Chamber and committees

:My general question is for everybody—I am not going to pick anyone to go first, because you are all in different stages of evolution. We always have a sort of dance in this committee—you will notice that the convener teases somebody into just pushing the dial a wee bit. I suspect that the reason for that is that, culturally, some organisations will always want to hedge what they say because they are aware that all the evidence that is given will be picked up by the Government and they do not want to step over a line. There are also sometimes internal challenges.

My question is a general one about culture. How equipped is each of your organisations to understand the potential scale of the threats that are coming down the track, which I think are deeply significant? In other words, could you go faster than Government itself is able to anticipate, and have you got that kind of push and pull? The short-termism of the political landscape that we are in—we have two electoral cycles in this Parliament—plays into what can realistically be done, and that could threaten the speed of change.

:I would also be interested in your thoughts, Tiffany. I do not hear a great deal of recognition of those real blockers to change. We have already spoken about multiyear funding, but the political cycles also inhibit risk taking when the extent of the change that we need is risky. Does anyone want to comment on that?

I have a brief comment about “front-line”. I am guessing that all the organisations that are represented here will, as a result of the work that they have done over successive years, have a clear understanding of how every function delivers into the front line. I completely agree with your argument.

11:15

Before I ask a general question, I have a small question for the SFC, which picks up on the comments about leverage and the issue around bank covenants. To what extent are those elements being gamed in, given what we saw in 2008, when the mechanisms that represented a minor technical breach of covenant in banking contracts provided the excuse for some quite rapier-like behaviour by private banks that exist to make a profit, with the result that there was asset stripping of various businesses. Stepping away from the purpose of universities, many of them hold significant assets. How well equipped are the SFC and the universities to understand that issue, going back to what we all learned in 2008?

I note that the last time that I asked that question was when I was a member of the Education, Children and Young People Committee—John Mason was there as well. Ironically enough, the person I asked was the principal of the University of Dundee, and we have seen how things have worked out there.

The complexity of the issue and the detail that we agree is required take us back to the timescales that Elaine alluded to earlier. That work has to be done for you to have a level of comfort that the tax can be collected in the manner in which you want.

Thank you.

I am sure that Homes for Scotland will be pleased to know that.

One of the things that we talked about—the convener touched on this, and we also had a discussion with Revenue Scotland this morning—was mitigations or the putting in place of good behaviour through compliance and special purpose vehicles, because most building firms will use them as a matter of course. During the discussion, it has become increasingly clear that we will not have the detail via secondary legislation until some way down the line. That reminds me of the committee’s old hobby-horse about using framework legislation to come up with some principles, but the devil of the detail not being around for quite some time after that, and potentially until after you have set a rate, as was being probed.

I can see that you are looking, but just to give a bit of clarity, there is a real possibility that a building firm can set up an SPV and then promptly fold it before it pays the tax. Yes, mitigations can be put in place, but the process is long, involved, complex and expensive for Revenue Scotland. I am just trying to get your feelings about that approach. Surely, in a perfect world, we would not do all of this in that way.

Is cognitive diversity part of your mix?

That is good, and I will watch the situation with interest.

On the gender pay gap, women on average are earning 5.9 per cent less than men, but that figure has increased from 1.6 per cent since the previous reporting period. Again, I appreciate that the scale of the organisation can mean that that can quite quickly become skewed, particularly with senior appointments, but it would be useful to hear your reflections on why that is the case, because the figures are going in the wrong direction.

Somewhere in the multitude of evidence that we have received, the Scottish Government said, “We have to do this,” and claimed that no other solutions were offered. However, we had commentary from Homes for Scotland last week that it had not been asked to come up with any other solutions, so it felt slightly irked to hear that no other solutions were proffered when it had not been asked. I take it that it is too late in the day to ask for any other solutions and that you are completely wedded to this.

We did have that conversation. Fionna Kell from Homes for Scotland made the point that the new build market size has been overstated by about £1.4 billion. She also commented that we are using estimates of estimates because we are following what is happening down south. That concern played into what was alluded to earlier, which is not just a lack of financial modelling but behavioural modelling, which I think the convener was alluding to when he mentioned the Laffer curve. Do you want to put some meat in the bones of that to start to model it properly? Surely you will have to do that to set the rate. I know what you have said about a date, but you will have to have some understanding of the modelling to set the rate.