't actually do anything themselves, but they go around government, local government, everything, looking very thoroughly at what is done and then commenting quite thoroughly. So, I mean, is that a model you see that could apply to the fiscal commission that they're doing, maybe it's not called Audit, but that kind of process of examining rather than actually doing it themselves? That's why I went through the work that we've undertaken to get confidence within the commission in the model that we had put together and I think that's how the system, in the way of which I've set it up so far and notwithstanding the fact that we're midway through a consultation and that my view isn't fixed, that's been the basis of it, that the fiscal commission were open and had the opportunity to challenge and test anything that they wished to challenge and test about our arrangements and that should be to their absolute satisfaction and they should have the resources to enable them to come to that conclusion given the fact that I accept that they've got a right to challenge utterly the projections that I bring forward. I mean, I'm just wondering, going forward, would you anticipate them perhaps giving us a little more nuanced comment on your forecasts because, for example, the points made that they've said up till now it's reasonable and you've made the point that they could say it's unreasonable. But when Audit Scotland say go in and look at Glasgow City Council, they will not just say it's good or it's bad. They'll say, well these bits are good but they've messed up on council tax or, you know, and they'll go into it in a bit more detail in their comments. I mean, would that be a kind of halfway house that, rather than the fiscal commission doing something completely different, they just gave a more detailed comment on the forecasts? I think I've cited one part of their conclusion, one sentence of it, but the fiscal commission reported more broadly on other points and made a number of other points in addition to the one that I've cited. It's a matter for the fiscal commission. They are an independent body. I don't direct the fiscal commission so it would be inappropriate for me to say what I thought they should be doing. It's entirely up to the commission to determine. So they are open able to give a more detailed. That's great, thank you. I mean, VAT has been mentioned so far and again different arguments about how it might be done, how it might be assigned. I mean, it seems to me that it's quite important that we do take account of value added in Scotland. And so, for example, I've got a biscuit factory in my constituency. All of these biscuits go south. If all of their work, if we're only looking at the consumer and who eats the biscuit and we get the vat on that, then a factory like that, which adds huge value to the input that we would not get a share of. So, I mean, it seems to me that it would be more logical that we should be getting a share of the vat at every step, not just at the final step. I think that I would acknowledge that there is a substantial area for debate on the vat question about how Assygnation takes place and that's a material part of the conversations that we've got to take forward with the UK Government. And input from the committee in terms of the setting out of issues that the committee believes should be implicit within the fiscal framework. I'm not familiar with how the committee intends to conclude its inquiry and if it intends to report shortly, but if the committee does intend to report, it would certainly be helpful to have input on the areas where the committee believes particular conclusions should be arrived at. Okay, thank you. And I think just one area, the other area I wanted to touch on was the kind of borrowing thing. I mean, we've talked about how the whole question, and you've been, I think, again, being reasonable about what you've said that our borrowing could impact on the UK and therefore it's reasonable that there's some agreement and rules about how that operates. It's also been raised with us that local government has a lot of freedom to borrow and obviously the prudential framework. And I just wonder how they fit into that picture. I mean, if we are having an agreement with Westminster and our borrowing could impact on them, then the same applies to us that local government could impact on our borrowing. I mean, I just crossed my mind, are we, do we take account of that enough when you're looking at your borrowing figures? Are you including local government borrowing within that? Government, Mr Mason, is well familiar with your operates through the prudential code, so each local authority individually has to be confident in the sustainability of the borrowing that they incur, and they are fully and internally responsible for that commitment. And they have to be mindful in coming to that judgment about the resources that are going to be at their disposal to service such borrowing commitments, which is a product of the UK fiscal framework into the bargain. So nobody is immune from it wherever they undertake their borrowing activity. A figure or some kind of rule about how much Scotland could borrow, should we have that just for the Scottish Parliament, the Scottish Government? There is no relationship today between any borrowing commitments of local government in Scotland and the borrowing arrangements that are implicit in the Kalman commission proposals. So there is no relationship there at all, so that hasn't been established. So we now essentially have a precedent. We are in 2015-16, we are able to exercise our borrowing responsibilities, and there is no relationship between the obligations that arise out of our borrowing interests with that of local government, and I don't think that there should be. Well, I suppose that that is my question, and I don't have a view on it, but I'm just wondering, because if Glasgow, which is a bigger part of Scotland than Scotland is of the UK, if it did mess it up debt-wise, we would have to bail them out, wouldn't we? Well, Glasgow City Council under the Prudential Code are entirely responsible for the sustainability of their borrowing. Is it comfortable that we can basically leave local government on one side and we just concentrate on the Parliament? That is clearly and without debate the details of the Prudential Code. Okay, thanks so much. Okay, thank you. That concludes questions from the committee. There's just one area that I just want to ask a question or two about, and that's regarding indexation and Malcolm and others. I touched on it earlier on, but I notice you mentioned that Holton was a method that you favoured, but in evidence we received, I quote, evidence that said, the imbalance between tax and population share, which is something that you've not touched on earlier, could be altered by decisions by the Government, leading to migration of top learners from north to south or vice versa. Consequently, the conclusion was indexation to changes in UK tax base. The Holton method was not suited to Scotland. I'm just wondering why you feel that is suited to Scotland. Further on, the Institute for fiscal studies considered that no method for calculating adjustments for subsequent years