Select Committee
Parliament

The SNP's George Kerevan asks if the Chancellor's finances - all aimed to hit the 2020 surplus target - are going to be "problematic".

Paul Johnson replies George Osborne has "moved money around" to hit specific targets, at the expense of wider economic changes.

Mr Osborne has done the "minimum economic changes in order to it his targets", he argues.

House of Commons
Parliament

The day in the Commons chamber begins shortly and will start with Foreign Office questions. 

There is an emergency debate on the UK steel industry, which was granted following a request from shadow business secretary Angela Eagle last night.

Other business includes a backbench business debate on reform of support arrangements for people infected with contaminated blood.

And there's the report stage of the Transport for London Bill. This bill, which has been on the Order Paper for months, would give TfL - London's Transport quango - extra powers to manage its property portfolio, allowing them to raise more money which can then be channelled into improvements in the transport network.

Select Committee
Parliament

Paul Johnson, director of the Institute for Fiscal Studies, says calls for the fiscal rule to reach surplus by 2019-20 is a "hindrance".

While it has the benefit of being "extremely straightforward" the problem with it is that it's "fixed at a particular date and that requires things changing every time we have a fiscal event".

"It would be nice to have a rule that is more flexible and forward looking," he argues.

The current rule has "created behaviour that is focused on a particular year".

"There is nothing magic with 2019-20, it is economically the same as the next year, but that's where all the activity happens."

Select Committee
Parliament

After a brief break, the Treasury Committee is back with new witnesses.

They will be hearing evidence from representatives from the Institute for Fiscal Studies.

Select Committee
Parliament

Labour MP Wes Streeting turns to the hot topic of the week: tax avoidance.

He asks if the anti-tax avoidance measures in the Budget "would have made any difference to what's come out in the Panama leaks".

George Buckley says any predictions "should be taken with a pinch of salt" as "we won't know the impact until many years down the line".

 Andrew Sentance agrees.

Select Committee
Parliament

SNP committee member George Kereven asks whether there is any "quantitative evidence" that links corporation tax cuts to "business incentives" to invest in the UK, in light of the chancellor's intention to cut corporation tax to 17%.

Mr Kerevan points out that corporation tax in Germany is over 30% and is nearly 40% in the US.

Andrew Sentance replies that a there is a "whole range of factors" that lead to greater business investment but the tax regime "must have an impact".

The UK's tax regime must be "seen to be attractive" but it will be part of an "overall package" including business relief and access to markets, he adds.

Select Committee
Parliament

Conservative committee member Mark Garnier tells MPs that reducing the top rate of income tax from 50% to 45% has "generated an extra £8bn of revenue" due to a phenomenon known as the Laffer curve. 

He asks whether "dropping the tax rate between now and 2020 may have the same effect on tax take".

George Buckley says there is "no convincing answer either way" and he is not "convinced its so easy to work this out".

Select Committee
Parliament

Conservative MP Jacob Rees-Mogg says the UK's tax as a percentage of GDP is "very near the highest this country has ever achieved".

"Is this realistic?" he asks

George Buckley replies that the UK is "fairly in the middle of the G7" and it's position is "not unreasonable".

Taxation to GDP is 53% in France while "Japan and the US are between 33-34%".

It's more important to "simplify the tax system" rather than "look at the total level", he argues.

Select Committee
Parliament

Labour's Rachel Reeves asks about the impact of the "increase in personal debt" in the UK.

George Buckley replies that many households "are quite vulnerable" because earnings haven't increased fast enough, while personal debt has increased.

The greatest increase has been due to "mortgage debt" as a result of the fast growing housing market.

This is leaving households "exposed" when interest rates "do eventually increase", he warns.

Select Committee
Parliament

Put on the spot by Steve Baker, both witnesses fail to support the Budget target to "become the richest of all major economies by 2030s".

Andrew Sentance says he is "not so sure its the target I want to focus on".

George Buckley agrees, saying there needs to be a greater focus on "capital allocation in the right places".

Select Committee
Parliament

Andrew Sentance, Chief Economic Adviser at Pricewaterhouse Coopers, argues that the OBR are "being too optimist about productivity growth".

He says complains there is a "measurement problem" adding he would "put the figure between 1%-1.5%".

Select Committee
Parliament

Conservative committee member Steve Baker asks the witnesses why the UK's productivity has been "downgraded" by the OBR from 2.2% to 2%.

George Buckley says "low productivity is something not just relevant to the UK" and there has been "weak productivity in many countries".

He says there are as many as "15 structural issues" that are contributing to low productivity, including the "hoarding of employees" during the recession. 

He adds these reasons are "cyclical".

Select Committee
Parliament

George Buckley, the Chief Economist of Deutsche Bank, says he agrees that Mr Osborne's "fiscal rules are good".

There must be "some framework around which policy must be set".

But he argues they mostly work in "times of surplus". He adds that he's not too sure how the rules work as there are "no consequences when you miss them, aside from some embarrassment".

Select Committee
Parliament

Committee Chair Andrew Tyrie gets business under way by asking whether George Osborne's "fiscal rule", external of making sure the UK reaches a budgetary surplus is "helpful".

Andrew Sentance replies that it is "pointing the chancellor in the right direction" but there is a "fault" in setting "a so specific legal framework" when things "move around" in the financial markets.

What's more important is "ensuring over the medium term public finances are being well managed", he says.

Select Committee
Parliament

The Treasury committee will begin taking evidence at 10am.

The committee will hear from:

• George Buckley, Chief Economist, Deutsche Bank
• Andrew Sentance, Chief Economic Adviser, PricewaterhouseCoopers
• Professor John Van Reenen, Centre Director for Growth, London School of Economics
• Paul Johnson, Director, Institute for Fiscal Studies.

Hello and welcome to our live rolling coverage of events in the Houses of Parliament as they happen.

Today's events begin on the committee corridors, as the Treasury Committee continues its scrutiny of the Chancellor's March Budget.

The committee will hear evidence from economists from the private sector, universities and think tanks.