Chamber and committees

On that note, I will open up the session to colleagues.

It is difficult to look at the triple lock, because, certainly, over the past decade, pensioners have become relatively more prosperous than other age groups—than younger people in particular. According to your analysis, the UK standard of living will fall by about 3.1 per cent by 2024-25. Have you looked at how that impacts on different age groups?

I am thinking about how the costs are set initially rather than the cost overruns. When you go out to tender on a project in the UK, it always seems to be 30, 40 or 50 per cent higher—or more—than an equivalent project would be on the continent, even in countries where the standard of living is comparable to or higher than ours. That seems rather odd. I just wanted to know whether the OBR took those kinds of things into account.

I have one last point, because our 90 minutes will finish in about one minute, and I do not want to keep you too long. It concerns what the chancellor did in his autumn statement and how that will impact on the OBR’s forecasts in the spring. I want you to comment on what the IFS said. Paul Johnson of the IFS said:

“In reality debt is set to be just about flat at around 93 per cent of national income”—

we have touched on that—

“And that is on the basis of a series of questionable, if not plain implausible, assumptions. It assumes that many aspects of day to day public service spending will be cut. It assumes a substantial real cut in public investment spending. It assumes that rates of fuel duties will rise year on year with inflation – which they have not done in more than a decade and they surely will not do next April. It assumes that the constant roll over of ‘temporary’ business rates cuts will stop. It assumes, of course, that the economy doesn’t suffer any negative shocks.”

In his response to the statement, Paul Johnson said that fiscal drag is now running at £50 billion, and £14 billion of that is since March. That puts into perspective the £10 billion or so cut to NIC.

We discussed this to some extent in the earlier session, but you also say that the number of people who are on incapacity benefit and related universal credit has increased from around 1 million people to about 2.4 million during the past decade. Is that trend likely to continue, or will it reduce or stay the same? Where do you think we are with that, and what impact will it have on public finances?

I was going to move on to discuss social security, so I am glad that you have mentioned that. The problem with social security benefits, of course, is that they are demand led. How do you see the Scottish Government being impacted over the next year and beyond by the increase in the number of people who are seeking benefits? Where do you see that going?

Have you looked at the impact on pensioners of fiscal drag? There has been an 8.5 per cent increase in the triple lock, but that seems to have increased the number of pensioners who pay tax. In 2010, about half of all pensioners paid tax; now, it is about two thirds.

Yes, but that is not good for long-term growth, is it?

This will be my final question before I pass on to colleagues. The OBR has predicted a 3 per cent reduction in living standards in 2024-25 from pre-pandemic levels, but when we asked it to advise us on the impact on different age groups, it was unable to do so. Does the IFS have any detail on how the reduction will impact on different age groups in society?

Pensioner poverty is a reality in many communities in many parts of the country but, according to The Economist, half of the 14 million pensioners in the UK do not have any housing costs, because they have paid off their mortgages.

I am now going to open out the session. I call Liz Smith, to be followed by John Mason.

That is okay. I asked about that because net zero is, obviously, a key issue in Scotland and, indeed, elsewhere.

Does either of you wish to make any further points before we wind up the session?

Let us hope not. I thank our witnesses very much for answering our questions so succinctly and comprehensively. I also thank Mr Josephs and Mr Hughes specifically for coming to Edinburgh, and I hope to see Professor Miles in Edinburgh next time.