will meet the Smith principles. I think that I'd have to look at that in some more detail to give you a substantive answer on that. In a sense, part of what you're raising would be essentially a hypothetical consequence of policy decisions that a Scottish Government might take on tax levels. I would rather just treat it in that fashion and let me take that away and explore whether there is more that I can share with the committee that would give a more definitive view on that point. Okay, I'll just distribute more information on that. Again, the IFSC indexation to the percentage change in the rest of UK revenues will insulate Scotland from UK shocks on the neutral of Scotland's revenues growth at the same rate. However, Scotland may be adversely impacted by changes in the rest of the UK to the devolved tax. It's not just about decisions taken here, it's about elsewhere. Of course, Dr Cuthbert adds that. The method spelled out in the command paper, paragraph 2.4.14, creates an unacceptable mechanism whereby decisions that were made by the rest of UK Government could yank the Scottish Government's chain and force it to act either by increasing tax or by cutting devolved services. He's looking at, effectively, how decisions on the UK are going to affect us here. Again, we had details from IFSC about it. It was not always clear whether the 10 revenues being rigorously used or was loosely related to tax-based clarification on that is needed. I will ask him one more question in terms of that, which is changes to the personal allowance would impact on the size of the tax base. I'm just wondering how that would impact on the indexation of the block grant adjustment for income tax. In a sense, that's a material point about the debate about whether or not income tax is a fully devolved tax. The Smith commission report at paragraph 75 says that income tax will remain a shared tax. There are clearly implications of the sort that you raise, convener. You have to be reflected in the way in which we take our decisions, and they have to be reflected. There is an issue here about no detriment. In a sense, the French minister in Scotland will have equal powers over the rates of taxation to the UK counterparts, but on allowances, UK ministers will have control and Scottish ministers will have no control. The consequences of rate changes are issues that we take our decisions and we live with the consequences. Issues such as changes to allowances and some of the characteristics of tax where we have not got comparable powers raise issues of detriment. Perhaps that is a helpful way of illustrating the issue where we have a power, a comparable power or we don't, perhaps, give rise to some of the issues about detriment that need to be considered. Does that not mean that indexation is going to have to be constantly revisited? I know that you are talking about land-building transactions and so on, but Professor Ronald McDonald suggested that that alone would need to be made in reform of the ballot formula. I think that the aspiration that has come through some of the evidence that there is a mechanistic solution to all of those things is wishful thinking. The problem is that a lot of people have said that there is a circle that cannot be squared in terms of some of those things having a mechanistic system with fairness, transparency and no detriment. There is a necessity for dialogue to take forward some pretty difficult issues that will be contained within the fiscal framework. It is preferable to get them to the point where they are required as little reinterpretation or interpretation or revision in the years to come. If anyone goes into that thinking, there will be a fiscal framework and there will be no requirement for revision or reinterpretation or further debate thereafter. We are engaged in wishful thinking. Thank you very much, so that is clear. I would like to thank you for your evidence once again to take the current section. Is there any further points you want to make to committees? I thank you very much. I am going to call a recess until 11.45 to enable members to have an actual break and to have a change of witnesses. Our next item of business is to take evidence in relation to the Care of Scotland Bill's financial memorandum from the Minister for Sport, Health Improvement and Mental Health. Mr Hepburn is joined today by Dr Maureen Bruce of the Scottish Government. I welcome our witnesses to the meeting and I would like to invite Mr Hepburn to make an opening statement. Thank you very much. I am very delighted to be back before the Finance Committee. I am also grateful for the opportunity to appear before today to speak with you about the financial memorandum to the Careers Bill. As you say, I am joined today by Dr Maureen Bruce. As you know, the aim of the bill is for adult and young carers to be better supported on a more consistent basis so that they can continue to care if they so wish in good health. I am sure that this is an ambition that we all share for Scotland's carers to do this. They should have a life alongside caring. We intend to achieve this, but extending the rights of carers and young carers in law, we also want to accelerate the pace of change in order to achieve our aims. We need to resource the bill's provisions and ensure in particular that local authorities are adequately resourced. I hope today to provide you with the necessary assurance that the Government's financial estimates are as good as they can be. There are, of course, as we concede in the financial memorandum, challenges in making the estimates. Those challenges primarily arise as uptaker of the new rights will be demand-led predicting how quickly carers will take up their new rights and the numbers of carers involved present a particular challenge. A reasonable starting point must be the extent to which carers presently take up their rights. It is fair to say that the existing position or baseline is very low. The introduction of new rights does not mean a sudden reversal of this, but we will have a build-up over several years. Another important cost factor is the average unit cost of the new adult care support plan, young care statement and the support to be provided to carers. My reply to your letter to me with requested further information sets out the methodology and assumptions used to determine the average unit costs. In recognition of the challenges in estimating demand and unit costs, I see merit in further work to define the assumptions that are set out in the financial memorandum and the underpinning detail. That is why we will set up a finance-led group with key stakeholders, including carers' and carers' organisations. That group will consider cost estimates in further detail and establish a clear understanding of risks and how they can best be mitigated. The group will build on the considerable level of engagement with local authorities and NHS boards when they were all invited to complete a detailed questionnaire to help inform the financial memorandum and, as I undertook to do in my letter to convener, will keep you appraised of the work of that group. There is another factor with a possible impact on the potential cost of implementability. This relates to regulations that set