Chamber and committees

The UK Government is aiming support at the retail, hospitality and leisure sector through non-domestic rates. Is that because that sector is particularly struggling at the moment?

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?

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?

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.

On the positive side, if companies have more modern machinery, that should help their productivity. However, is there not also a risk that they might invest for the sake of it, to get their tax bills down, and so make poor investments?

On the question of forecasting accuracy, I think that in March the forecast for debt interest was £94 billion and it is now £116 billion, which is quite a change. Is that one of the most difficult forecasts to pin down?

Would there be any impact on research and development, or is that pretty well written off as it happens anyway?

You have got a lot of faith in the market, which maybe I do not entirely share. Is that not the same as following the bookies, which is to do with what is popular rather than what you are expecting.

That is great—thank you.

Okay. Thank you.