Speeches by Yang.

“Professor Allas, you mentioned the missing £33 billion—is that right?—of capital investment in the NHS in the last decade. For a figure of that amount in terms of what the Government would need to invest to raise growth, we are clearly constrained by multiple factors. I am keen to hear the panel discuss whether the mai…”

“Professor Allas, you have a particular interest in NHS productivity growth. What is behind the UK’s low productivity growth in public sector work? What would you have liked to see in the Budget that could start to remedy that?”

“For you, the main focus for the Government should be to reduce the yield rate and therefore be able to create more space for productive investment. Is that right?”

“For five or six years, then.”

“One of the big decisions that we heard about yesterday was the decision by the OBR to downgrade the UK’s medium-term productivity. Yesterday, I asked Professor Miles, who is the macro forecaster on the committee, why that decision had been made now and not earlier. His answer to that was that he wanted to give two year…”

“What do you mean by “a long time”?”

“You had many conversations with three or four internal economists as well as all the external economists you mentioned. Having spent a lot of time among academic economists, I know they are prone to disagree about many things. Ultimately, and institutionally, is it down to you to make that decision? Is it you and you a…”

“Do you have a sense of whether that amount is large or small compared with previous fluctuations between round 1 and round 3?”

“Yes.”

“Thank you both for appearing before us this morning. Mr Josephs, I wanted to go back to the point that you both touched on very briefly about the fluctuations between rounds of forecasts. From my reading, the change between round 1 and round 3—so, across all the pre-measures rounds—is about £6.7 billion. Am I right in …”

“In the last Budget, there are several increases in the effective rate of tax on income flowing from wealth and, in particular, in the effective rate of tax on dividends. I see that, in relation to behavioural effect, you find that, over the five-year forecast period, the effect of people changing their behaviour in res…”

“The three of you make a consensus decision. Thank you; that is helpful. I have a small point on productivity. Professor Miles, you mentioned the view that you had been too optimistic. An animal has been invoked by journalists to describe that feature, the productivity porcupine, which has spikes above but not below. Th…”

“Does this tend to happen on the committee—for example, Mr Josephs, being the fiscal go-to, gets the say over fiscal issues and you get the say on macro issues, and that you each keep to your own?”

“I appreciate that there is something to be said for letting the dust settle. How is this decision made institutionally? For example, I think you have around a dozen economists working in the OBR. Was there a discussion with them? Was there a discussion between the three members of the committee?”

“I will turn now to Professor Miles on the macro picture on productivity. We have spoken to you before, when you have made previous appearances before this Committee, about your optimism on growth relative to other forecasters. Of course, the IMF, the Bank of England and others downgraded the UK’s productivity in previo…”

“To go back to your earlier point about trying to address the misconceptions out there that forecasts vary wildly between rounds, is it correct to say that between different rounds, week to week, there might not be that huge variance, but between six-month forecasts there is certainly a large variance, in terms of the c…”

“Right. So between one six-month forecast to the next, the “average absolute revision”, pre-measures, is £21 billion. That is quite a large part of historical and current—”

“So in this case the £6.7 billion fluctuation from round 1 to round 3 is actually smaller than it might have been in the past, when your forecasts were more unstable. I am curious to know, and would be very grateful if you could set out, perhaps in a letter, the volatility from previous rounds that we have not been able…”

“Can I also clarify a figure from the EFO itself? You write about a “£21 billion average absolute revision” to borrowing “in the…pre-measures forecast”. Is that £21 billion the difference between different six-month forecasts? Am I reading that correctly?”

“I rise to welcome the Budget, because despite the difficult economic times we are in, the Chancellor has made decisions that are strong, sound and fair. It is a strong budget that more than doubles the fiscal headroom to £22 billion. It is a sound budget that improves the economic efficiency of some of our taxes and ma…”