out the circumstances in which charges are waived for support to carers. Some local authorities say that they are having issues with the operation of the current regulations. We are working with key stakeholders, including carers' and national carers' organisations, to find a solution of their cost implications for any mechanism that we seek to introduce at stage 2 of the bill to do with the waiving of charges. Of course, the financial memorandum would be revised to take into account any additional costs. That was set out in the original financial memorandum and I was able to re-emphasise that in my letter to you, convener. I know that my officials brought to thinking on the cost estimates. If there are a chance of building up the estimates, I do think that they could have presented their own estimates too, as they were certainly given the opportunity to do so. Indeed, that opportunity remains and perhaps can now be best taken forward through the group that I have referred to. An important point is that the existing funding through local authorities and NHS boards will remain in place. Local authorities are using resources now to support carers and should continue to do so. However, there is a significant difference between the estimates and the costs of the bill. As implemented, we will need to look at the issues again, such as the overall Scottish Government financial settlement and the options that are available to us alongside other commitments, just as we would in the setting of any budget process. I think that that is all that I have got to say at this stage, convener. Of course, I am happy to field any questions that you may have. I thank you very much. As you will know, I will start with some opening questions and then we will open out the session to colleagues around the committee. I would like to thank you first of all for the correspondence that you have engaged in with the committee. One of the areas that came up was when the bill team was asked where the cost of replacement care would be a major cost of the bill. The bill team responded and I quote, I think that it is fair to say that a further financial memorandum should be presented. Is there any intention to present a further financial memorandum at this stage? I think that that is a critical part of the process. We had set out in the financial memorandum presented that this is an issue that has arisen and I have set out in my opening statement to you, convener. That is an issue that we are exploring further. We have set out that it could be that we seek to bring forward some changes at stage 2 of the bill, so we have let the Parliament and the committee know at the outset that that is a possibility. Of course, if that involved substantial change to the terms of the original financial memorandum, then yes, of course, and as again was set out in the financial memorandum, we would present a supplementary financial memorandum. I recognise, as a former member of the committee, that it is critical for this committee to rigorously assess any of the financial implications of any of the provisions that we take forward in legislation, so that is a long way of saying, yes, there would be, convener. Obviously, we are well aware that when you produce these financial memorandums, you cannot always be absolutely spot on. We are looking at best estimates, but of course the concerns that have been brought to the committee's attention are that from many of the stakeholders they are not the best estimates. For example, you will be aware that SWS commented on the unit costs in the financial memorandum stating that the selection of the lowest and highest options is biased, and they are going to complain about the average of £176 being taken at the high end estimate. Therefore, overall, the costs themselves are lower than they believe is the actual case in reality. In fact, I have also said that, given that the FFM describes £176 as the average unit cost, it is because of the view that in presenting a range of unit costs in the financial memorandum with our unsyntics at the top range, that is misleading. Except that we are seeking to mislead anyone, certainly we would not accept that we have presented biased information. I would say at the outset that the process of gathering that information has been led by COSLA. It has been intimately involved in the gathering of the available data that we have had to work with, and that is again set out in the annex that came with my letter to you. We can only work with the information that was available and that was gathered and presented back to us, so there is no attempt to present it in a biased form. There is no attempt to present it in any other way than the clearest possible fashion. I am writing and recollecting that we concede that there are some other average costs that we have not included in the consideration, because they seem to us to be outliers. It is not only the higher figures that we did not include when we came to our estimation. We also discounted some of the lower estimates as well, so if we have included that, we could have been open to accusations of bias. I understand that there are concerns. I suppose that that is why we have set out the willingness to establish this group. We said in the financial memorandum—paragraph 7 of the financial memorandum makes it clear that, as we are willing to hear more information, we are aware that COSLA has concerns. I would say, convener, that I have met the spokesperson for health and wellbeing from COSLA and I have made the offer to him and his colleagues that if COSLA has alternative estimates, if COSLA has an alternative methodology, we are very willing to see it. Thus far, they have not sent that to us. I reiterated that offer in a letter to the spokesman and, again, we have not had that thus far. We are doing what we can to engage with COSLA to speak to them about any concerns that they have. Of course, we have invited them to take part in the finance led group as well, although, again, thus far we have not had a reply from them. I am sure that we will have one soon. When did you contact them? In terms of the finance group, we contacted them last week, I think, I am writing and saying. It is probably a bit early for them to get back to you. I would imagine that— Potentially, I should say that there are others being invited who have got back, convener. That is not a criticism of COSLA, per se. I am just making the point that the offer is there and they are yet to get back. I probably have to consult our members. One of the issues is not just the amount of money, but obviously the scale. For example, we are talking about, in terms of the adult carer support plans, being a 16 per cent increase in over five years. The North Easter Council has said that they actually expected to be 53 per cent in the first year, not as stated in the bill when carers come forward. I think that there is an issue about fact that people having their annual carer plans reviewed and that that would increase the number of people who would uptake the uptake of these resources. I think that it is not just about the amount, but it is about the scale. It is just about why is there such a— It seems to me, and I believe that other members of the