 Weli nhw ymlaeddo pob hwn i gael eich gaelwch â'i gaelwch ar gyfer swyddfaeth. Felly rwy'n edrych i'ch cyflwyngu angharwch oesau'r gaelwch ar gyfer swyddfaeth, i ffodol yn gweithio felly iawn oherwydd o'n jei rai sydd fel alsglaen, ond rwy'n teimlo i'r syw pwguniaeth ei ddweud. Mae gaelwch gan y pryd yn dweud i'r ysgriforth, ac mae nil yn Disson 50. Felly rydyn ni'n hefyd yn ychydig i'r gaelwch â'i gaelwch ar gyfer swyddfaeth, seisio ar gynllunion y bydd yoedd o'r prosesion fy sefyll, a'r leidio i'r gwellig oedd Joe Patrick, geiriadau geiriau Gwlazgwladau i Llamfyrd, Alan Wat, geiriadau geirio i'r Gwylfaenio Unigol Cymru, Ross Martin, geiriadau geirio i'r Sion Cyngor i argyflwadau sydd. David Wat, geiriadau ceirio i'r director for the Institute of Directors, and welcome to you all this morning. We're very glad that you're here. The focus may not be on this committee this morning, given that the other things that are going on around draft clauses being published today, but we welcome you here. We think that you're the most important visitor of the Parliament. Summarize quickly the structure. We'll try to keep this as informal as we can and obviously still have to do it through the chair. There are four witnesses, so if we can make our questions as concise as we can and answers in the same way that would help. I think that we'll start off by asking questions around taxation and borrowing, moving to welfare issues. Are there any questions there and dealing with other issues to sweep up any other important matters as we go through the process? That will give us a bit of structure around what we do this morning. I'll address the questions, and I think that most members will do so. To all the panellists, if you feel you want to contribute, please indicate. There may be individual members of the committee who want to ask specific questions of specific individuals. We'll see how it goes. I thought I would ask a very general question to begin with myself. I'd like to understand to what extent the Smith commission proposals constitute in your eyes a set of powers that should enable the Scottish Government to create conditions that would improve the performance of the Scottish economy and create jobs? In that sense, do you think that Smith commission has helped or other things that could have been done? I don't mind who kicks off. Ross Luke says that he's ready to go. Thank you very much, convener. It's just to get a bit of context as far as we're concerned, and I think that probably this will apply to everybody at this end of the table. If you look at the impact of any changes to particularly the tax system, and actually sitting in this building is as good a reminder as any of the attractiveness to some of asymmetry, but obviously asymmetry and its attractiveness is in the eye of the beholder, and the common concern I think would be that, with additional levels and layers of complexity, additional levels and layers of cost. However, there is a recognition, certainly from SCDI's point of view, and a long-standing recognition that the centralisation of the UK economy has been an issue for decades, and a rebalancing of that is a necessary part of the negotiation, and we certainly welcome a rebalancing of that. We've been calling for a rebalancing of the system ever since I was born, really, so in 1969, when I was still in short trousers, SCDI were looking at the impact of the centralisation of the economy and the impact of the centripetal pool to London, and in particular looking at the impact on the big cities and the effect that that unbalancing of the economy was beginning to have, both in the private sector and in the public sector, and looking to see what could be put in place in order to rebalance the economy and give the nations and regions, as we would now call them, the opportunity to do exactly as you were suggesting, convener. That's to have a package of measures, a context, a set of powers, the ability to effect positive change in any part of the UK economy and do that in a way that obviously provides benefit to that part of the economy. From SCDI's perspective, then we would talk about having an economic benefit test to any proposals, any individual proposals, but making sure that things aren't seen in isolation and that the package as a whole is seen collectively and together and that there's some form of test. The chancellor yesterday, in his evidence to the Treasury Select Committee, went a stage further, I think, and it would be interesting to see exactly what he means by no detriment. Whether that places boundaries on the package and whether it moves from boundaries to control and control mechanisms. It would be interesting to see what is said today and what follows on from that, but fundamentally, the UK economy is one of the most centralised in the world. There is a broad recognition that that needs to change and we welcome the discussion and the ability to have that discussion in a sensible and open way. Stuart Patrick from Glasgow Chamber of Commerce. Three points to throw in. Broad welcome from the membership that powers are being transferred in much the same way as Ross has described from SCDI, reinforcing the recognition that the balance of fundraising within both national parliaments within the UK and for that matter within cities within the UK has been too limited. We're constantly struck by the percentage of revenue raised either within Scotland or within the city regions being under 20 per cent compared to an OECD average of over 50 per cent. We do think that that has implications for the productivity performance of the country. We therefore welcome the nod that there was in the Smith commission towards further devolution of powers beyond the national parliament because we think that it's important to recognise that UK cities on average tend to be underperforming in productivity terms compared to their competitors overseas. We want to understand more about why that's happening. We think that the transfer of revenue-raising powers to local cities and local communities is part of that story. The second issue is about the single market. We welcome the fact that the Smith commission did not appear to have significant implications for the UK single market. That's not to say that the introduction or implementation of individual powers might lead us into that territory. We're quite concerned that there should be some mechanism, not dissimilar to what Ross is saying about a test, some mechanism for judging what the implications of any use of the powers might be on that single market. We drifted into that territory occasionally, even under the existing regime. I know that it's controversial, but minimum pricing for alcohol is a good example where the discussion about the use of that power is affecting free trade potential beyond the single market in the UK. We don't want that sort of situation to arise within the UK. That's the second point. The third point is to note that, although we welcome the transfer of all the powers around income tax, we've got to have an awareness of the responses from our members during the campaign that said of the issues they felt were most important. Income tax was one that was near to the top of the list. How the income tax powers were used, I can't guarantee how the members would react to particular uses of income tax powers. I think that's the final point that I would lay in front of you. No one likes to increase tax if you know that. It's a starting point. Let's make a few general points here and the members if I can. First of all, business has always been very enthusiastic about this Parliament having some accountability for its income as well as expenditure. It's very easy. People in business see it as quite easy to spend money. It's much more difficult when you have to be accountable for how it's raised and the implications of that. I'm not totally sure that those implications are always necessarily thought through, so that's a big issue for us as well. Going forward, we won't see how that pans out, but it's very good as a principle that this Parliament should be accountable for its income as well as expenditure—a significant amount of that anyway as well. A key point that Robert Smith said in the report, which is not legislative but the fact of working together is crucial, I've got to say. We do all encounter at times departments bluntly not speaking to each other. I'm not sure that it doesn't sometimes happen within the Scottish Government, but let's part that for a little while as well. It certainly does happen between the Scottish Government and the UK Government, and it's extremely detrimental, obviously, particularly in the areas that, for example, have returned to work. It's one area, and I think that that's one other area that I would mention. I was involved with the now First Minister's commission in looking at welfare reform. I think that there's a real need for working together in certain areas there, which would be really helpful. I'd bluntly think that business is completely disconnected with Scotland, if I'm honest. Whose fault that is? I'm not totally sure. It probably faults on both sides, but it's not helpful to business in Scotland to be quite frank, and I think that we need to get that sorted for the future benefit of everybody, to be quite honest with you. Some of those principles, I think, are welcome as well. There are some principles in that are welcome, but, as Stewart said, I think that we'll wait and see how some of it actually pans out in relation to certain taxation issues as well. Thank you, David. Allen, do you want to… One of the nice things about going last is that most of the things that you were going to say have been said, but that said, I'm slightly different from the other gentlemen here today in that I'm representing a single sector, and that single sector is very dependent on public sector expenditure. So we're watching this very closely. Our members are largely welcomed through the recommendations and are very keen, because we believe that, throughout its history, the Scottish Parliament has spent wisely what it's had, and therefore extending its borrowing powers would seem very logical. Obviously, to raise those, you have to have a methodology for raising them. Broadly welcome that. The caveat that we would put there is that our industry, although it is quite high in turnover—it's roughly £2.5 billion turnover—is very low in margin. The margin is, we estimate, between 2 per cent and 5 per cent. Therefore, it's quite sensitive to changes, and therefore we would ask that any changes in taxation or legislation are drilled down to very deeply to just check what the implications and the wider implications are, and indeed some of the unintended implications of what might be. I was bored on the issue of borrowing powers, because it was something that I think all submissions touched on. Obviously, we've got a bit to go in terms of the arrangements that's got to come through the UK and the Scottish Government. There's a bit to travel there to understand exactly what they look like, but obviously the principle is there for extending it. I think it would be helpful for us, if anyone could provide us with a picture of what you think would be—what the sensible arrangements around borrowing should be. Is there a general amount of borrowing that you think Scotland should be able to borrow to? Should it be based on the potential borrowing system that effective local authorities have? What arrangements do you think would be the best suitable for Scotland? We've got an opportunity, obviously, as this still hasn't been settled down yet, and there's a lot of discussion. You've got the opportunity to influence it today. I think that the peace, not just on borrowing but on the whole array, then, obviously, Scotland not having had responsibility for revenue raising and that side of the balance sheet, as the DfM would put it, then we've not got the mechanisms by which to independently assess. The OBR's role, for example, comes into question, and whether it would be the appropriate body and mechanism by which to do that. Whether that is the OBR as it exists or whether it is devolved in some way, as some members would suggest, there certainly needs to be that maturation in terms of the accountability and responsibility aspect. That was a big aspect of our members' views with rights coming from responsibilities and with responsibilities coming from the need for regulation, but clever, agile, flexible, accessible, transparent regulation. There has to be a proper discussion about how you do that, who is going to be responsible for it, what the metric is going to be, who is going to be responsible for the policing of it, who is going to be responsible for fiscal transfers, if required, for example. There's a whole range of different issues in there, which the body hasn't necessarily had to tackle in the past, but it's going to have to get up to speed with pretty quickly. Obviously, a crucial issue for your own industry, Alan, because of the heavily dependent upon public expenditure and to infrastructure through borrowing, any particular things you'd like to add to the sub-down approach? I think that back up the point of some sort of Scottish OBR might be quite welcome going forward as well. I suppose that very much, if you would point out that we don't want boring for the sake of boring, we want boring for a purpose, like all other powers, and very much for a purpose, for example, related to infrastructure development, and certainly not a situation that the UK has got itself into just boring to keep its normal revenue spend actually working. There's not a way we want to go for a future of Scotland. I don't think that that's beneficial, but if we can borrow sensibly for things like, I mean, fourth crossing, which is close to my heart, having spent some time in that bridge this morning, then let's do that absolutely. There's many areas of the A9 and the things that the Government's embarked on and others around the room could suggest, but really worthwhile boring for over a long