The Official Report is a written record of public meetings of the Parliament and committees.
All Official Reports of meetings in the Debating Chamber of the Scottish Parliament.
All Official Reports of public meetings of committees.
Displaying 3697 contributions
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
Did you suggest earlier that that is more of a challenge for the UK because our interest rates are more index linked? Are other countries different?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
Is it about the choices that other—certainly, European—countries made? They did not do the same amount of quantitative easing but did more traditional debt.
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
That is helpful. I will press you again on the practical impact of the GDP deflator. My understanding is that the Scottish Government uses it to measure factors such as how much it can borrow. However, the illustration that we are always given is inflation in the capital sector—for example, buying materials such as concrete and steel, which have been expensive. Am I right in thinking that the GDP deflator effectively constrains the amount of capital expenditure going forward, or is that a misunderstanding?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
Okay; fair enough.
The suggestion is that the UK is more index linked and that other countries have got more fixed rates. They are gaining at the moment but, in the long run, they will have to pay more, we will pay less and it will all even out. Is that a fair assessment?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
On the subject of inflation, we have the GDP deflator. I was somewhat surprised that the OBR said that that was 5.7 per cent in 2022-23 but says that it is now 6.7 per cent. That is a reasonably big difference compared to the past. Is the GDP deflator a vague figure that we are not very clear about at any given point? As I understand it, the UK Government uses that figure a lot. Does that have an impact on spending?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
I will move on to full expensing. The OBR seems to feel that that will bring a bit of a hit in the short term, in that businesses will not bring forward capital expenditure, but that it will be beneficial in the longer term. I did wonder whether full expensing could encourage companies to make poorer investments because they would get tax benefits. What are your thoughts on that? Earlier, David Phillips said that if a company had been considering investing in buildings, full expensing might push it towards investing in plant and machinery instead.
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
I will move on to another point. I believe that the concept of full expensing of fixed-asset expenditure covers only plant and machinery. How will that approach play out? As I understand it, there will be a short-term hit and then a longer-term advantage. Is that the plan?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
My final question is on the tax burden, which is 4.5 percentage points higher than it was before the pandemic. How does that compare with other countries? Does that have an impact on our economy?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
Okay. I think that I partly understand that. [Laughter.]
The GDP deflator has come up a few times in our committee. I noted that, for 2023, it was forecast to be 5.7 per cent and it is now 6.7 per cent. In practice, where does that impact? Does that make any difference?
Finance and Public Administration Committee
Meeting date: 12 December 2023
John Mason
On the question of the tax burden, we now seem to be at 38 per cent, or 37.7 per cent or thereabouts, which our previous witnesses said is nearly 4.5 percentage points higher than it was before the pandemic. However, it is a lot lower than the figure for France, which, it was suggested, was nearly 50 per cent. Should we be worried about that total figure, or is it how it is broken down that matters?