committee, that there seems to be a wide divergence. It is not that there is a divergence that we expect at all bills, as you know. You have been through many of them when you were on this committee, but there does in this bill seem to be quite a tremendous differential in the range of uptake that local authorities anticipate as to the Scottish Government. I suppose that I would accept and I think that we would all accept that this is going to be demand led, so it is difficult to forecast what that demand might look like. I am sure that we will all appreciate it now. Of course, I was a former member of this committee and I know that the Finance Committee expects us to say more than that. That is what we have attempted to do, to present our best estimate. I think that the forecast that we have set out is a not unreasonable one for a variety of factors. I think that the first point that I would make is that there is at this present moment in time a very low baseline of an estimated 12,000 adult carers getting a carer assessment. That has got to be a starting position. The removal of the regular and substantial test to be eligible to be taken part in the assessment process will result in a large increase in the number of carers requesting an assessment because we know—or as known—those who have responded. The majority of councils do not use that test. Indeed, we have supported quotes from local authorities about removing this barrier to assessment. Aberdeenshire told us that it will improve equity and consistency. Those who decline a carer's assessment just now will not all want them to go through the new process. Some might, perhaps those who feel the current assessment is stigmatised, but others decline the assessment because they are content to be involved in other procedures with the community care assessment of the care for personal. We know that this is an issue in one. We do want the challenge, but there is often the issue that some people do not perceive themselves to be carers or some already feel supported. That is very clear from the questionnaire return. A number of those people will probably not request an assessment. I know that there is also a suggestion that it should be compared to free personal care. I do not think that that is a fair or direct comparison. I think that it would be reasonable to have expected the take-up of free personal care to be higher than the take-up of the new rights that are set out in the bill. It is primarily because those entitled to free personal care are already receiving local authority services and, in many cases, were in the care home. In fact, that makes it much easier to raise awareness of the new rights and also meant that the cohort of people who have been targeted by those provisions were already in contact with the state. We have done our best to come up with what we think is a reasonable estimate. I accept that it is an estimate, because it is very natured. This is a demand-led process. I know that the committee wants to have as much information as possible can. I think that that is absolutely the right thing for the committee to seek through any financial memorandum that we present, so that is what we have tried to do. I want to move on to a couple of areas. I may round up before I open up the session, because my colleagues do not want to ask specific areas that I am deliberately avoiding, because they want to ask those. The national carers organisation has noted that, I quote, the cost and for the duty in relation to provision of adult carer support plans appears to be based on the model of a one-off intervention, but that an outcome-based support plan is a process rather than a single event. I wonder whether you can address that particular issue. Secondly, the same organisation says, and I quote, is important all staff of carer at this task have the correct skills to do so, an experience of working directly with carers, an additional training learning may be required and will have associated costs. The reason they say that is because they have concern that the ACSPs might have cost reductions due to changes to the mix of staff grades and skills. In other words, the people who carry out that will not be as qualified as perhaps they need to be is the fear from the national carers organisation. I wonder whether you can address those two issues. Let me take the second one first to understand where that perception may come from. I think that the point that we are trying to make is that although we are implementing provisions here that ensure that people have certain rights, we are not being entirely specific about how that may be delivered on the ground in each local authority area, so it is for the local authority area to determine how they implement that assessment process. That could involve, for example, working with third sector organisations. We know that that happens in some areas in terms of carers assessments and there are some good examples of that being done on a very cost-effective basis. I suppose that the point that we are trying to make is that there could be a range of options for delivery of the assessment process. In terms of the concerns of national carers organisations about the costs that we have for the unit costs, I think that you are talking more about the cost of support rather than the cost of assessment of what you are talking about. What they are basically saying is that it is not a one-off intervention and costs are being assessed on that basis, but it is an outcome-based support plan. The process of the costs have been underestimated because there is additional costs to what has been considered by the Scottish Government. Again, all that we can do is go on the best information that we have. In terms of the unit cost or support, it is based on research. Interestingly, given that those are concerns that are being expressed by carers organisations, it comes from a carers organisation. They were the Princess Royal Trust. For carers at the time, they are now the carers trust. That is for direct bespoke support. Excluding information advice, which is costed separately, and one of the provisions of the bill is to ensure that that is an essential part of the legislation that we are seeking to take forward, that there should be that information advice service that is provided in each local authority area. In terms of the unit cost that we have presented, that comes from a carers organisation itself. Again, we can only go on the information that we have available to us. I appreciate that. We all want to see this legislation successfully implemented. I want to make one more point before I open up to colleagues. Throughout this financial memorandum, there seems to be a very distinct pattern. In terms of the unit costs, the average seems to be lower than what stakeholders are saying. In terms of the scale i, the numbers of people who would have to be assessed, the Scottish Government seems to be lower than the stakeholders. In terms of the model, again, the Scottish Government does not seem to have assessed the full cost in terms of the on-going support that is required. Also, in terms of training and staff needs, again, there tends to be an underestimate because perhaps people who are less qualified would