period of time at a sensible Government rate. That makes a lot of sense, but to get into it for revenue spend is a recipe for death and disaster as many other countries have seen. I think that we'd welcomed a discussion within borrowing about that distinction between capital and revenue borrowing. I'm conscious that I suspect from what members say that they feel comfortable with the idea that whatever Scotland gains in borrowing powers has taken off the UK so that the overall UK envelope remains sound, but I think that where there tends to be some room for manoeuvre is, do you have a little bit more flexibility in coming up with capital borrowing powers for infrastructure investment? I wonder about whether that UK envelope round capital borrowing, whether there's scope for a little bit of marginal increase in the Scottish room for manoeuvre, is being constrained within the UK overall package. That's the one area that's worth examining. Ross, I'll come to Tavish and then Mark. I'll add one other point to that. As well as borrowing, looking at other ways of leveraging in external finance, particularly for infrastructure projects, one of the issues that we raised in our submission was the possibility of bringing the offshore and the onshore economies together and putting in place, for example, tax credits allowances for offshore. In current circumstances, that's probably more of a challenge, but in normal times being able to allow and enable oil and gas companies, for example, to invest in onshore infrastructure, for example, as part of the city deal in the north-east, if there's going to be one. In full recognition that the development of that infrastructure is going to help that sector in terms of labour mobility. There's a couple of stuff of entry that's been indicated. Tavish, I think that you wanted to... Yeah, thanks so much, convener. First of all, can I thank you for your points on atart and OBR, which I've been arguing for a long time, and the more you all say on that, the better, in terms of the independence of forecasting and the independence of analysis. Mr Patrick, you made a very good point about on the single market, because again, all your submissions have highlighted the importance of the UK single market. You mentioned a test on the impact on the single market. Could you just elaborate on that? I mean, I agree with the principle, but if you could elaborate on that principle, I'd be most grateful. Well, I guess we're... I suppose an interesting comparator for examining this would be the discussions around t-tips just now, the extent of which we are attempting to try and remove barriers to trade between US and Europe, and acknowledging there are controversial components to that, too. We would say that business regulation is the largest part of the challenge in delivering t-tip. It's not necessarily direct tariffs, no one suggesting within the UK that we start having financial tariffs, but we could, over time, find that consumer protection, environmental protection, health and safety in particular, lead to regulatory decisions that affect products and their ability to enter markets. So it may end up that you have Scottish regulations that you, by accident, discover, end up putting cost on products, either accessing from other parts of the UK, or more damagingly, obviously, to us, in accessing other parts of the UK, because that's such a fundamental part of the trading arrangements of the single market. So quite often, I think that the regulation issues are more difficult to spot right up front. That's why we would suggest that there is a test, or even some form of business advisory group to the Parliament, that highlights to you well in advance where the implementation of a power, or a particular act under a power, might lead to a regulatory barrier between the different parts of the UK. Some mechanism that, in fairness, doesn't currently exist that gives business an opportunity to comment on these matters as their first thought-of in regulation or in draft statute. Mark Ruskell I should make clear on the Tartan OBR idea that we haven't gone as far as to call for that particular change, but we have made the point that the need for that level data is absolute. Whatever mechanism is put in place, we need to be able to get desaggregated data. Mark Ruskell had a supplementary in that area as well, and then I'll come to Lewis. We've taken evidence from Professor David Held of Aberdeen University regarding some of the complexities that may arise as a result of devolution of tax powers, for example. We've seen some indication of that playing out in terms of the way that the land and buildings transaction process has gone. The concern being that the Scottish Government consults early, and certainly in terms of the Scottish rate of income tax that's coming in has to notify the Treasury well in advance of the Treasury setting tax rates at UK level. The concern is that there could be gaming by the Treasury, particularly when it comes to as a nation of VAT. The example used by Professor Held is that, when Scotland sets its income tax level, the UK could essentially reduce income tax, but hike VAT would have an impact in the rest of the UK, because Scotland would be setting its own income tax rate and receiving an assignation of VAT would not have the flexibility in that regard. Is that a concern that you would have? One of the points that has been raised at the Finance Committee, which I serve on by the Law Society of Scotland, is that perhaps some form of financial fair play agreement or clause is required to ensure that those kind of scenarios don't arise. I'd be interested in your views on that. All I can say is that it's a publicly criticised of Treasury. The point that I made earlier on, really genuinely, at first and foremost, the department should be working together across the UK. As long as we're a united kingdom, we should be working together as a united kingdom. I don't think that a department, including the Treasury, should allow it to be willy nilly either and not consult Scotland or ride roughshod over this Parliament or things like that. It just shouldn't be allowed to happen to me. If you have to lay that down in the statute, perhaps you have to do that. Absolutely it's complex, and it will be complex over the first few years in particular, and we, I suppose, at Sharpendo suffer from some of the complexities of the Scottish rates of income tax is coming anyway and things like that. All those challenges for business, and I suppose what we want is we don't want, I was going to call it stupidity tax, maybe a bit impolite, but anybody being really difficult to make our life in the HR department or the accounts department of our business life even more difficult by being silly about VAT or taxation and not being open and helpful and consulting and setting levels as far in advance as possible to allow business to put the mechanism in place in order to collect the tax which it does on behalf of this Parliament and others as well, and that's a real disenchantment that business has. We are tax collectors, first and foremost, for you guys, and we need to be co-operatively supported in that, and departments fighting each other just makes that even worse than it already is, and it's not very pleasant as it is. Ross. Although we're in uncharted waters as far as the reshaping of the UK is concerned, it's not uncharted in international terms. We have visitors who don't know if they're here yet from Canada, and clearly there are systems around the world where they strike that balance and they operate on a set of principles with agreed metrics, and there's a recognition that that has to be set clear at the outset so that the latitude for mischief making or for gaming, as you would call it, is reduced considerably. So there are mature systems around the world from which we can learn in terms of the relative power and the relationship between the federal level and the state level. Inevitably you're going to have differences emerging over time, but I can understand why one aspect of it might be considered to be gaming, the other might be responding to the demands of local areas. If I'm in Newcastle and I'm watching Scotland make decisions on local taxation that will have very direct and quite immediate impacts on investment patterns, I wouldn't be too surprised if chancellors in future treasuries are not under significant pressure to respond. I can imagine that that might lead to a degree again of enforcement of greater devolution to local areas, because you'd want to have the flexibility if you're the Treasury to be able to respond to some of those requirements in a new castle or a north-west or in order to be able to remain competitive. So I think that we should expect that. At this moment, just let me welcome formally our guests from the Canadian Parliament who did join us during the beginning of the session, so welcome to our deliberations and listening into what we're up to. Lewis. Thank you very much. I could be in the rest of the outset about your general take on the powers devolved under the Smith agreement to the Scottish Parliament. Can I ask a couple of questions around, if you like, those general considerations, but from a slightly different angle? First of all, in relation to city regions, on Stuart Patrick, the Glasgow submission is very strong in city regions. The SCDI and Ross Martins mentioned already this morning the proposition of city deals that would apply to Aberdeen is certainly applying for one and Glasgow already has one other. Is the view of the panel that the Smith agreement goes far enough or says enough about devolution from the Scottish Parliament to localities or city regions, or at least does it lay the basis that allows that to happen going forward? When you go Stuart. I'd say, the argument is that we were delighted to see that Lord Smith didn't nod towards it but felt that it was understandable that he didn't go further because it was arguably not within his remit, but we would certainly welcome the fact that he's opened the door to that discussion. I just think that if you're sitting in Glasgow or indeed in Aberdeen and I would say straight up that we are absolutely enthusiastic about the notion of city deals for all of the cities of Scotland, it's not a question of one city benefiting over another, it's actually a whole change in the system of governance across the UK to reflect the fact that our approach to metropolitan urban development has been behind so many of our competitors. The reason why that's so important is that cities and urban, particularly city regions, have become much more important for attracting investment and developing business, largely because they're centres of innovation. That's become so much more important to achieving productive growth in the whole UK economy. In the UK and in the Scottish economy, our most fundamental problem is productivity. If our cities are well below average on productivity, London aside, which is a very unusual case, we've got a question to ask about why that's happening. Our view is that the balance of powers has been too skewed towards London. Equally, there's a risk that we take the step towards transferring the powers to the Scottish level and ignore a lot of the trends that have been happening not just around the rest of the world for decades, but actually happening over the last five years in England to improve the powers and the flexibilities of our competing cities. I can't deny that Manchester, although we're very friendly with Manchester and we enjoy the competition with Manchester, it does scare us a little as we watch the powers that Manchester has accrued over the last three or four years. Its ability to invest in infrastructure, skills and innovation systems is potentially significantly greater than any Scottish city. Just to follow on from that and to put it into the context of the period since 1999, clearly we've seen a change in the relationship between central and local. Some one direction, some other, but all the while there's been a recognition that there needs to be a much bigger transfer to the city region level, and that's where the action necessarily should be. So we're beginning to see that from both Governments in terms of their own different approaches to that, whether it's through the Scottish Cities Alliance, from the Scottish Government and the partnership that that is, or whether it's through the city deals from the UK Government, but that underlining principle that if you're going to affect change at that level and with the key ingredient of diversity and recognising the different circumstances and different parts of the economy, then there needs to be a let and go from the centre. I'm coming at it from again a different angle in the submissions that you all made to the Smith commission. A number of arguments were made, for example, about the importance of keeping corporation tax reserved, and there were also submissions in relation to employment law and other areas, which seemed to you to be important from a business point of view. Do you feel that the areas that have been reserved under the Smith agreement are the right ones and are sufficient to give that degree of a single market status or a competitive advantage to business in Scotland? I don't think that I have much disagreement with the Smith commission's outcome at this point in time. I suppose that it is where it is. I think that the point that the chamber raised in the very beginning, and I don't know if I have an answer to this, is that are there enough powers devolved to help business operate in Scotland? I don't know if I'll know that until after these powers are implemented. The point that I made earlier on about my biggest practical concern is that the potential business benefits through, for example, as I mentioned, is really operating in Scotland, and the clear answer in my view is no. I think that there's a few of those schemes and things that could be much better when we're fully run out in Scotland regardless of devolution. I don't think that we were