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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 10 May 2025
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Displaying 3226 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

My colleagues will explore that in more detail. I have a couple more questions to ask. The OBR has suggested that the Chancellor of the Exchequer’s headroom is only 0.3 per cent over the forecast period, which it thinks is extremely tight. How does the IFS feel about that?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

Yes—the OBR suggests that there is a 54 per cent chance of meeting the target, which is more or less the 50:50 that you suggested.

The last question from me is about a quote from your Scottish analysis. You say:

“an increase in forecast whole-economy inflation since the Budget (from 1.7% to 2.4%) means that capital funding this year is little changed in real terms compared with what was expected at the time of the Scottish Budget—in stark contrast to the situation for resource funding.”

What does that mean with regard not just to capital projects going forward, but to the likely impact on productivity?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

Paul Johnson, in his assessment of the UK budget, said:

“the most striking aspect of the spending decisions is how incredibly front loaded the additional spending is”.

You have touched on that to some extent. He also said that

“it would be odd to increase spending rapidly only to start cutting back again in subsequent years”

and that

“when it comes to settling with departments for the period after 2025-26 keeping within that 1.3% envelope will be extremely challenging”.

He described that as a big gamble. However, how much of a gamble is it? Is there any way that you can assess how likely it is that the Government will be able to reach its goals? Saying that it is a big gamble does not really quantify it to any degree. Can you help us with that?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

What will be the impact of that on the Scottish budget next year?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

Good morning, and welcome to the 34th meeting in 2024 of the Finance and Public Administration Committee. The only item on our agenda is an evidence session with the Institute for Fiscal Studies on the UK “Economic and fiscal outlook”, which will inform our scrutiny of the 2025-26 Scottish budget. We are joined remotely by David Phillips and Ben Zaranko, who are associate directors at the Institute for Fiscal Studies. I welcome them to the meeting.

We will move straight to questions. I think that we all know what it is but, for the record, will you give a brief explanation of the acronym SCAPE, which you use throughout your analysis of the Scottish budget? My understanding is that it stands for superannuation contributions adjusted for past experience—nae wonder you use the acronym—but will you explain exactly what that means?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

Digging deeper into your analysis, you say:

“the Scottish Government looks set to continue to face tough trade-offs in future years. Carrying forward funding would ease trade-offs between services next year. But such funding can only be used once: it will only help the budgetary pressures facing the Scottish Government in later years if it is successfully utilised to help boost productivity, address the rivers of service demand, or boost economic performance and hence tax revenue.”

You go on to say:

“even if successful, such efforts may take several years to bear fruit, meaning that without further top-ups to UK spending plans or increases in Scottish taxes, some services will likely face cuts in future years.”

That is a wee bit more pessimistic than other commentators have suggested.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

I will stick with tax for a minute. One of the issues that is being talked about is the coherence of the tax strategy. In relation to the UK tax system, IFS director Paul Johnson said:

“if this government really wants to focus on growth, then part of the plan needs to be a much more coherent tax strategy than we saw”

in the 2024 budget. Will you explain what the IFS believes that “more coherent ... strategy” should be and how we in Scotland can build on that, bearing in mind that a lot of our tax strategies depend on what happens UK wide?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

I will open up the session now, and the first colleague to ask questions will be Liz Smith.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

You mentioned incorporation. The Office for Budget Responsibility has said that, across the UK, the measure is likely to encourage about 17,000 incorporations, costing about £0.7 billion in revenue. Have you seen higher rates of incorporation in Scotland, in relative terms, as a result of recent tax changes in the rest of the UK? Alternatively, is there no real difference, or do you not have the data to assess that yet?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 3 December 2024

Kenneth Gibson

No—it is the cash headroom, which is £9.9 billion.