be expected to do this work, but I might not necessarily be doing it. There seems to be a pattern across the board in terms of not having touched on some of the things that I know John and others want to ask about, that there seems to be... When you have an FM, you have some stakeholders that say, we think that it's going to cost a bit more, might cost a bit less, but the problem with this FM seems to be in each of these categories, it seems to be pretty consistently cost underestimations according to stakeholders. When you put that all together in one package, you're talking about a significant sum of money, and that's one of the concerns, a major concern that I have in terms of this legislation. I can understand that concern. I suppose that I would make the point, and I would make it with the best will, that we have presented a methodology, we've presented where our estimates have derived from what I'm hearing in terms of some of the critiques, that they're wrong, we're not hearing so much, and here's what we think it will be, and this is how we've arrived at that position, particularly in relation to causes criticism of the unit cost of the assessment process. We'll be reasonable about it, we're more than willing to engage in continuing dialogue with those stakeholders to hear the concerns that they have. We've done that thus far, we'll continue to meet them, it does require at some stage to, I think, for some information to be provided, so that we can also assess what their perspective might actually be, and they can set out what their best estimate is that I've not heard that thus far. Thank you very much for that. I'll open out the session now, and the first person to ask a question will be Deputy convener, before we go on. Thank you very much, convener. I should probably realise, minister, at the previous meeting when we met the bill team, we spent a bit of time on replacement care, and that's the kind of area that I'm interested in. I mean, we had this interesting quote at its column 61 of the official report. Cosla and some local authorities have told us that it is unfortunately not possible to say whether replacement care benefits the carer or the cared for person. If it benefits the carer, the charges would be waived. If it benefits the cared for person, normal charging would apply. I mean, I do understand that. I just think an ordinary person reading that or hearing that would find it a little bit frustrating and a little bit odd that we're getting bogged down in this. I mean, clearly, if a carer goes away for a week, and if it's a young person, maybe to a camp or some kind of holiday, that's great. The person who's being cared for needs to go into a care home, probably, although we can discuss, there might be other ways of dealing with that. Really, can we not break through this as to, well, who benefits, because I think, primarily, it's the career that's benefiting, but maybe the cared for person gets a bit of benefit. Have we got to get bogged down in this? I hope that we'll get bogged down in it, Mr Mason, but it's certainly you're getting to the nub of the issued hand, and that's one that we are presently trying to discuss with COSLA, with the care organisation, to see if we can establish the best way forward. What I would say is that there are regulations out there. What we are responding to is a concern from certain local authorities that say that they are having difficulty interpreting them now. I'm pushing my officials to make sure that I'm getting the best possible evidence to see what the actual picture is on the ground, but we'll continue to have dialogue with those stakeholders, with COSLA, with local authorities, with the care organisation to see about the best way forward, so that it gets back to the point, the opening question from the convener, that could result in us presenting substantial amendments to the bill at stage 2, which could require a supplementary financial memorandum at that time, which I know the committee would take an interest in at that stage. The convener already thanked you for the correspondence, and I'm appreciative as well, because it clarified one of the points that I was raising, because when we talked about waiving charges, I wasn't sure if that only meant the local authorities charges, or if it would include a third party. I think that your correspondence has confirmed that it would include a third party, because if a charge was waived, it just means that the local authority would take it on and would not pass it to the... Essentially, the local authority, the only interaction of the private sector, who I think is the example that you're giving, is my understanding, Mr Mason. You can correct me if I'm wrongly. The interaction in this process would be... They might be commissioned to, by a commissioning body, a local authority, most likely to provide some element of care, so I'm not even convinced that we would be empowered, as a Parliament, to demand that private organisations waive charges, so it would be the commissioning body, i the local authority, that would have to waive the charge. Yes, my fear was not that we would force them to waive them, but that the party would just stop the cared for person getting the care, and therefore it would stop the carer going away, so it would just block the whole process. I'm reassured that that's an option. It seems to me that if the cared for person has to go into a care home, and I realise that presumably if there's a young carer, it means that there's not a lot of other family and friends who are available to care, so the options then become bringing in enough daycare to keep the person at home, or they go into a care home. My assumption is that these are the two main options. I suppose that that gets to the very nub of the legislation that we're trying to take forward, that in these circumstances you're talking about the young carer's statement, and that's an assessment-driven process, it's a needs-driven process, so they would have identified needs. That's going to be different circumstances, so it could be that in some circumstances there are alternative family members who may be able to provide some short-term care, but they may not be able to provide that long-term care that the primary carer who has gone through the assessment process is able to provide. There could be different options available. Presumably we could make an estimate at least and say that 50 per cent could be cared for at home, 50 per cent would need to go into a care home, or 25, 75 or something like that. Potentially, I suppose, we're starting to get into the realms of, as a second guess, where that process of us having dialogue with the stakeholders that I mentioned earlier might take. Surely that would be more of a needs thing that we wouldn't be a question of discussing. We could discuss with COSLA and local government who would pay, but if the person needs to go into a home because there are no other family members... Yes, I suppose that it could be estimated, although it is going to be... The whole point of the bill process is to ensure that it's very person-centred and it's very much driven about the specific needs of individual carers. It could be quite hard to estimate as well, because