rushing to list a long number of other things that might be devolved at this stage as well, but I think that there's, as I say, with possible concern over if things don't actually work. That is again related to getting people back into work, as I mentioned earlier, on welfare. If that doesn't actually work, then the devolution clearly is not adequate, because the departments aren't doing as Lord Smith requested them to deliver all of that together. One point of general principle, if I may chair, and one specific. On the general principle, predictability and stability are obviously the watchwords in terms of any changes. Lewis, you'll know from your position up in the northeast the impact of the fiscal shock in 211 on the North Sea. That unpredictable huge change in the regime at that point was something that I remember certainly was pretty mad about and rightly so. Some level of predictability leads to more stability as a general principle. On specifics, with corporation tax, our position is as is in terms of our submission. Obviously, if there's a deal done with Northern Ireland and that changes the system in that part of the UK, then we would want to go back to our members over a period of time and look at the evidence of any impact that that may have. Obviously, the situation over there is different because of the border with the south, but we would want to have a look at the evidence of any impact over time. I think that if there's a discussion saying that corporation tax will be reduced for Scottish companies, I would be the last person to be sitting here saying that that's a bad idea. However, I think that the challenge for corporation tax has been that so many companies currently who trade pretty much within the UK don't have to worry about the allocation of profits between different regions of the UK. The practical administrative challenges of doing that, introducing transfer pricing and understanding domicile, those were concerns about the administrative burdens of corporation tax, which don't apply to the assignation of VAT, obviously, or indeed to the implementation of income tax. With income tax, you have to deal with an individual code for every employee anyway, so the extent to which you're doing that through the existing systems looks easier. The challenges of introducing a separate corporation tax is interesting to see how Northern Ireland would deal with that where it to happen, but those concerns were expressed. It's worth noting. I've got a couple of supplementaries in this area, so I'm going to go to Duncan and then Linda. Just trying to draw the link between the low productivity that exists, not just in Scotland but across the UK with our comparators, and the devolution of employment law. Does the current situation not allow some employers and management to sweat labour rather than be innovative in terms of productivity? Would it not be a tool if we had some aspects of employment law where we'd heard strong disappointment last week that it wasn't involved, that it would challenge the management in Scotland to address the productivity levels rather than sweating the labour and low wages, temporary contracts, zero-hour contracts, et cetera, et cetera, which is an easy route, but we still remain poor levels of productivity. If I could answer the question immediately as to why we had low productivity, then I would be one of the first economists to be able to do it. To be able to say for sure that aspects of labour policy are the most important issue about UK productivity, I'm not convinced that the evidence is there to prove that. When you look at international comparisons at a UK level, it tends to be around the most indefinables. It's not about labour, it's not about capital, it's about innovation, it's about the way in which businesses enter particular markets and are clever about the kinds of products and services they bring to the markets, which is incredibly difficult to understand what it is that affects that. The Americans' productivity levels depend on their ability to innovate. That's why we're interested in the extent to which things like centres of excellence, through the likes of catapult centres, et cetera, and the extent to which business, government and academic worlds work together practically. That's probably got more of an impact, alongside some of the infrastructure issues that we've felt the UK as a whole has under-invested in for decades. Those are more likely to have an issue. We're actually not bad on skills. We're relatively competitive, and in Scotland we're not bad on skills, so I'm not absolutely sure that I'm convinced that there's got a direct productivity issue. There may also be issues about fairness and distribution, but I'm not sure that I can see the productivity link. I will say that I just don't recognise the sweating labour issue that you've got, actually, and I'd like to see some evidence of that, but we'll come to that in a slightly different expression, if you like. I think that there are reasons as to what says about productivity, and I think that something that we should be addressing and really fundamentally reviewing. I think that the thing that I can't give my head round is the fact that we've got all our universities in the top quartile and our research and development within business in the bottom quartile of OECD figures, and that just doesn't make any sense. Those two things don't match as well. I wouldn't want to start to debate an employment law, but maybe you could reflect that zero hours contracts are actually to do with an employment law. They're not actually breaking it as it currently is, and that's the problem. The laws are probably not helpful to actually employing people, which is part of the issue. Had that been devolved, Scotland would have been any different. I'm not totally sure that it would. A lot of the implications for that are that Europe and I are not even UK-wide as well, but maybe this is not the right place to go into a lengthy debate on employment law. Let me tell you that most of my members are spending every week and hour to keep their employees employed and working to the best they can and being as productive as they can. They're not trying to sweat them. They're not trying to sack them. They're not trying to get rid of them. They're trying to find them in many cases. The thing that I would slightly disagree with is that I don't think that we're fine as far as skills are concerned. I think that we're still massively short in certain areas as well, such as the notable engineering sort of thing, so we've got some real challenges on that front as well. The evidence, again, going back to the welfare reform report, the work that we did without a doubt the biggest thing that we're determining, in fact, whether a person was employed or not, was their skill base, their skill level, and that's something that we have to address as well, sort of things. There's some massive issues around about that to have a productivity. Obviously, we represent a really wide array of organisations through the private, the public and the social economy. On balance, we came out in favour of maintaining the status quo in terms of employment law in that regard, but we have hit on an issue that our members are getting really, really interested in. We ran a session just last night with Roseanna Cunningham with her new fair work responsibility. It's the fastest-selling oversubscribed session that we've had for a long time. There is clearly a mood out there in terms of that agenda, and whether you do that through changing the balance between Westminster and here, or whether you change that in terms of the partnership and the way of working and trying to sort out some of the issues that David was talking about, for example, between DWP and SDS, and overlapping responsibilities, there is certainly an issue to be tackled, and there's a mood and a desire and a hunger to tackle that issue. Linda, and then Rob, I think that you were interested particularly in research and development issues, which will pick up some of the themes that were beginning to emerge there, but Linda has had a supplement. I'm interested in recognition of employment skills, etc. One of the things that I was very keen for about the Smith commission report was an overall cohesion. If you even break that down into the areas that directly affect your members, I'm thinking particularly of things like job centre plus, apprenticeship schemes, different incentives for employers to take people on and indeed promote skills, and business for an awful long time has been saying that it's all very complicated. I think that it's the SCDI submission that says that there would like an integration of everything to do with employment in relation to job centre plus, for example. You'll have noticed that that hasn't happened, that it's very much an admin role that is proposed under the Smith commission rather than having control. I just wondered if you think that that's been a missed opportunity in relation to your work. I would also pull in in skills, the inability that we have on immigration, for example. I know that in engineering there is a shortage and I know that it's very difficult in some skills to be able to employ people from other parts of the world because of the UK immigration policy having a very different slant than what's necessary for Scotland. I would reference our friends from Canada here. Canada has a system that has often been looked at with the provinces being able to attract the kind of skills that they require. On immigration, we are really strong in our submission that there needs to be much more flexibility and a recognition of the impact of our restrictive immigration policy on an economy that clearly needs to attract people and skills, so we would absolutely agree with that point. On the overall cohesion point about provision of services, our view is very much that there is plenty scope within current settlement for better relationships and better working relationships and a better cohesiveness between organisations that currently have responsibility. We just met yesterday with the new head of the DWP, the new head of the job centre plus in Scotland, to make that point again. There certainly seems to be a willingness on both sides at officer level. Whether you guys at political level have the same willingness or not, we have yet to see. It will be interesting to see whether that new measure of co-operation and change in the nature of the relationship can move on at pace or two. I support the point on immigration. To my understanding, I didn't find one UK policy that is not fit for purpose in Scotland at immigration. We would probably be the top because it is just not working. I know that there has been work done. We have got somebody on that group that one of your colleagues is working on just now to look at that. For example, re-establishing the fresh talent initiative for doing something, we absolutely must do something about it. It is just crazy that we are turning young people away from our universities and colleges and we are also turning away from our workforce when we desperately need them and they want to be here. Why are we doing this? We have a policy that is based for the south-east of England and just does not fit this country because our population like it or not is basically static. It is up to 200,000, but that is not a lot in the number of years that it is taking to do. We have some real challenge here. Something has to be done about that without a doubt. I think that even if those organisations could set themselves in the one building on the high street so that the individual who needs those services could go to the one building and get all the services, that would be a step in the right direction, even if they were not both run by the same Government. The customer does not care. The customer wants the help, and we really need to work together, as Ross suggested. I just want to reinforce what the others are saying, just speaking again as a single sector but in the engineering sector to which you have alluded, Linda. We have a chronic shortage of skills at the moment, which could be in some way addressed by immigrants, and the backdrop is just not there for it. The mechanics are not there to do it at the moment, and that would help immensely. I also want to support the cohesion argument that it is a miasma to an employer who has other things to do. The people that I represent actually want to build things, not to try to navigate through tricky bureaucratic landscapes in employment and the like. Anything that can be done to aid that journey is welcome. Touching on apprenticeships, I think that there is definitely a mood swing within Scotland, and I think that it is probably post-wood, where we are now beginning to see far more cohesion between schools, further, higher education and employers. That is actually now beginning to hit the park, as we would say, in our sector. That is an employment that is the same cohesion that we would look for that is now beginning to come through the education and skills base, but also in employment. First of all, to pick up on David's disagreement with me, I misphrased myself there. I am not saying that there are not skills shortages. I am not sure that it is clear that skills have been the main reason why we have been unproductive, because there clearly are skills shortages in engineering. That is something that we have been quite vocal about in Glasgow, because engineering is such important part of the economy. On the points around immigration, I think that we could be quite specific about the importance of, for example, post-graduates being able to stay within Scotland for a period of time after their graduation. That would be an area if there are movements that could be achieved there. That would make a difference to some of the discussion that we are having about the integration of business and research and development in universities and the impact on the start-up rate in the country. I constantly get asked by students in post-graduate courses from