Fears over Scottish tax body appointments

John Swinney has already proposed three appointments to the SFC. Picture: Andrew Cowan

John Swinney has already proposed three appointments to the Scottish Fiscal Commission (SFC) which is being set up scrutinise Scottish Government tax forecasts.

Lady Susan Rice, who was the first female to head a UK clearing bank, has been proposed as the chair of the new body, with Professor Andrew Hughes Hallett and Professor Campbell Leith proposed as members.

Both Lady Rice and Prof Hughes Hallett are members of the Scottish Government’s Council of Economic Advisers, prompting concerns from some MSPs on Holyrood’s Finance Committee about a conflict of interests

In a report today the committee backed the three appointments - which will be unpaid, part-time positions.

But the MSPs stressed: “It is essential that the SFC is independent and seen to be so.”

They added that “in particular, there is a need for transparency in the relations between the Commission and the Scottish Government” as well as the tax authority Revenue Scotland, which is responsible for administration of taxes that have been devolved to Holyrood.

Mr Swinney has already told the committee being on both the fiscal commission and the Council of Economic Advisers does not present a conflict of interests, as the two organisations have ‘entirely different roles and remits’.

The Finance Secretary insisted the two organisations were ‘entirely different things’ and added: “The fiscal commission will not be providing me with advice on how I might exercise the fiscal levers, they will be providing parliament with an assurance that the estimates I have made on the calculation of tax receipts from Land and Buildings Transaction Tax, Landfill Tax and non-domestic rates income are soundly based.

“It is not in any way, shape or form related to policy development or the manner in which economic levers are being exercised.”

He told the committee the new fiscal commission could only fulfil its role ‘effectively if it is both independent of the Scottish Government and seen and understood to be so’.

Mr Swinney added: “I gave full consideration for the potential for conflicts of interest to arise, or be reasonably perceived to arise, in the membership of the commission and other roles and offices held by the nominees. This includes membership of the Council of Economic Advisers.

“I am satisfied no conflicts of interest exist between membership of the Scottish Fiscal Commission and the membership of the Council of Economic Advisers.

“The Council of Economic Advisers is an independent group which provides advice to the First Minister on the Scottish economy. The political and professional independence of individual members of the Council of Economic Advisers is protected and fully respected.

“The Council of Economic Advisers and the Scottish Fiscal Commission have two entirely different roles and remits. The commission will be engaged in the technical scrutiny of revenue forecasts which will draw on the members’ understanding of economic and financial data, trends and assumptions.

“The work of the CEA focuses on recovery and jobs, internationalisation and economic levers. The CEA will have no role in the forecasting process which will be undertaken exclusively by the Scottish Government and will be scrutinised exclusively by the Scottish Fiscal Commission.

But Labour’s Malcolm Chisholm pointed out the Finance Secretary could have chosen from the ‘’many eminent economists in Scotland’’ when putting forward nominations for the fiscal commission.

“I am genuinely baffled why you would have picked two of the three who are already fulfilling a particular role when there are others who would have been accepted because of their competence but would not have stirred up this controversy,” he said.

“A lot of people outside are already questioning it. It doesn’t get the fiscal commission off to the best start.’’

Fellow Labour MSP Michael McMahon said: ‘’What we really have here is a concern that the Council of Economic Advisers and the independent fiscal commission are both appointed by the Scottish Government, that’s where the perception of a problem occurs.’’

Tory finance spokesman Gavin Brown told Mr Swinney: ‘’The issue for me is about the perception of a conflict of interest.’’