we presumably don't have all of the available data. It's also going to involve people who aren't in the system right now. We would know what it would cost to put somebody in a care home because, broadly speaking, that's... Well, yes, but that then gets us, I think, into the realms of us looking at where it becomes as a replacement care in the rest of it and comes into issues of waving of charges. I think we... I'd be loath to start putting down estimates that could be of no relevance to this committee for its process of... Well, it strikes me that what we would know would be the say of £500 in the care home. What we don't know is how that gets split up between the Scottish Government, local government and the family. So, we know the total cost, but we just don't... We'd have to negotiate about how it was split up. Potentially. I'm not quite clear where your question is taken in relation to this area, though. Well, I think... My point would be that we know what some of the cost would be, or we could estimate what some of the costs would be. I think there's a separate question as to who pays for those costs, but, basically, that's the point that I want to make. Okay. I mean, this touches on two areas, so some of this could come out through what's assessed and what the person's entitled to, and I suppose we've set out what our average unit cost for that could be in terms of where it touches on waving of charges. I suppose the point that I was trying to make in seeking to be helpful to the committee is that if we were to start trying to estimate what the potential cost could be of any particular provisions at this stage, it might not be that helpful, because we haven't worked out what the provisions will look like, and that's why I think it's more appropriate for us to provide that in the form of a supplementary financial memorandum. All right. Thanks so much. Okay. Thank you, Government. All by Richard. Mr Fairlie, late on in the day, at the last ever in session, the Scottish Government said this, the cost of replacement care could be in the region of £30 million across Scotland, that is at present prices. Is that £30 million per annum? I would need to absolutely clarify that, but I suspect that that would be the case, but I urge the committee not to get hung up. I say this in the gemstones, because I know £30 million, and I know from my experience in this committee that Mr Brown, you are always concerned about large sums of money of any specific provisions that we take forward. I carry out my comments in that sense. I would not want the committee to get hung up on the £30 million that relates to the area that we've just touched on, because that £30 million encompasses a whole range of expenditure. Some of it has already been expended out. It is expenditure that takes place at this moment in time, so the £30 million is a fairly broad brush. I figured that it would be perhaps a starting point for us to analyse in terms of how we take forward the whole area of waving of charges. Is that an annual figure, or is that a figure? I thought I'd answer that. My expectation in Maureen can correct me on my own, but yes, I think that that would be correct. I'm fairly certain, but we can confirm this. If you could, that would be great. It makes a range of assumptions, of course, but you must have done some work in order to be confident enough to publicly state the £30 million. Are you able to share with us either today or again in writing how that £30 million figure is billed up? Yes, of course. Having us committed to combating and writing to clearly establish whether that's an annual figure, let us commit to doing that as well, we can provide a further breakdown of what that £30 million relates to if the committee would find that useful. The reason why it's so important is that the bill as a whole, the maximum annual cost is somewhere in the region of £80 million. If there's £30 million on top of that, it's potentially the biggest single slice. I suppose the point that I'm trying to make is not likely to be £30 million, because my understanding is that some of that £30 million already covers money that's being spent just now, so that £30 million encompasses a wider range than would be covered by the area of the waiving of charges when replacement care, if that makes sense? It does, but I'm sure that your letter will clarify exactly what is existing, because what we're interested in obviously as a committee is what is the additional expenditure as a consequence of the bill. If some of that is already being spent, then that's not really driven by the bill. I guess what I'm keen to find is what is the additional expenditure as a consequence. I suppose that that comes back to my point in terms of we've not quite established the provisions that we want to put in place, so it's likely to be that that would be set out as contingent on us agreeing that we will take forward specific provisions related to the waiving of charges, because I do make the point that there are regulations in place at this moment in time, but we are responding to concerns that have been raised by local authorities, so if we do put in other provisions that require additional Government expenditure, we would provide that in advance of stage 2 in the form of a supplementary financial memorandum, but taking on board your point and I absolutely understand the need for this committee to have as much information as possible. We can try and break down that £30 million figure for the committee, Mr Brown, and indeed we can clarify whether our view that it would be an annual figure, which I think is correct, is absolutely correct. Can I take you to the financial memorandum, particularly if it's the table between paragraphs 79 and 80, the table itself doesn't have a number on it? The issue that is raised by the Scottish Government and others is that there is some dubiety in certain cases as to whether the key beneficiary is the carer or the cared-for person. If it is the carer, then charges can be waived. If it is a cared-for person, then generally they are not, so I understand that distinction. In that table, you have estimated that the number of adult carers who you think are likely to receive support in each of those financial years. My question is this. Surely if these adult carers have been formally assessed under the system set up by the bill and the decision taken by those doing the assessment is that that adult carer is entitled to some form of help and support, then surely in almost all of those cases it is the carer who is the beneficiary, because that is the assessment of the professional's undertaking of the work? Yes, but this relates, if I am reading it correctly, and let me just look at it in more detail quickly. I think that this relates more directly to the provisions that are on the face of the bill just now, so the issue of whether replacement care benefits the carer or the cared-for person more is tied up with the whole issue of waiving of charges, so that is not covered in this table. Maybe I am missing something here then, but if the adult carer has been assessed professionally as being deserving and requiring of a break or some other form of respite, surely then the beneficiary is the carer? It is not