overseas, what can I do to help them to stay here because they want to start a business? It is a pretty regular request. That is an area where more could be done. On the co-ordination issue, I am certainly conscious that one or two of my members are interested at the extent to which the work programme will transfer will genuinely have flexibility. It is important that local authorities, Skills Development Scotland and the delivery of the work programme all work in harmony. At the moment, you get the sense that that does not happen. It is almost as if the local authorities and Skills Development Scotland are at some extent clearing up behind the operation of the work programme. It would be disappointing if the transfer of the work programme did not lead to much more coherent interaction. However, I agree with the point that Allen has made that we are seeing much more of that integration happening on the apprenticeships field. That is very welcome. Rob had indicated earlier an interesting R&D innovation issue, and that has come up on a number of your responses. I think that it is appropriate to let Rob have a... Thank you, convener. Being productive is the words that Stuart Patrick used there. Sica said in his submission that we would welcome the exploration of further powers that could allow for additional incentives to support and stimulate business research and development. The IOD talked about R&D tax credits, SCDI talked about additional tax incentives. Do you think that Smith has clarified that and that it is likely to be able to be delivered? Probably not. One of the challenges with research and development is that we have quite a few powers in place at the moment to support the existence of research and development activity. We have particularly the use of regional selective assistance and the various grants that are used through Scottish Enterprise. The question that I have to ask now is whether we really genuinely would achieve a great deal more with substantial tax powers or whether the company base is the right company base to start with. You could reduce tax powers and it makes no difference whatsoever, because the company base itself is wrong. There are particular areas where, for example, the patent box with the 10 per cent rate clearly has an impact with life sciences companies. It may be over time as we build up the capacity in certain sectors in engineering, in particular, that tax powers might become more effective. At the moment, I think that it is curious that we have such an array of grants available, which is the flip side of tax powers, and yet it does not appear to be making a tremendous amount of difference. We would be very sympathetic to greater powers to reduce taxes in R&D, but we just asked the question why the grant arrangements at the moment are not quite reaching the point where you would think that there was change. The organisations made it quite clear that this was key to dealing with productivity through better research and development. Have you got anything to add, apart from your belief that it would not occur? Would you underline some of the points that you make, for example, David Wat? I think that there are two or three things. I mean the point about the disparity. I think that there is something that we can do already, right now, regard it before we go on to the tax point. We have an organisation called Interface. We bluntly do not have enough interface between universities and businesses, and I am not blaming universities primarily for that. It is probably more business. We also have a tax credit system that, to be honest, with a lot of businesses, we are not aware of and do not understand. Maybe we have a role again to play in publicising that. I have a member who has made a very significant business in the past 10 years through starting that and doing so successfully in working in Morocco, of all places, doing a similar thing. There is a niche even for him to, while taking his percentages to get companies to realise that there is a tax credit system that is currently available, so there is an education thing. However, I do wonder if those are centres where more widely publicise. Again, bluntly, HMRC is not normally famous for publicising the fact that it sometimes gives money away in this case, and it can be very helpful to business. I think that there is a real big education thing. However, I do wonder if those were more beneficial, if they were able to be more targeted to local areas, to industries in certain situations, if that would be helpful. For example, one could argue that oil and gas needs support at the moment. It might not need it. It did not need it five years ago. It might not need it in five years. It could be flexed. That is a good question as to whether that sort of power was with the Scottish Parliament, while that might be more effective. There was some variance of those powers as well. It is quite complicated, because obviously the research in itself, as far as university is concerned, is quite an international business and certainly a UK business, so that is a complicated issue as well. However, there is a bit of how it applies to business and gets to businesses. Stewart is right that we already have a number of schemes, but some of them are not getting out there and we need to do that first. Secondly, there is an implication that we do not have enough out there, so I think that we would be very happy to discuss how we might do that more fully. I think that there could be an argument that having it in this Parliament might make it more effective and closer to businesses in Scotland. I was short on the answer, but there is a big goal to be had. We make the point that even HMRC recognises that there is a benefit of £3.60 to be had for every pound of tax credit, if targeted appropriately. Part of that appropriate targeting would be whether any change to the system would allow targeting in sectors that are most likely to benefit from that support, for example. If the Scottish Government was able to target in life sciences, for example, or in areas of the economy that were needing that extra bit of incentive in Scotland, which might not necessarily show in other parts of the UK, and be able to have that variability and recognise the diverse nature of the economy, it is certainly something that we were supporting. In energy, other than oil and gas, the need for that kind of research and development is clearly something that goes with having more tax credits. One of the things that we find encouraging in the city region and in the west is the emergence of much closer working between the Scottish Funding Council and BIS through what was the Technology Strategy Board in Innovate UK, where we are seeing centres of excellence being supported, which genuinely bring businesses, academics and government together in single locations. For example, the stratified medicine centre that will be developed alongside South Glasgow University Hospital or the Technology Innovation Centre at Strathclyde University is close to opening next to its facilities in the centre of Glasgow, which will focus mostly on engineering and, to some extent, on the energy market. That is quite encouraging because it is different. We have tended to look on research and development as either it is within company taxation incentives or it is about trying to get spin-outs out of university through commercialisation of university research. Actually seeing university departments working alongside businesses to solve practical problems in co-located areas is relatively new. That has got some promise. In a sense, we still do not fully understand the reasons why our business research and development is as low as it is, but I think that we would want to have a panoply of measures when simply relying purely on the argument that we want to see research and development tax credits. That should be part of an overall package. It has got to be a much more wide-ranging portfolio of measures. I think that Tavish has got a supplementary. Then I am going to go to Alex, and we have been talking about how we might spend tax. I think that he has got a question about how we might raise tax and divergence issues. Tavish. Thank you, convener. Rob Gibson is a very fair point. I was just trying to contrast that with your earlier observations about not making the tax system more complex, because my recollection—and maybe Linda would reflect this—was in submissions made to Smith. There is an awful lot from business saying, for God's sake, do not make the whole thing even more complex. Tax credits was one of the areas that highlighted time and time again about that. Could you just square the circle for me about you want more room for manoeuvre on tax credits? Is that going to be done through and with the Scottish Government and the UK Government working together to achieve that, or are you arguing absolutely for the devolution of those tax credits that some of you have described this morning? Inevitably, a bit of both. If you take personal tax credit system, which is overly complex, massively so, there are clearly lessons to be learned from that side of the taxation system in terms of business taxation. That balance between level of complexity and the ability to target is something that the personal tax system has struggled with. However, there is a balance to be struck, and it might be a different balance in different parts of the UK. I think that your point about the Government's working together in making it clear, I think that the point about—I am not quite sure that it has to be devolved, but it certainly has to be more localised, because it is not seen as easily accessible by companies from Apple Cross to Elgin. That is an issue that is much easier to do from here than it is from London, so that is probably a strong argument for devolution of that tax and implementing in the support of it. However, it is a UK system. It may be, as I said, a bit nice about being able to flex to industries and sectors, as we talked about, but it certainly has to be more localised in terms of its impact. I want to talk about the tax system in a slightly more general sense for a start. We have heard submissions on corporation tax, for example, from yourselves and from a range of groups that are fairly opposed to the devolution of corporation tax, because of the divergence issues that make them alone. However, clearly, in the Smith commission proposal, there is plenty of room for divergence in the tax regime. Interestingly, most of the witnesses that we have spoken to in previous weeks wanted tax powers devolved not so that they could cut taxes, as they understand. They were perhaps thinking of ways that they could spend the money. What threats do you see in a divergent taxation system to businesses in Scotland? It is one who sat through the early days of the Scottish income tax that is coming along, so the income tax rate and the defining of a Scottish taxpayer with 10 Treasury officials, another end of a video camera and about five of us, most like actuaries, sitting in an office in the bowels of Milford Street recently. I can tell you that it is pretty painful as it is, so if that is an example of how long it is going to take to do other things, we will get some challenges in terms of just the administration of it and the defining of it in terms of income tax. However, your point, as you have hinted at it, is that we have a real concern that, because this Parliament gets tax powers that will think great, we can raise them, both out and the point that we all made earlier on is thinking what the implications of such decisions are. If you look around the world, small countries tend to be high tax countries. If we are a high tax country, it is not a threat, it is a real reality. We will have a significant number of our members who will just run across the border if we become a high tax individual tax rate economy. It is not a place that people are rushing to be working in. There is a level in that and there is a balance in that, as the certain points have been well publicised at UK levels before. I think that the point that Stuart made really well earlier on is that, while in the IOD, for example, we have been strongly against devolving co-operation tax, I suspect that I will have to hold my members back in Scotland from demanding it if it is devolved to Northern Ireland as well. There are some challenges if that happens, so there is an issue there as well. We can understand the devolution of income tax. The fact that it is raw said earlier on is personal. We all have a system, we all have a number already, we all have a nace at the end of it because you are in Scotland is relatively straightforward. That, in itself, will take some time. For bigger employers, to be honest, it will be a relatively small entry in a computer system. For smaller employers, inevitably, it will be a bit more difficult, but it will be in place and we can work on that. We probably will have, by the time that the Smith change has come along, a situation in place that will make it work, but please do not make it a licence to raise taxes automatically. I made at the beginning that the most important issue that was raised by the members during the referendum campaign was that income taxes were considered to be the most significant issue. If I take what Professor John Kaye was saying about how many people it would need to shift across the border in order to offset the impact that it would have on putting taxes up at the high end of the bandings, I would certainly feel that it is not impossible to see that number. He said a thousand. I do not know if that is true, but that certainly felt a realistic number. There are a thousand people shifting across the border. That could happen if you listened to some of my members. It is relatively straightforward to run a business in Scotland with 90 days access to the country under the taxation regimes that would allow you to do that. I can think of several people who already do it, so it is feasible to consider that as an outcome. However, the more important