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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 4 May 2021
  6. Current session: 13 May 2021 to 16 January 2026
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Displaying 4176 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

The Institute for Fiscal Studies has been quite excoriating in its critique of the UK budget, and I noticed that one of the comments was that

“A crucial ingredient in this year’s policy decisions has been the way in which OBR forecasts appear to have driven policy.”

You touched on that a wee bit in response to Michelle Thomson’s questions, but what can and should the UK and Scottish Governments do differently in terms of fiscal policy? There has been a lot of critique—given your role, I understand that—but do you have more positive suggestions for how we can make things better?

11:15  

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

What should Scotland’s spending priorities be, given what Daniel Johnson said about there being a jump in resources this year, but a real-terms decline in the following two years? Sustainability of the public finances is, obviously, a major issue for us in Scotland.

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

One issue is that the OBR does not necessarily have access to the data that it requires to look at specifically Scottish circumstances. Are there any data streams that could be added to make forecasting in a Scottish context more accurate?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

Paul Johnson says that the

“primacy of asset accumulation, and the importance of asset holdings”

has been prioritised over improving living standards through earnings, which will impact on low-income households in particular. Is it fair to say that?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

Good morning and welcome to the 13th meeting in 2021 of the Finance and Public Administration Committee.

The first item on our agenda is to take evidence from the Office for Budget Responsibility as part of our budget scrutiny. We are joined by Richard Hughes, director, and Professor Sir Charlie Bean and Andy King, budget responsibility committee members. It is the first time that we have taken evidence from the OBR this session, and I thank Mr Hughes and his colleagues for making the journey to Edinburgh.

We have 75 minutes for discussion and will have to finish promptly just before 10.30 am, in time for our second evidence session.

As we have been given a small but perfectly formed statement by the OBR, I will open up the questions. I do not mind who answers the questions—that is a matter for the witnesses, and one or more can answer.

In the third paragraph of your overview of the October 2021 economic and fiscal outlook, published on 27 October, you stated that there are

“supply constraints in several markets.”

You go on to say that

“these supply bottlenecks have been exacerbated by changes in the migration and trading regimes following Brexit”,

and you

“expect CPI inflation to reach 4.4 per cent next year”.

What is your view on how the consumer prices index will impact the Treasury gross domestic product deflator, which is obviously important for the setting of budgets in Scotland? Is the situation with supply bottlenecks improving, and when do you expect it to return to as near normal as possible?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

I will stick with inflation. No one has answered the question about CPI versus the Treasury deflator yet. I was struck by the difference between the OBR’s assumed nominal earnings growth in 2022 of around 3.9 per cent and the 1.3 per cent that is in the Bank of England’s monetary report. That is a huge differential. Most people would probably think that the OBR is nearer the mark on that. From your perspective, do you think that the Bank of England will look again at that, and will there be implications for interest rates? We know that the bank voted seven to two against changing the interest rate last month. What is your feeling about that, and how will it impact on your forecasts?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

Is it not the case that, if people are incentivised to invest in assets, they are less likely to invest in the productive elements of the economy that are high risk, which impacts on productivity and growth?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

Inflation is leading to fiscal drag, which is a windfall for the chancellor. What is the impact on middle-income earners in particular?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

I have one more question before I open it out to colleagues. In his speech, Paul Johnson said that, over the period since 2010,

“health spending will have increased by over 40%, education spending by less than 3%.”

That relates to south of the border, and implies a remarkable lack of priority afforded to the education system, with

“spending per student in FE and sixth form colleges”

remaining

“well below 2010 levels.”

He goes on to say:

“This is not a set of priorities which looks consistent with a long term growth strategy.”

What has been the impact on growth of those education policies over the past decade or so?

Finance and Public Administration Committee

Budget Scrutiny 2022-23

Meeting date: 7 December 2021

Kenneth Gibson

For our second budget scrutiny evidence-taking session, we are joined remotely by Carl Emmerson, the deputy director of the Institute for Fiscal Studies. Mr Emmerson is standing in for the director of the IFS, Paul Johnson, who is unwell—we wish him a swift recovery. I thank Mr Emmerson for making himself available to give evidence at short notice and welcome him to the meeting.

I remind members that our broadcasting team will operate their microphones, so they should not touch them. We have an hour for this evidence-taking session, so it would be helpful if members could keep their questions concise.

I invite Mr Emmerson to make a short opening statement.