as if someone has gone into care for a week and the carer said, all right, I think that I am just going to take a holiday. This is a formal assessment that the carer is entitled, so surely the key beneficiary here is the carer under this new bill? Yes, if the short break was determined as part of that assessment then yes, I do not think that we could get away from the fact that they would be the primary beneficiary. Okay, so surely then on your financial memorandum in this particular table, almost all of these people here then, if it is 153,811 in 2021-22, then is it not a safe assumption that almost all of that 153,000, you could say the carer is the beneficiary and therefore you could work with the likely? Will not all of you people necessarily get a short break identified as part of their carer's assessment? I think that we are talking slightly across purposes because the issue is not so much the short break that they are entitled to, it is whether or not the replacement care that would be necessitated by the virtue of the fact that the carer has now gotten entitled to a short break, so there is replacement care put in place. The question now becomes, and this is what local authorities say they are having difficulty in assessing under the current provisions that exist in statute, is whether the replacement care is a primary benefit to the carer or the care for person, so that is what we are trying to bottom out, that is what we are talking to causal and local authorities about. I do not think that we can escape that of a short break, which may necessitate replacement care, but we cannot get away from the fact that a short break is identified as part of the assessment for any carer as identified as a benefit to the carer indeed. Sure, sure, I accept that they do not all get a break, there are various assessments, but based on the current position, could you not make some working assumption on what percentage of people are likely to be assessed as requiring a short break as to some other form of respite, and could you not then use the same assumption to work out at the moment what percentage of carers sent on short breaks actually do qualify for the respite care to be paid for, or the charges to be waived? I mean, there must be some data there already that you could use to have at least an estimate for the figure. In terms of, we obviously have said that it will be as part of the financial memorandum, we have said that there is an extra £2.36 million for short breaks, and that comes as an assessment of the additional numbers that we believe would be potentially entitled to short breaks through this process, so we have attempted to undertake that assessment, Mr Brown, so that that information is in the financial memorandum. Okay, so you then, if you know the percentage entitled to short breaks, based on the current figures then you must have some idea of, for every 100 carers that go on a short break, you must have some idea of the current make-up of what percentage of the people that they care for are entitled to the charges being waived, and which percentage are not entitled. That information must be… Well, yes, I mean, the people will ultimately hold that information, and again, I can correct me if I'm wrong, but it would be local authorities, and that's part of the process of us seeking to engage with local authorities to try and establish exactly what the picture is, and indeed, for me, primarily, as the Minister of Responsibility for this Bill, to try and establish what exactly is the nature of the problem and the concerns that have been identified by the local authorities in interpreting whether or not replacement care has a sort of benefit to one party or the other. Okay, let's go back to that table then between 17 and 18, on a slightly different issue then, so that's the replacement care cover, I'll move on to a different… Some people have suggested that the overall number of people that are likely to be entitled to receive report, some people have suggested that you've underestimated the number that are likely to be entitled to support. If you look at the first line there, 2017-18, your assumption, we'll just work with adult carers for just now, your assumption is that 11,175 people will be entitled to support of some description, that's 2 per cent of the care… Can I just clarify? It's not so much entitled to who will come forward to seek that support? Well, you've said it's likely to receive report, see it received, so it's not just people who'll come forward, this is your estimate of people that will receive it. Sorry, yes, but those of those who come forward who will be entitled to you. Well, no, you're saying it's 2 per cent of the carer population on the table. That's correct. You're saying that 2 per cent of the carer population will receive support in the year 2017-18, but yet in the same memorandum, if you go to paragraph 81, you're saying that the surveys that you've read show that 4 per cent of carers said that they receive short breaks or respite care, so if it's 4 per cent of carers getting it from your previous surveys, why are you suggesting that it will be 2 per cent in 2017-18, at a time when obviously a lot of advertising will take, when I'd have thought it would be higher than the current 4 per cent if you're advertising and telling people they're entitled to it? The nature of the support here is important because this is referring to the spoke form of support, so we estimate that at the moment less than 2 per cent of carers have the carers assessment, so we're starting from a very low baseline. Even from that starting point, so say 2 per cent of those who are currently assessed come forward for the new support plan or for a review for a new support plan, however, then there is a range of general support that's available to them, so there is the advice and information services that's available to them and we know from pretty robust research that that is tremendously beneficial and it's the kind of second priority for carers in terms of our understanding of what carers want, so the first thing carers want is that the services for their cared for person are right and the cared for person is being properly cared for with their health and social care. The second thing, when they begin to think about their own needs, they want information and advice and that's why there's a commitment there to continue to do that through the NHS and through the local authorities commissioning voluntary sector who have real skills in this and the local authority role in coordinating advice and information, so that's a really important part of this for us and also accessing local community services that are available to anyone in any community who needs a bit of particular support, so when those options are exhausted then there's this financial estimates around bespoke support which can include things like short breaks or a range of things, advocacy, things that carers need and want that can't be provided in other ways. You're saying in 2017-18 11,175 carers will receive support, that's your projection. What is the actual raw number then for the current financial year or the last financial year in terms of the number of carers who receive support? If you don't