thing is not that. It is the extent to which companies would have the ability to attract talent from around the rest of the country into Scotland that is more worrying. It is much more difficult to assess, but it is much more potentially much more damaging to, particularly to engineering companies, to financial services companies and especially the creative industries companies, when you are trying to attract talent from the rest of the UK. I have already spoken about the complexities of the tax system, but I have also spoken about little bits of fine-tuning that you believe would contribute positively to business development in Scotland. Is there not a danger that if we allow the system to diverge in the way that we have described that companies working across the UK as a whole will simply find the field becoming more complex, not less complex and that it may be more difficult to administer that single regime? If we come back to the guiding principles of transparency, predictability and the desire for stability, the strong message from our members on that was that as long as you have those characteristics of the system, changing aspects of it as you go can be dealt with as long as there are no shocks being brought in. You are not imposing a structural change to the system, which is going to impact unduly in one part and therefore have a knock-on effect in another part. Having that predictability and that drive for stability is clearly the overall riding concern. Having changes to individual taxes or allowances or credits is just the meat and drink of systems. Certainly, companies and organisations are used to dealing with that both in a national sense and in many of our members' views, because they operate in regimes across the world—different fiscal regimes across the world—whether it is a federal scheme or whatever. That kind of balancing goes on all the time, but it has to be done on the basis of sensible relationship and sensible rules for the game. None of the shocks to the system that are introduced at the whim of the incumbent administration at any level and that there is an agreement that the overriding aim—let's face it—is the central policy purpose of both Governments, publicly stated, is the growth and stability of the economy. There should be the ability to come together and create those conditions for predictability and that level of reassurance. Let me get to the point that I was trying to make. If you look at the general powers that have been developed in Northern Ireland over a number of years now, particularly not tax, but the welfare spend, what you find is that a great many powers have been devolved. In fact, what the Government in Northern Ireland has spent their time doing is changing nothing. They have tried to shadow the UK system. If we look back again at taxation, tax powers are not a new thing for this Parliament. We have had the power to vary income tax since 1999. In the past week, we have heard announced changes to the land and property taxation tax that is being brought in. We have heard John Swinney talk at great length only yesterday about how he wants it to be revenue neutral. He wants to ensure that there is as little as possible deviation between the effect in Scotland and the rest of the UK. Are we not in danger of going through a process where we devolve a huge number of powers under the Smith proposals to the Scottish Parliament and the Scottish Government only to spend many years in the future not using those powers to ensure that we don't create any differences? It is all to be fair. It is all we can do is make the case for any change and then it is over to you guys. So you have no fear. I did ask for sick cancer. I will just add to the point. That is what devolution is about and we work in involved countries. I do think that there is a genuine potential benefit to decisions being made more locally on things such as taxation. Scotland is not London and the UK is guided a lot by the activities of London. There is a strong argument for you and your colleagues to determine in a tax level that is different from that in London to attract people into this country to work. Why not? I would think that lowering tax should be brilliant for the economy of Scotland personally. Your point about that has not been much evidence of that in the recent past. Will there be in the future? I do not know. There will be a compunction, as you well know, to set the tax levels and then there will be a lot more thought and debate about it as well. The point again that we keep making is that there is an economic impact to decisions that this Parliament makes and sometimes business does not think, it always thinks that through very much now because you are dealing with income you will have to think that through and we will hopefully benefit from the results of it, potentially we could suffer. Maxwell has got a supplementary and then I want to move on to other areas. The warning record, but I go back to my opening statement saying that in an industry that is very dependent on the public sector and on a low margin obviously any change of direction is very sensitive to. We also urge and we did in our submission to Smith that we urged caution in the introduction of any measures. We did not say don't and I think that and in fact perhaps we should have said more there. By all means have the powers and then at the appropriate time consider using those powers but not don't ask for them. Maxwell and then I'm going to go to Stuart McMillan. I think he's got a question around the APD. Perhaps of course Northern Ireland hasn't made much change in its powers but its powers over welfare because of course it only has one half of the balance sheet. Effectively you don't have that. In every new raising powers you can't make much change in terms of what you would do for example with welfare so that's the point that I just wanted to put on the record. People of other small countries might be slightly confused by some of the comments that we've just heard around the panel. Do you think that people of Norway and Switzerland are desperate to hand away their tax powers because they've made such a mess of creating wealthy economies in their countries? It seems to me that they've done reasonably well when they've managed their own affairs and yet we seem to have an underlying belief that the transfer of powers to Scotland over a range of taxes would create a threat and that divergence would automatically mean a worse situation in Scotland. That doesn't reflect what I said at all. At the end you didn't, Mr Watt? No, I feel that. I think that Scotland could be fantastically successful. The political system, regardless, will thrive and survive and go on with it. I'm saying that a high tax economy, if you've got a lower tax economy 100 miles away, is slightly different from Norway and Denmark and Sweden and if we could all test it. Some of these countries share borders but they also share pretty high taxation levels. I mean, I've just had a very long conversation and diatribe from one of my members, in fact, whose wife has finished, who spends a lot of time in Finland, and just to cheer you up, he voted no very strongly because he said, I don't want to live in a small high tax economy and all of these are small high tax economies. Now, whether I share and that's not the view of the idea necessarily my view, but there are some potential ramifications of being a small number of people, so anyway, let's part that. That's the past. What I want to ask about though is because the question that Mr Johnson asked was about the threats. I want to ask about the opportunities that such a thing would bring, the evolution of tax. Highlighted, the key opportunity is exactly what I highlighted. The key opportunity is bringing it closer to businesses locally and having the chance for you as a parliament to make decisions locally that help the people of Scotland in taxation, but raising taxation is not necessarily going to make business at your very portal of business or indeed help the economy or indeed the people of Scotland. You would accept it because we had a lot across the panel about people fleeing across the border. We had some of that nonsense during the referendum campaign. The parties that supported a yes were very clear, certainly we were very clear that what we wanted to do was create an economy that actually was good for business, that would grow the economy, that would create more wealth and opportunities and that that would be shared by the people of Scotland. That was the argument that we were making. Effectively, I wonder if the taxation powers and a basket of taxation powers, not just income tax but a basket of taxation powers, are devolved, do you think that a Scottish Government would not use that opportunity to invest in the very areas to actually create the wealth and the opportunities for the companies that you represent? From some of the early discussions about income tax, most of the focus has been on the £50 tax rate. That does not give us a sense that you are going to use a basket of powers to assist the growth of the economy. It comes as no surprise if we sit here rather edgily at the notion of what would that basket of powers be used to do. I would say that the circumstances that you highlight, particularly around Norway and Sweden, we do not start from the position that Norway and Sweden start from. You start from a position in which there are values and assessments about the future made by your existing population. In your business base, a fair number of people are concerned that taxes might go up and that they might act accordingly. Some of them are very familiar with the acts that you need to take in order to manage that. In doing that, in the UK, it is dead easy to run a FTSE 100 company from Buckinghamshire that is based in Glasgow. You can do that quite easily. Many of the folks who might increase their taxes might choose to do so, but, as I said, the point is not that a number of folks would make that decision. It is the impact that it has on our ability to attract talent in from the rest of the UK. We absolutely depend on that. We do not start from the same position as Norway and Sweden. I am concerned about the idea that you come from the principle that, almost automatically, it is about 50p tax rates. That is why we are making those— I think that you find that that is the Labour Party policy that they have been advocating at the moment, but I think that the issue is— I am trying to ascertain whether or not you believe that there are opportunities. That a Scottish Government would recognise those opportunities, and if it had those tax powers, it would use those tax powers sensibly not to damage the Scottish economy and Scottish businesses, but to try and help Scottish businesses to grow and actually create employment. That seems to me quite an obvious— It is conceivable, but it does not come across within the existing discussions. In differentiating between what could be the case if the result had gone differently in September and what is the case at the moment, we are talking post referendum, and the Smith commission is obviously a result of that. It is within the context of Scotland still being part of the UK. Our submissions were all on that basis. The discussion with our membership was all on that basis. We have all made it clear that we want to see more flexibility, we want to see more diversification of the system, we want to see powers for a purpose, if you want to use that phrase. If we can drag in the old word, subsidiarity, and you levy a tax at the area of impact, and we have all given examples of where we think that is appropriate, we might not agree across the board on each of those examples. Collectively, those examples probably add up to a lot more than each of us individually would go, but we have all given examples of where we think that flexibility is appropriate, and it would have an impact economically, a positive impact economically, and it would create opportunity. Mark, you were indicating an interest. I have read your submissions, and I am keen to get a bit more information on your rationale behind your positions on APD. It is pretty simple. 