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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 25 June 2025
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Displaying 3510 contributions

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Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

My understanding is that the figure came from Richard Hughes, the chair of OBR. We will move on.

You talked about growth. I was looking at The Economist’s review of 2023. As you will know, every year The Economist provides a number of forecasts, although they are not the kind of forecasts that we generally discuss—perhaps “predictions” is a better word—for economic growth and so on. It says that the UK will grow at -0.8 per cent next year, with a per capita income of $55,000 at purchasing power parity, whereas the Republic of Ireland will grow at 5.4 per cent, with a purchasing power parity per capita income of $135,000. Why is the UK in such a different position from countries such as Ireland, which is just next door?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

That is a good point. I understand that there has been a 600,000 increase in the number of people who are economically inactive relative to the number before the pandemic. I appreciate that that is an issue.

One of the things that has been predicted is a 7 per cent fall in living standards during the next two years. Obviously, the impact of that will vary considerably. Which groups in society do you feel will be most and least impacted?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

I have one more question, which is about the block grant adjustment OBR tax forecasts. We have already heard that we do not expect much, if any, growth in the next few years, and we have heard about how living standards are going to fall. The OBR has predicted that Scotland’s income tax take, for example, will grow from just under £14.7 billion to just over £18.1 billion by 2027-28. That is a huge increase of almost £3.4 billion. Do you see that coming through fiscal drag or other measures?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

I would have thought that the idea of an office that tries to make tax simpler and more understandable would be a positive thing.

The OBR mentioned unemployment, which we have touched on only peripherally. The OBR expects UK unemployment to rise by between 3.6 and 4.9 per cent by 2024. That will be a significant proportion of the workforce, at in excess of 1.5 million people. What might the regional impacts of that be? How do you anticipate that impacting on Scotland?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

Exactly. That is the point that I was trying to make, but you have made it much more articulately than I did.

I thank our witnesses for their excellent contributions and for answering all our questions, and I thank my colleagues round the table for their contributions, too.

That concludes the public part of today’s meeting. The next item on our agenda is consideration of our work programme, which we will discuss in private.

11:54 Meeting continued in private until 12:07.  

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

Ben, do you want to come in?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

We can all see that the plan is for the real impact of the budget to fall after the next UK general election. Do you disagree with the OBR when it says that these continual policy changes have cost £40 billion in additional borrowing? That seems to be the implications of your response, David.

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

Good morning, and welcome to the 32nd meeting in 2022 of the Finance and Public Administration Committee.

Our first agenda item is an evidence session with the Institute for Fiscal Studies on the United Kingdom autumn budget statement and the wider UK context, with a view to informing our scrutiny of the upcoming Scottish budget 2023-24. We are joined remotely by David Phillips, associate director, and Ben Zaranko, senior research economist, at the Institute for Fiscal Studies. I welcome you both to the meeting.

I move straight to questions. Your submission states that the Office for Budget Responsibility notes that the UK’s economic position with regard to fiscal policy has been beset in the past six months by

“a series of dramatic swings in the direction of fiscal policy with five major fiscal statements delivered by three successive governments”

and that

“the net impact of this series of announcements and reversals has been to add over £40 billion of borrowing by 2027-28”.

What will the impact of that be on not just the UK economy but Scotland’s economy?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

The prediction is that there will be a 1 per cent increase in real incomes by 2027-28. How can you possibly predict that level of growth at this point, given all the potential shocks that we might see? If someone had predicted that five years ago, everyone would have been astonished; five years ago, everyone expected that a five-year prediction would be much more positive. How big a pinch of salt do we need to take with the forecasts?

Finance and Public Administration Committee

Budget Scrutiny 2023-24 (United Kingdom Context)

Meeting date: 6 December 2022

Kenneth Gibson

Of course, the Scottish Government does not have the same levers, which is why I asked what specifically the Scottish Government could do.

Perhaps David Phillips could say what the Scottish Government could do, given the situation that we are in.