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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 5 May 2021
  6. Current session: 12 May 2021 to 26 May 2025
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Displaying 3259 contributions

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Finance and Public Administration Committee

Scottish Fiscal Commission

Meeting date: 20 December 2023

Kenneth Gibson

It clashed with the Scottish National Party group meeting, which is why a lot of us were not there. However, the early morning, bacon-roll-type seminars are very useful, not only for MSPs but for staff. I am keen that they should continue.

I know that John Mason has to rush to the chamber to be there for 2 o’clock, and of course we cannot meet after 2 o’clock. It is 5 to 2 now, so unless anyone has further questions, I will call the meeting to a halt.

Thank you again for your evidence, Professor Roy and John Ireland. It has been very helpful in our deliberations. I close the meeting and wish everyone a very merry Christmas and a happy and peaceful new year.

Meeting closed at 13:54.  

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Obviously, I know that it is standard practice. It is frustrating that the figure is not based as much in reality as one would wish, certainly in these difficult times.

In the fiscal overview, on page 3, you talk about resource funding rising by 8 per cent by 2028-29. However, on page 5, unless my arithmetic is wrong, you say that the funding will increase in real terms from £52,449 million to £54,691 million, which is actually an increase of 4.2 per cent rather than 8 per cent.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

It is interesting that, in her statement yesterday, the Deputy First Minister talked about a 10 per cent reduction over five years, rather than a 20 per cent reduction. That seems odd, given the figures that you have used. I did not see your figures until after the statement; if I had seen them, I would have asked the Deputy First Minister about that.

One of the issues that has been very much to the forefront has been the new additional rate of income tax, which starts at £75,000 a year. You have assumed that that will produce £82 million net, but the gross figure is £200 million. Basically, you are saying that the £200 million that, on paper, is being levied by that change will bring in only 41 per cent of that estimate, or £82 million. Would that be right?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

How accurate are your predictions likely to be in that regard? What are the margins of error? I would have thought that they could be quite wide.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

I want to come back to capital, briefly. I will ask questions for only another three or four minutes, because colleagues are keen to come in. What is the impact of the reduction in capital on medium to long-term growth? Even if we accept the GDP deflator—we know that the reality is completely different, but assuming that we accept that as a real figure—that will still mean a 20 per cent reduction in capital over five years. What will be the impact on growth and productivity of capital taking such a hit?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

I have a final question for the moment. In its autumn statement, the UK Government did not look beyond 2024-25. What impact has that had on your forecasting for Scotland?

12:30  

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

That would be 3 per cent.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

That concludes the committee’s questions, but there are a couple of other points that I want to ask about.

First, I want to try and pin the behavioural response issue down a wee bit. In paragraph 35 of your report, you talk about £200 million gross and £82 million net, but, as we know, £74 million of that net figure comes from the new £75,000 band, and £8 million is from the £125,000 to £140,000 band. Where is the gross in those two figures? Are we talking about £8 million out of £40 million, £60 million or whatever? I want to get a better idea of where the tipping point is. I remember being in the Basque Country many years ago and being told, “If you put income tax up by 2 or 3 per cent more than the Spanish average, it does not make much difference, but if you go to 4 or 5 percent, it suddenly goes zzhhh”—that is, it falls away in a kind of reverse Laffer curve, so to speak. That is what I am trying to say. How much of the gross £200 million comes from the £125,000 to £140,000 band and how much comes from the £75,000 band?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Indeed.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Well, I only got it at half past 5 yesterday. [Laughter.]