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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 5 May 2021
  6. Current session: 12 May 2021 to 9 July 2025
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Displaying 3539 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Basically, then, you are saying that, out of the £143 million, you will generate £74 million, or slightly over 50 per cent, but from the £57 million you will generate only £8 million, which is probably about 13 per cent. That is interesting.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Okay. I got to page 96 of the report, which is on the land and buildings transaction tax. No one has touched on that yet. We are looking at quite a significant decline, from £813 million this year to a predicted £730 million. In other words, there will be an £83 million deficit, which, incidentally, is £1 million more than we will raise from the projected tax increases in the two rates that we have just talked about.

However, you then go on to look at residential tax, which, over the next four years, is forecast to go up by about 56 or 57 per cent—I am just doing the sums in my head. Can you briefly talk us through that? I see that, in paragraph 4.88, you say that you forecast that

“house prices would rise in 2022-23 by 6.0 per cent and transactions fall by 10.8 per cent”,

when, in actual fact, house prices rose by a wee bit more than that and transactions fell by a bit less. Can you talk us through the land and buildings transaction tax element, given that we are talking about a significant amount of money and a significant decrease, going forward into the next financial year?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Fiscal drag and rising earnings—

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

But, to a large extent, fiscal drag is the reason for the forecast being £2,211 million higher now than it was a year ago.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

In paragraph 3.47, you say that pay in the finance sector in Scotland is growing 3.5 percentage points faster than it is in the rest of the UK. In the next paragraph, you mention that, for a while, North Sea oil acted as a drag on earnings, which are coming back up to the average. Will you talk to us about that and the circumstances around that? Why is that happening? Is that likely to continue?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Thank you for that helpful opening statement.

I will turn straight to your report, “Scotland’s Economic and Fiscal Forecasts”—my questions will be mostly based on that. On page 6 of the summary report, in the very first sentence of the introduction, you say:

“The Scottish Government’s budget next year is set to increase by £1.3 billion from the latest position for 2023-24. This is a rise of 2.6 per cent in cash terms or a 0.9 per cent rise after accounting for inflation.”

The point about the rate of inflation is always a bit of a bugbear for me, because it assumes a gross domestic product deflator for inflation of 1.7 per cent, but that does not bear any relationship to the real impact of inflation on the Scottish budget, given that more than half of the Scottish budget is salaries, which are increasing by significantly more than 1.7 per cent. Why does the assumption continue to be 1.7 per cent, given the differential between the GDP deflator and consumer prices index inflation?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Yes, because we are talking about a real-terms increase in resource, but it is not a real-terms increase in the real world, if you are using a deflator that is so far below the increase in wage settlements, for example.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

Okay. I assumed that that was resource only. I did not realise that it was capital and resource.

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

That is what we are really looking at: how accurate the forecast has been and how behavioural change has impacted in previous years.

Some of the forecasts seem to be pessimistic compared to others. For example, it now seems that we are going have a positive reconciliation in 2025-26 of £732 million. That seems to be very optimistic compared to what was predicted. What explanation do you have for that?

Finance and Public Administration Committee

Budget Scrutiny 2024-25 and Economic and Fiscal Forecasts

Meeting date: 20 December 2023

Kenneth Gibson

This figure does not have a number. It is on page 5 of your summary report—it is right at the beginning.