8 per cent of Scotland's companies export 8 per cent, which is not a glorious figure. Every single tool that we can use to help them to move abroad and look for opportunities to not move abroad, but to work abroad is very beneficial to the economy and to their companies. Simple terms, if you fly out of Scotland, you fly through London, as many as I have to do in other places. If you are paying taxation twice, you would like to see direct flights, of course that is the number one priority. The Government and the airports have worked very hard at doing that and we applaud that, but ultimately it is expensive. If I fly out of Edinburgh as I will shortly, I will pay more to the UK Government than I pay to Edinburgh Airport. That does not seem a good use of my money, to be honest with you. I think that there is a real challenge here in terms of the cost that we, as business people, like to say, are very expensive. If you travel and get the figures wrong, basically, if you were to travel business class and if you are going to China to do business, there are so many businesses that are courage to do, and you are going to be paying about £250 in taxation to get there. That is a lot of money. If you are then trying to cultivate links in China, you are going to be going about five or six times before you get any money back or even have an agreement to do business, it is a lot of money. Going to the Government, we really do think that this Parliament has to recognise the challenges. We are geographic and remote. I remember a number of years ago, I was going with a new department to Dailine, who started business class flights direct into Munich, and sitting in Munich Chamber of Commerce saying, look at this fantastic map of Europe. We are right in the heart of it, but we are not. We are right at the extremes of Europe, so flying is a massively important part of doing business in Scotland, and it always will be, regardless of environmental challenges, and we must make it bluntly as cheap as possible. Just to follow on from those points there about Munich and Bavaria, the Bavarian figure for export in is roughly 10 times ours, and clearly they have the connectivity issues broadly right. Air passenger duty is probably the tax with the least evidential basis for its introduction, and it is the tax that has probably been increased most in its short life. Since its introduction in 2007, on short-haul flights it has been increased by up to 160 per cent, and on long-haul flights between 216 and 360 per cent. It is an enormous increase. When people talk about the low marginal cost of APD, as David said, in terms of personal business travel, it is a huge cost and a massive barrier to people getting out and selling around the world. We are very clear on APD and the need for its introduction and eventual removal, and whether that is transferred or not does not really matter. It is the tax itself that is the key aspect. I think that we could just add a little bit to that to say that we absolutely agree entirely with what David and Ross have said about the locational issues about APD that make Scotland different. We have to depend more on air travel and hubbing than if you were flying out of even Manchester. However, another aspect of this is the extent to which it makes it difficult to attract airlines to invest in the routes from Scotland because it has an impact on the rate of return that they will assess when making a decision to set up a direct flight. David was absolutely right that the most important thing for us is to get as many direct flights as possible, but we know full well that that is difficult because we tend to be quite low down the list of priorities for international airlines who are currently expanding all their activities into developing markets. We want to get a Chinese airline into the UK. APD is just another aspect of the rate of return that they are calculating. Yesterday, in the Parliament, there were two issues of APD that came up twice. Once in questions to the Chancellor Minister, my colleague Willie Coffey asked the question regarding presswick and how it would help the Ayrshire economy. However, in the morning time in the finance committee, the issue of APD came up. Comments from the CBI stated that the APD should not be devolved. With the comments that the panellists have just mentioned, surely the CBI is out of touch with the economic situation here. Go for it, Ross. I am not going to mention those two letters, but I will mention the other three APDs. APD is a recognition across the whole of the economy and everybody who interacts with the transport system that the impact of APD in Scotland is disproportionate. We need to start with a sensible discussion with Treasury about the impact of that and whether a relative change in Scotland can be effected, regardless of whether the power is transferred or not. I think that it was when he was given his evidence yesterday to the Treasury Select Committee. He said that if APD was abolished in Scotland, it would have done some measure of work in terms of the impact of that on Newcastle and Manchester. They were predicting a 3 per cent impact on Manchester, which is obviously manageable in his language, and a 10 per cent impact on Newcastle. Obviously, there would have to be some mechanism by which Newcastle was given some measure of support. UK Government is alive to the issue as far as we feel in our discussion with them. If APD can be reduced and abolished even quicker under the current arrangements, without going through the transfer of powers, then all the better. If APD takes the revolution, that is something that we are willing to look at and consider. Again, the tail line is in Charlie, but for reasons of pure geography and trading, we believe that it should be devolved. In terms of that, do you think that it should be devolved immediately? As soon as possible, to be quite frank with you. I would like to hint to that, but I would like to see the abolition of the taxes as soon as possible, although that is feasible and there is a different story, but it is not something that we are supportive of. It does damage business, but there is no question about it. It is expensive, as I pointed out. I think that Bunker has a short supplementary, and then I am going to Mark. I suppose that it is the nature of taking the single issue and not connecting it up to everything else. I think that we had that last week with welfare. On the single issue, which is a big important issue for business, had been for some considering the time, the less tax taken there has got an implication on what we can spend in construction and on the welfare. I suppose that we are in this unreal situation where we look at all of this, like last week, where we want to maintain welfare spending or increase welfare spending. We want a minimum wage. This week, we want to cut taxes. We want investment, increased opportunity to borrow more, and investment in R&D. That is what we can't do all of that and cut taxes here, there and whatever, and maintain the welfare budget, increase research and development, or pay for increased borrowing. It is a quite strong list. Absolutely you can. That is how you run a business. You increase your income by having more people employment. By getting the 360,000 people in Scotland who are distant from the workforce into the workforce paying tax, you can spend more tax. That is how it does. That is what we need to do in this country. The other thing that I will add slightly at one point is that you probably all disagree on this. I think that we should look at the fact that you have just mentioned, for example, earlier on living wage. I think that the Government needs to look at how much money it is taking from people on minimum wage and living wage before it starts telling business to start paying higher wages as well. That means that some of the issues around about the money that we currently spend in the public sector are another big debate. APD is an isolated example. It can be treated as an isolated example because there is no basis for APD other than a tax grab. The impact of reducing and then removing APD, all the point of error submission, is that it is a huge barrier to growth. If we can remove APD and therefore grow the economy, and we think that that is a particularly strong barrier, then there is a balance in effect. It might not balance it entirely, but there is certainly a balance in effect. To round off on that, our own strategies at the national level do identify areas that we think on the whole have an impact on our growth rates and on our productivity. Exports and research and development happen to be two of those. It is not as if those discussions are happening without the context of a properly thought-through strategy. I will admit the earlier on the evidence that I am saying that I do not know that we have got all the answers to the problems that we have been discussing. However, at the very least, I think that APD and exports, the relationship is extremely close. I would argue that it can be treated as much as Ross says is an isolation. Mark Ruskell I think that that takes us to Mark Ruskell, and then I think that Lewis has got the question, Mark. In the institute director's submission, it talks about the fiscal regime on oil and gas, which is obviously topical, and it generally is all the time in the northeast of Scotland. Ross mentioned the 2011 situation, obviously the current situation. I think that it mirrors what David Ruskell is saying, that where there are job losses, one of the ways to protect those is through the introduction of key fiscal measures. The introduction of, for example, exploration credits, as Norway did in 2005, has been mooted. I know that in your submission, you suggest a Scottish input to tax on oil receipts and the oil and gas fiscal regime. I wonder whether you could elaborate on that and how you would envisage the Scottish input to tax on oil receipts and the oil and gas fiscal regime working? I think that, to some extent, you should slightly answer your own question. It also relates to a point that I made earlier on. I genuinely believe that taxation closer to the pair of taxation, closer to the business operator, is beneficial in terms of understanding what they are doing. There is also a sectoral input, and that is a classic example of that with oil and gas. To me, I am not quite sure in mind how the mechanics would work. I think that that would need to be teased out in discussion, but I absolutely do think that, for example, right now at the moment, we have a classic example of where, bluntly, if this Parliament had powers over—and even more influence, bluntly, over the regime on tax in the North Sea, I think that the regime would change much more quickly, bluntly now. There is a chance—I hope—that the chancellor will do something in the budget. Bluntly, my view should be doing it today. I think that if this Parliament had powers regardless of party, I think that they would be doing that right now, so I do think that the Scottish Parliament should have an input to that. Whether it goes as far as actually having it devolved, I think that it should, personally, because I think that, again, it is a very specific area. It is hard to think of another area, because even renewables, for example, where we have got predominance, is still a UK very strongly-based organisation, oil and gas, or industry. Oil and gas is very much Scotland's baby, if you like, sort of thing, and it has to look after it and nurture it and should have a very real input to that. At the moment, it is a classic example of that. I would be in favour, bluntly, of Scotland having that sort of taxation powers. The ones that you have suggested, for example, have been flexed in other countries, would be well residing in this Parliament. I think that they would be quite well handled for that particular industry. Whether it is a model that could be followed in other places, I am not totally sure. Or other industries, I am not totally sure, but that is a classic one that is, bluntly, 90 per cent of Scottish industry, if we are honest. When that power is not transferred, where it is retained, there is a need for Scottish Government to have input into some of those discussions. For example, on decommissioning and the decommission relief deeds, there is no mechanism at the moment for Scottish Government to have an input into those discussions, and there certainly needs to be. I think that we are going to continue this conversation for just a little while, because I have seen a few folk put up for supplementaries. Mark, do you have anything else? Lewis, and then I will move to others. Lewis, was it integrated first and I will come to you. My question was slightly stepping back a little from the on-gast thing, although that is very important. Alex and Tavish were in it specifically in this area. We both put our hands up at the same time. It was on the issue of the devolution of the oil and gas tax regime. The reason why that has not been proposed is that, if you look back historically, the volatility and the potential tax take in that is enormous. Twice in the last six years, we have seen the oil price drop from $130, $140, in some cases, right down to $35, I think, six years ago, and we are currently hovering at just under $50. That enormous volatility, if that was to be devolved, must have surely a parallel borrowing power that has the same scope to cover that volatility. If we are going to devolve the tax powers over the North Sea, or tax on the North Sea, how much borrowing power do you think we need to give us continuity? As I am baris in position, I find myself in a spokesman for the SNP. If I was in business and I had a lot of money coming from oil and gas, I would not have spent it all at the same time as it came in. I might have been protecting the country against the volatility, as well as other countries have done. It happens to be a party policy. It is not made as a business point about how we spend money in government in this country and just assume that oil and gas will constantly be bringing us in money when, clearly, it will not be. You are saying that, because of the size of the UK, we can accommodate that. We will find out how that goes from the chance that deals with it over the next year and 18 months, that fall and tax date that he will have, as well. The point is valid about the outcome of the volatility changes. My point is that, again, the Government should react more quickly to the volatility changes in doing something, and it seems that Westminster bluntly has not been reactive enough. While it might be taking the pain, it is not actually doing the things that it has to do. I think that going back to and very much know the situation in 2011, I did not say that I was not horrified that it was taxed. I was just horrified that it was not told about it. We go back to the previous time that it was taxed heavily by Gordon Brown, the then chancellor, bluntly. He told him that he was going to do it and that he had a best part of a year to prepare for it. The last time they were horrified, it did not happen. Now they are horrified because there is no really working with them to actually get over this, they think, relatively short term, although BP now has three years' problems. I think that that is where there is no working with anybody at the moment, and that is the problem that is actually going on. That would be your argument for not devolving the impact that would be massive on a Scottish budget. I am not saying necessarily that all the tax income should be devolved, but certainly the input and consideration of the taxation level should involve this Parliament, because this Parliament is very closely engaged with oil and gas. We would certainly agree with the point about spending the income more wisely in what has happened in the past, and that is emphasised by our suggestion in terms of tax relief credits, in terms of being