Speeches by Coghlan.

“I would like to follow up on Yuan Yang’s point. When the Governor was in front of the Committee, we heard that from a finance theory point of view, it should be irrelevant whether you sell the gilts now or pay the interest on the losses over the life of the gilts, but surely that is not the case, because if you realise…”

“Does anyone else wish to comment?”

“Final question: why is the Fed doing this differently?”

“Yes, mysteriously. Right now, as taxpayers we are paying a £20 billion-a-year cost—that is a very significant amount. Do you feel it is being handled in the correct way?”

“You are absolutely right. The taxpayer was making £20 billion a year or so prior to 2022, but for the Government at the time, that money disappeared. That is a sunk cost or a sunk benefit.”

“Was that number published because of the political pressure the Bank was coming under on the cost of this?”

“The overall fiscal cost of QE and QT at current market interest rates is approximately—on our numbers—£120 billion. Obviously, that was in the 2010s. That is a very significant sum, looking at the NPV of it as a whole for us to pay.”

“Is the £125 billion included in that—the £120 billion?”

“Defence innovation is vital in adapting our armed forces to the drone age and the war in Ukraine, but also to the Government’s economic strategy. What confidence can the country have in the MOD’s ability to deliver, given the debacle with Ajax?”

“Dr Beck-Friis, the fiscal space point is interesting. As we know, the EU has a similar but not as bad issue with productivity. Mario Draghi, in his keynote speech to the EU in September, urged the EU to borrow for R&D, especially defence R&D. He stated that even a modest 2% total factor productivity increase over a dec…”

“One of the most effective areas of public investment is investment in innovation. Philippe Aghion won a recent Nobel prize in this space. The OBR does not credit government intervention and innovation policy as having had any impact over five years. Does that disincentivise the Government from investing in public R&D?”

“The OBR put out briefing paper 9 on productivity forecasting. It was interesting. In the literature review on public R&D, it states that some of the literature says that a 10% increase in UK R&D capital could give a long-run increase in total factor productivity of 1.9%, which is a huge number, given that the 0.3% down…”

“Just on your point there, Professor Allas, I agree. How on earth can we expect productivity to improve if we are not actually increasing public investment?”

“Finally, Professor Allas, is the OBR’s method for forecasting productivity sufficiently rigorous? I am thinking in particular about the fact that its use a top-down judgment rather than a bottom-up forecast for productivity.”

“The shadow Minister makes an interesting point about the personal views of some fund managers. What is his view on including defence stocks in ESG portfolios, given the change in the geopolitical situation?”

“The Liberal Democrats welcome this measure, but what work have the Government done to ensure that the regulation will be in line with that of international regulators such as the Securities and Exchange Commission, to reduce the burden on our businesses?”

“You state in the EFO that the Government will reduce SEND funding by £2.2 billion in ’29-30. The Department for Education have put out a statement saying the OBR is fundamentally wrong and that it will not come out of the core schools budget, and the projections do not take into account the detail of their reforms. Do …”

“You announced a new approach to scoring supply-side impact policies. In plain language, is it now more difficult for the Government to get pro-growth impact policies included in the forecasts, or is it easier to avoid anti-growth impacts?”

“Is it possible to build a forward-looking, bottom-up forecast of productivity? One of my concerns is that, obviously, these numbers have been so wrong over the last 15 years, and that has created a large negative impact on Government policymaking.”

“In your analysis, does your productivity forecast essentially still come down to a top-down judgment based on past trends, as we have discussed in previous sessions?”