Chamber and committees

Legal migration to the United Kingdom was roughly 750,000, net, last year, which was a record number. I would imagine that most of those people will be of working age. Has that not increased growth in the UK economy? What has been the impact on that?

But we do not know what the contribution to the economy is, generally speaking.

Would it not also mean that billions of pounds would not be circulating in the economy? Students tend to rent accommodation, go to cafes, buy food at Tesco, spend money on clothes and so on, and go around the country to visit castles and lochs and God knows what else, so surely there would be quite a significant overall impact.

What is the impact on public service spending as a result of that?

So, what are we talking about here? You have discussed how

“the spending of unprotected departments”—

that is, UK departments—

“would need to fall by 2.3% a year in real terms from 2025-26, increasing to 4.1% a year, should the UK Government continue with its ambition to increase defence spending to 2.5% of GDP and return overseas development assistance to its 0.7% of gross national income target.”

What are we talking about in ballpark figures at today’s prices?

I understand that the expensing measure amounts to around £3 billion a year, but the increase in corporation tax from 19 to 25 per cent is worth about £18 billion. Is that right?

We talked about the GDP deflator. John Mason asked questions about that, and Professor Mills gave us a detailed answer. An issue for me is the unrealistic nature of the GDP deflator, in how it is likely to impact on capital. Over the next four years, it is predicted that the impact of the GDP deflator on Scotland’s borrowing would allow the ceiling to go from £3 billion to £3.165 billion, which is a measly cumulative 5.5 per cent over four years. That is now baked into the fiscal framework. Is it in any way realistic?

I have a few more questions.

It is interesting that, 10 years ago, when Robert Chote used to give evidence to the committee, productivity was a bugbear, and there were a number of suggestions about how we could improve it—everything from further investment in research and development to new technologies.

Since then, there has been the growth of working from home. A few weeks ago, The Economist suggested that working from home reduces productivity in the medium term by an average of about 19 per cent. I do not know whether you want to comment on that. The Sunday Times certainly touched on that on Sunday, in its report about the UK’s 552,000 civil servants.

You predicted that there would be an 85,000 head count increase in unemployment in the first quarter of 2025. How much of that will be caused by a reduction in public sector head count? A couple of years ago, the Scottish Government was looking to reduce the public sector head count to what it was pre-pandemic. It seems to have gone a wee bit quiet on that, and we will probably question the Government about it in the weeks ahead. Do reductions in public spending of 2.3 per cent in the short term and 4.1 per cent in real terms factor into your figures?

You are right, but does it not affect pensioners specifically, because people who have retired have already paid tax and are now having to pay tax on their pensions? Is that not an issue of concern?

There is just one further question, which comes from me. We are coming towards the end of the 28th United Nations climate change conference of the parties. The OBR said that there was

“little sign in the UK of significant new investment in low-carbon energy and heating technologies in response to the rise in gas prices”,

and it explained its view as to why that was. What is the IFS’s view on that?