able to support cash-in infrastructure projects, for example. If that had happened in the past, for example, Aberdeen would have had a mass transit system linking up the key economic areas of the city centre of the airport, the university and the port, and hopefully that can be put in place at some point in the future. However, we are not arguing for the devolution of the fiscal regime. If you take the point in which the press had a bit of fun with the points in which the Government of Bank of England was making earlier this week, then that aspect of the balance in terms of the UK economy and its ability to withstand that shock is a point that is obviously well made. There are aspects of that discussion that you clearly point out, Alex, which are members who would agree with it. The Smith commission has a lot on inter-governmental relationships, so your point about decommissioning, I hope that you might accept, would potentially move forward by the strength of the work that I can say without a fear of favour, both John Swinney and Michael Moore did on putting that into Smith, so there is some very solid stuff there in terms of your point on decommissioning and how the Scottish interest would be taken into account there. Secondly, can I just ask David Watt? I mean, when I met BP's North Sea manager on boss on Tuesday in Aberdeen, he said, it's not just the tax regime. I absolutely agree with Mark on this. It's not just the tax regime. It's also the supplier costs and the internal company cost structure, which is the three legs to the stool of what needs to happen in the North Sea right now to make sure we're a competitive industry in the future. I hope that you might accept that the tax regime is absolutely fundamental. I agree completely on what you said, but there are two other legs to that stool that need to come ahead to. I might be just to make a point. It's always something that I have to do representing the institute of directors. We are not an organisation that supports our register of the high wage levels at any point for company directors or anybody else, and the fact that our wage levels apparently are about a third above Norway's at the moment is not a healthy situation. Many people saw that coming. I don't think that it's necessarily always a good impact for somebody whose son had to move out of Aberdeen because he couldn't afford to buy a house. I know very well what the impact had for a lot of people, so I think that I'm not defending that. Bluntly, that was coming anyway, and your point is valid in that respect. Sadly, it's resulted in job losses where I would rather have seen and salary cuts for many people. Maybe if that had happened more thoughtfully as those wage levels developed, we might not be in this situation quite so much. The point is that the cost is a big issue as well. There's no question about that as well. I'm just very strong to support Ross's point. One of the reasons that's in there is that when I did my draft—my comments about North Sea's in there—when I did my draft, my Aberdeen committee were the one group who were really jumping up and down, but you haven't said anything about willing gas. It's much so important in this country. Also, I think that the fact that fuel ignored to some degree and the point about infrastructure is a valid point as well. My committee has just started again jumping up and down the fact that you can't get to the airport in a train unless you then get a bus to get to the airport. It's just, honestly, oil and gas. We don't have a direct flight going back to APD to America into the oil capital of Europe sort of thing. There's strange things going on, so a lot of that is, again, going back to giving Alucard how it's spending money, but generally we haven't spent on some of these things as he knows all too well. The Smith report contains agreed recommendations for devolution. It also includes seven areas. One of them is a fresh talent initiative for graduates on which the two Governments should work together, but it also says that the two Governments should work together across a whole range of areas and that needs to be improvements in joint working and also in accountability departments. I was very struck in the SEDI submission that it reflected 50 years of concern about regional balance within the United Kingdom, by which I mean balance among the city regions, but also balance between Scotland and the north of England on the one hand and the south of England and London in particular on the other hand, and that's an issue that clearly is still with us. I'll be interested in comments and we've just heard very eloquently the issues facing the oil and gas sector and how important that is. I'll be very interested in the views of the panel about what can be done now in the context of the Smith agreement by joint working across the UK to address that regional imbalance. Joint working, better working with the north of England is something that's been mentioned in one or two of the submissions. The strategic corridor from Aberdeen to Newcastle is again critical to many economic activities within the northern half of this island. What more can be done between Governments and between central and local Governments to strengthen those economic links and strengthen that rebalancing, if you like, of the UK economy? When our membership looks in on Scottish Parliament and Government and UK Parliament and Government and looks at the relationship between them, we see instances such as the Scottish Select Committee, which could be meeting here and being more accessible. We see the Prime Minister today in Edinburgh, not in this building. Sorry? He will be, but not making his announcement. We see a lack of co-operation and a lack of maturity about the relationship between the two Governments and the two Parliaments. Looking in from outside, that just looks weird. There was a big issue about the symbolism of that and what kind of message that sends in terms of the willingness of both Governments and both Parliaments to work together. First and foremost, there's a symbolic issue. Then there's the practical, the day-to-day aspect. Whether we are in the territory of undue 50 years or, in Sir Richard Lees's words, the leader of Manchester, undue 100 years of centralisation. If we're in that game of decentralising and whether the decentralisation stops here or goes further out to the city regions, if we're into that game, then fantastic. Our membership would support where the impact of that is measured, where the impact of that is recognised and where there's an evidence base to move in that direction, but not decentralisation for decentralisation's sake. A couple of thoughts on this. First of all, just in the context of the centralisation issue, yes, we're overcentralised, but equally we're having to deal with overcentralisation to the global city of the world. London is an unusual city now. It's not a question of talking about Germany or Italy or France. This is a very strange set of circumstances that we have to deal with. London and New York battle with each other to be the most successful cities in the world. It adds to the challenge of regional development. As a consequence, we very much welcomed the move between Scottish and UK Governments to support a Glasgow city deal, because that was part of a general move around the UK to look at how you devolve powers to local regions that reflect local economies. The important part of that deal is that it's regional. It's city regions, not just in central cities, so you're looking at having to change the structures of government or the arrangements within the city region in order to implement. That's a helpful move. Manchester has been well ahead of us in that respect, I have to say. Equally, there are some other examples where perhaps the interaction between UK and Scottish Governments could improve over time. I think that it's useful to see the Scottish funding council and the Technology Strategy Board re-innovate UK begin to look at complementary decisions that reflect the UK's research base and the extent of which universities work together to exploit technological improvements that cut across the borders. I think that that's beginning to show signs of improvement. However, one thing that I'm sure there's more to do is between UKTI and SDI, where the extent of which the joint working has been notably lacking. We work very closely with UKTI because we do trade certification. We don't find ourselves working so closely with SDI because we don't do so much in the way of trade missions and so forth, but it's notable that the two organisations have very different approaches to life. They're using infrastructure that could be much more easily shared and would help to tackle one of the biggest challenges we have in accessing export markets. I absolutely support that point. I think that Brian Wilson has a view that identified that as an issue as well. I think that Scottish Export was very useful. I think that we should all adopt and follow through. That was one of his key points. He gave examples of good co-operation but equally some pretty bad examples of lack of co-operation. I've personally experienced that and I think it's really not helpful at all. I think that that's an area without a doubt. I think that the whole area of infrastructure, indeed particularly broadband, is another area where there has been some UK Government input and that's helpful. There could be more in that front as well. Crowny State is mentioned, as is evidently obvious as you're aware in the Smith report as well, but I just would re-emphasise again DWP Job Centre plus areas there. Biz, seed enterprise initiative, for example, is a great scheme, little known in Scotland to us. We need to work and do that as well. There's fox on both sides, probably, as I said, for that as well. There's lots of areas that would be very beneficial to this country if we work better together. I think, Linda, that you had a question. I think that we're almost coming. Supplementary, sorry, you've got a welfare one. I'll take your welfare one first. Welfare is an unusual issue to raise with you. However, we've discussed it with a lot of other people. One of the things that's said quite often in this Parliament is that when we're talking about those who are in low wages, is that the welfare system is effectively subsidising companies to employ people on low wages. We have people talking about proposals that might suggest that in Scotland we can increase taxation and we can increase the level of benefits. Is there a danger that that might just further subsidise low wages in the Scottish economy? My answer to that is not a couple of things. I mentioned a couple of things already. I was invited by the then Deputy First Minister to sit in her welfare reform group. I was happy to do so, but not signing up to the premises in an independent Scotland. I wasn't signing up to that bit. I've got to say two things. First of all, I learned a lot in that group as well, because a lot of the presentations that we had probably did away with some prejudices that I had around welfare as well. I would certainly recommend that document. If you haven't already read it, please do it genuinely. It's important and there's a lot of interesting and relevant information to your question on that front as well. The other key area that I wanted to be involved in is because I see the absolutely crucial link between welfare and work. Most people, the number one thing they want is a job and a sense of being out of that job as well. That's really important. We should be using welfare system, a benefits system, to get people into the workplace. We should be not seeing the two things as different. There is not an easy connect at the moment, if I'm honest, as well through some of the systems. I understand the UK Government's trying to help. I'm not negative about their efforts to help, but the problem is that they're starting a system that is arguably broken in trying to mend it. In some ways, it would be nice if we could start in square one and not have a system and just start, but that's not going to happen. We're going to have to work with the system that we have and develop it into something that does actually work. To get people back into work gradually and to stop silly things like, I can only work 16 hours. I constantly get employers saying to me, I want to employ this person for longer, but they'll lose all their benefits. It's not only lose their working tax credits, they'll lose their council tax relief and they'll lose their various other... Well, I know. In essence, it's simple. The problem is that the switch-over to that is assuming that there's nobody, and that's the real problem. The people getting caught in the middle of that. If I'm honest, in that switch-over, we probably don't have enough people. It's not for me to suggest employing more people in the public sector, but in that space, at the moment, to do that change-over, which might in the longer-term work for some people, I've got to say. The fundamental thing is the relationship, the employer's value. They need to understand a simple system that needs to encourage people to work, even if it's gradually getting into work. But genuinely, I had an employer only a couple of weeks ago saying to me, I've got a cleaner who worked for me, and she probably isn't earning a lot of money to be here, but she wants to work more, but she can't. Now that's how ludicrous situation we've got ourselves into. We have to stop that. I'm not blaming anybody, it's just where we are just now, and we have to sort that. Can we sort it better in Scotland? No, I think we possibly can, but we can only sort it with cohesion. Another point I made earlier on, the relationship between skills development in Scotland and all the evidence that I heard is the number one reason for people being on low wages is low skills, bluntly. If we upskill people, they will not be in minimum wage or living wage, they'll be beyond that. We can't dissociate skills development in Scotland, they roll with Jobcentre Plus, they