have that hand, Mr Gray, I think that the right thing to do is to make sure that I'm comparing the right thing. It just strikes me that, on the face of it, it looks like the numbers go down slightly, but you're spending £3 million a year on giving information and advice. I think that it's probably going to be best to try and clarify the right thing with you. Last question then really is just if the charges do have to be waived and local authorities have to carry the cost as it were, you're going to bring back another financial memorandum. In advance of that, is there a broad commitment from the Scottish Government that they will underwrite the cost of that? We need to agree. We're obviously in dialogue with local authorities now if there's anything as a consequence of the legislative process that we decide to take forward, then, ultimately, I suppose the answer will likely be yes, but we're in the process of trying to work out what that may be and that involves dialogue with local authorities, so part of that will be about how we actually pay for the provisions of whatever is put in place. I've actually got one question that Mr Brown has covered some of the areas that I was going to cover, but that last point is absolutely crucial because on replacement care, this could end up being the biggest cost in the legislation and we don't have it in memorandum as it is at the moment. We under-appreciate the minister says that there will be a further financial memorandum to come, but in terms of providing clarity on this issue in terms of who would be entitled to that replacement care funding, isn't that something that could be resolved in this legislation at stage 2 to help to provide clarity to that issue? Yes, I think that it would be. That's at the nub of this whole area. That's what we're seeking to do. You're going to bring forward a financial memorandum, but, additionally, potentially, amendments legislation to provide clarity on the legal status of that issue? I should be clear that we will only bring forward a financial memorandum if we present amendments at stage 2. I think that not only will we be required to do this understanding orders of this Parliament that substantially alter the financial commitment that would fall upon Government or, indeed, any other party as a result of the legislation that we take forward. So, yes, it would be on the basis that we are seeking to amend the bill. I'll just be clear, because you are seeking to amend the bill. That's the working assumption, but we're engaged in dialogue on this matter just now. I mean, I would make the point that there are regulations at present that should cover these matters, but the point has been made by local authorities that they have difficulties with them, so we are indicating willingness to engage in dialogue with them. Absolutely, Minister, but I think that for us, more on terms of Parliament, proceeding with the legislation to ensure that the funding is there to make that part of the bill actually relevant worker and be meaningful that those young carers can get that respite, then it's important for us, whatever the circumstances, to have an indication of what the cost will be, of course, and in the future as well. So will the nature of your amendment be basically to clarify these regulations? Is that basically what your intention is? And I suppose my other question is, I mean, what happens if you don't reach an agreement with Cosrable, you then just have to impose something, because you're accepting that the bill requires this basically? Well, it's not so much about imposition, I suppose the point I'm trying to make is that there are regulations, there is guidance in existence at this moment in time, we are responding to a concern that's been expressed to us, Mr Chisholm, by local authorities and we're reasonable people, so we want to engage in dialogue with them and ultimately if that requires us to amend this bill to try and clarify matters further and if that results in additional financial commitments from the administration then we'll not only present the amendments but we'll present the supplementary financial memorandum. I can't really say in much detail what the amendments will look like because we're engaged in an open process with those who've raised the concerns but also crucially we've got to talk to the carers organisations about this as well. Would it be fair to say that the Government itself has a clear view of its interpretation of the regulations and therefore although you're describing all this in terms of dialogue with Cosla, do you have a view about how you think the regulations should be interpreted? Well, that's why I'm seeking further information from not only my officials but also trying to get the perspective of local authorities. I'm clear that there are regulations. I'm less clear on their efficacy and how they're working on the ground. I want to try and establish that picture. Again, I'm happy to keep the committee although I know that this is more of a policy area so it might be the health and sport committee that take a greater interest in the specific policy provisions but I'm obviously happy to keep the committee appraised of where we take this work. So what's the likely timescale of all this? I mean, when would we expect stage 2 of this bill to be? Let's try and get over stage 1 first. You've got over the summer to do it. Well indeed, yes, because we don't expect us to be concluding stage 1 till after the summer recess so it gives us a period of time to continue that work. I should say that that work is of paramount importance because, if we're going to take it forward as part of this bill process, we don't want to delay matters. Carers are keen and hungry for this bill to go forward. They do have using other changes that could be made to the bill and we'll be seeking to engage with the carers organisations about that but I don't want to do anything to delay this bill on Julie. Given that stage 1 isn't going to happen till after the summer recess, isn't it? Why can't we have supplementary financial memorandum before stage 1? Can I reflect on that, convener? Let me commit to IV and I suppose that we're still on the stage of the realms of IV. It is our assumption that it will be necessary but it is still an IV. There is a need for a supplementary financial memorandum. Can I commit to getting to the committee as soon as possible? Thank you, we'll correspond on that issue. Are there any other points that you want to raise with committee members? I suppose that I would make the point that I know that the committee takes its responsibilities in terms of financial scrutiny very seriously as a former committee member and if we can provide any additional detail, we've obviously committed to doing that in terms of particularly Mr Brown's areas of interest. If there are other issues, convener, then please do not hesitate to contact me again. Okay, thank you very much minister, Dr Bruce. That concludes our public deliberations today. I'm therefore going to close the public section of today's business. We'll just have a one-minute recess to allow official report and witnesses to leave. Committee members just hang far just a minute and we'll go on to our last item of business.