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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: 26 November 2024

Kenneth Gibson

You have said:

“In 2026 and 2027, we expect households to run down their rate of saving significantly as they try to maintain consumption growth in the face of stagnant real wages.”

You talk about a “direct behavioural response” to taxation, in that it will increase

“the incentive for more tax-motivated incorporations”.

You estimate that those will

“increase by a cumulative 17,000 by 2029-30”

as a result of the budget, and you say that

“These combined effects reduce the yield by”

£700 million by 2029-30. How do you come to that estimation of tax-motivated incorporations? That is also an issue of great concern in Scotland due to the different tax rates that we have here.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

That is why I am asking you—I couldnae find it in the document.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Good morning, and welcome to the 33rd meeting in 2024 of the Finance and Public Administration Committee. The first item on our agenda is an evidence session with representatives from the Office for Budget Responsibility on the UK “Economic and fiscal outlook”, which will inform our scrutiny of the 2025-26 Scottish budget. I am delighted that we are joined in person by Richard Hughes, who is the chair of the OBR, and by Professor David Miles CBE and Tom Josephs, who are both members of the OBR’s budget responsibility committee. I thank you all for taking the time and the trouble to come all the way up here—it is very much appreciated—and I welcome you all to the meeting.

I invite Mr Hughes to make a short opening statement.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Thank you very much for that. In time-honoured fashion, I will start with some questions, then pass over to colleagues around the table.

In your “Devolved tax and spending forecasts” document, which you produced to go with your magnificent 207-page tome on the budget, an element of frustration seems to come through. You say:

“we lack sufficiently detailed or timely data that is required to produce forecasts for Scotland”,

so the OBR needs to do a lot of extrapolation. What additional data could be provided to help you to make your forecasts more accurate? I am well aware that we have the Scottish Fiscal Commission, and I will ask a question about it in a minute or two.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Interestingly, your forecasts appear to be more optimistic than those of the SFC. Historically, how accurate have your predictions been, compared with those of the SFC? Are yours more accurate or less accurate, or are they more or less on the nose, give or take?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Indeed—I appreciate that.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Mr Hughes, I am going to quote a lot from your report—everything that I am going to say, more or less, is a quotation from your report. Right at the start, on page 7 of your report, you say that, from the recent budget,

“Budget policies leave the level of output broadly unchanged at the forecast horizon.”

You go on to say that

“Real household disposable income ... per person, a measure of living standards, grows by an average of just over ½ a per cent a year over the forecast”

and that

“Compared to our March forecast, the level ... per person is just over 2 per cent higher at the start of the forecast due to data revisions, but 1¼ per cent lower by the start of 2029. The bulk of this difference (around 85 per cent) is explained by policies announced in this Budget.”

Is it your view that Scotland will follow the same trajectory? Why do you feel that a lot of the budget detail that you have analysed seems to be on the same theme, with a lot of it being front loaded and with a reduction in growth and investment over the piece? Will you talk us through that particular issue in terms of disposable income?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

Okay. You have said:

“In nominal terms, debt interest spending falls to £104.9 billion this year but then increases year-on-year to £122.2 billion in 2029-30”

which is a £12.6 billion revision since March. Can you talk us through that?

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

You are basically saying that the UK Government will have an envelope for pay, and it will say that it can be met either by increased pay, which might mean a reduction in numbers, or with lower pay but maintaining the numbers.

Finance and Public Administration Committee

Budget Scrutiny 2025-26 (United Kingdom Context)

Meeting date: 26 November 2024

Kenneth Gibson

I have to say that your outlook report does not read in a particularly optimistic way where you say, on page 53, that

“This results in an average annual tax increase in excess of £800 per employee”

and, on page 35, that

“Real private consumption is forecast to fall 0.4 percentage points as a share of GDP from 2023 to 2029. In our pre-measures forecast, we expected this share to rise by 0.4 percentage point but this is more than offset by policy measures in the Budget.”