roll with Business Gateway and all those other organisations working together to help those individuals to get to a point where they're not anywhere near that minimum wage as well. If the Government wants to really help people in minimum wage, stop taxing them. If it wants to help people in living wage, stop taxing them when they earn that sort of money. Don't blame employers, stop taxing them. Why are we taxing people 20 per cent on that money beyond £10,000 to £13,500? I still want to contribute, but I know that both Duncan and Tavish had issues about the role of the parliaments and to get them in at some stage, but Linda, you had an issue that is related to— Yes, it's sort of related. The Institute of Director Submission, you actually say in it, David, that you wanted the Smith commission. I remember that coming in at the time to facilitate economic growth while promoting economic social fairness, which ties in with what you've said. I've no reason to believe that that is not the mission of everyone who's involved in this, and indeed most people in Scotland. My initial thoughts were, do you think that the package that has come up from the Smith agreement could help promote both of these strands? Since even thinking about that question, I have had a note of some of the things that are in the heads of agreement and the draft clauses that have come out today. It would seem that there's a couple of things that I find concerning that I'd like your views on. One is that the UK Government seems to be maintaining a veto over changes to welfare, for example, and there are issues about additional benefits. The other thing that may be found quite concerning from the conversation that was started earlier is that it looks like capital grant is to be replaced by borrowing powers rather than augmented, and I wondered if there would be a quick reaction to that. Obviously at this stage it's coming from an outside source, but do what you best you can with this new information, obviously. That's not easy. I don't think we're in a position to respond to those, but what I can do is respond to the context for that question. The context is that we as an organisation come at the whole debate from the economic perspective and look at the impact on the economy. If you're talking about some of the issues that Alex was raising in Orlanda, then it's that issue about what are the barriers to productivity? What are the barriers to innovation? What are the barriers to internationalisation? Clearly pegging somebody to 16 hours is a barrier to productivity. If somebody wants to work more and they are a productive person, then we're limiting their productivity as an individual and limiting the productivity of that organisation. There needs to be a recognition of that as a barrier in the same way that a pure child care system is a barrier to work and a barrier to productivity. We exclude a huge section of our population from productive work because we don't have in place an accessible, affordable and flexible child care system, which is why SCI is working with Children in Scotland and the Child Care Alliance to have a look at that system to see whether we can drive that from an economic perspective. The most exciting aspect of the white paper by far from SCI's perspective was taking what was previously seen and historically seen as a social policy drag, the cost of child care, and ramming it up front and centre as an economic driver and having a recognition of bringing that social policy agenda and the economic agenda together. That symbolises the journey upon which this Parliament is on in terms of Smith and the rest of the other side of the balance sheet. It's taking the social policy agenda, the economic agenda and trying to understand the impact of one on the other and not looking at them in isolation. I think that there are a number of different examples that you could pull on that are barriers to productivity that fall into that category. On that point about context, I will pull it down into the locale I know best. The comment earlier about skills and the extent to which the system supports the achievement of skills to then subsequently achieve a good living wage. I will make two points on that. The Centre for Cities report that comes out every January constantly highlights one challenge in the west of Scotland, which is that we have very high levels of high skills for the proportion of our population with graduate level degrees. Glasgow is the eighth out of 64 in the country, and other Scottish cities are near to the top of that list, too. Glasgow is equally very near the bottom when it comes to those with no skills at all. A lot of the powers are already there in place to tackle that issue, and we still haven't managed to do so. In some respects, I am not sure that the Smith commission debate is getting to the heart of that issue. Just as a side point around the comments are well for more generally, one of the reactions that I found within my own membership to the whole discussion through the referendum debate was to raise the issue of the living wage. Previously, there was a knee-jerk response that said that we do not really fancy that. It could be adding costs that we do not want. Quite a different attitude is developing now that says that this might actually be an important part of the success of our companies. Some companies for a long time have said that living wage was part of their competitiveness package. It is how they attract people into their business and how they grow the productivity of their own firm. We have now agreed—I have certainly got a decision being made by my council of directors on Monday—to open up a full review of our position on the living wage. I think that that will be beneficial for the future. Thank you, convener. Can I just say that I hope that we can all work together to try to achieve what we all quite clearly want? In the last bit of time, we have got available about eight minutes. I would like to have a discussion about the role of the Parliament. In 1989, prior to that, the consultative steering group, many of them are still around, set up the Parliament's procedures. The principle was that it was going to be different from Westminster, and we are living with that in all its shapes and forms. I suppose that the question is that, given additional welfare powers, taxation and the Parliament, it is able to provide that scrutiny. Is it up to the job to take on these responsibilities and how do we need to change to ensure that we can provide that scrutiny, that oversight and that governance? That is a cracker. That is a good question. Let us be quite honest that one thing that I have heard a lot in it, this is not an IOD position, but just in general conversation I have with quite a lot of learning people around the country, that this is a unicameral system and that was always going to work as long as we had a coalition Government, but now having a majority Government, it makes it more difficult for it to work as well, and the scrutiny of that is an issue. I think that the other thing that I suppose is in a practical terms from a business point of view, and I think that something Stuart mentioned earlier on, is that one thing that concerns us in terms of all the changes that are going on, and it is really the basis of our discussion today, is what is the economic impact for the business of the decisions that the Parliament makes, and how, to some extent, does it know that? Is there an economic assessment of the exercise of its powers? I think that sometimes there is not, so there needs to be some, I would suggest, sounding word, business-wise word, whatever you want to call it, that actually does that. I am not sure that the council of economic advisers serves that purpose at the moment. My experience seems to back and forward being the Scottish Government, and everybody writes a big, long paper, which everybody just about reads, and then they send another big, long paper back to each other. I think that if that is the body, then it needs so much more power and teeth, but somebody needs to be looking at the economic impact and outcome of the decisions of this organisation from a business point of view, that is the issue. Whether it means a restructuring of committees or another chamber or something, that is way beyond my pay grade. You made right at the very beginning that David was highlighting there that some form of standing group that has a business advisory role to the Parliament, not to the Government but to the Parliament, is something that we wonder might be useful as you are going through all of the content of the Smith commission and any other developments that may occur as a result. We could not begin to tell you how that would work in practice, because we are no experts on the systems and management of the Parliament, but we do think that the Parliament needs to have that kind of support rather than simply the Government. Specifically, one of the major points of engagement is the business and Parliament event, which is not all that it might be, and that there is some work that could be done in order to shape a better relationship. In the wider sphere, the national economic forum is beginning to show signs of usefulness and purpose, but there is still some work to be done on that as well. Just on the same theme that Duncan has raised, the STDI submission to today's meeting says on this issue that committees of the Scottish Parliament need to display the same independence from party politics and forensic analysis, which characterises the best of the committees in the UK Parliament, especially at times of majority government, either by coalition or by single party. Is it mechanisms or is it people? Are we to blame? By and large, we have demonstrated today that independence of party and the engagement has been on a basis that we would expect, but it is a young institution and it will take time for it to develop its own character and its own way of working in its relationship with others. Certainly, when we ask our members their views of the Parliament and the Parliamentarians, they are very much on the basis of that they have not got enough incentives. The framework does not allow them enough incentive to focus on economic issues. There is an issue about the context in which they live, and, hopefully, one of the central results of the Smith transfer will be that it provides a better framework in which to operate and more incentive to focus on the economy and economic growth. I was just going to support that very much, and that sounds really sycophantic, but I do think generally speaking that the committees that I have been in front of have been very sensible and non-partisan in their approach, to be honest with you, and I think that they can genuinely say that. On the whole, MSPs are fantastically accessible to businesses, locally and things like that. Minister, through Governments, in my experience, the Scottish Parliament, have all of whatever political hue you have been very successful at being one of them, among others, and Bruce himself as well. I think that that has been a fantastic thing, that approachability, and that nearness to the business has been really helpful in terms of listening to business people. I will say that real business people, not people like us, actually think that it is really helpful in terms of developing it, but I think that the point that Ross made is that, if you had a lot more power in terms of economic development and were able to flex your muscles more, you could have more local impact as well. It is a very dependent sector from this Parliament. We have great faith in the ability of this Parliament to deliver on our agenda, and we are very happy that it gets further powers and uses them in a gradual and measured manner. I suppose that, again, there may be a discussion for politicians in the Parliament, but we have a responsibility of committees, a numerous responsibility as legislators, inquisitors and inquiries to develop policy and review legislation, etc. Personally, I think that we are struggling to fulfil all of those roles. If we are going to have more of those powers, what should our focus be if we are changing? That is the point that I am trying to get at. We are attempting to do too many roles, but not good enough, but we should maybe prioritise in some of the other areas. That is a big question. If you can answer very quickly, that would be great, but I recognise that that is something that we are going to have to really begin on and get our teeth into. The answer lies in a central thrust from all of us throughout the session, which is that, with the decentralisation down to city region level and to the islands, then that should free up some of your time. That should allow you some more space and scope to take on some of the other responsibilities that you are getting. I have just very quickly added to that. That is where I think that the business advisory group, however, could actually help you rather than cause you more work. I think that one thing I would say is that I have been nice to politicians a minute or the other thing. It is really very careful to, as a politician, to listen as well, and that is a lot of time. People will tell you things that are very helpful. I have done a lot of listening today, and the insights that you have brought to us have been very helpful in our deliberations, so I am very grateful to you. As I close the meeting, I just remind members that our next meeting of the committee will be on 5 February, when we will begin consideration of the draft clauses with evidence taken from a range of taxation practitioners. Obviously, we will meet next week on 29 February to have a private briefing on the technical issues around the clauses, and those who have not had the opportunity to do so to respond to whether the visit to Hamilton could be let the clerks know as soon as possible. Lastly, as well as thanking our witnesses, I thank our visitors from Canada who have been listening into our proceedings today, and I close this meeting. Thank you very much.