I will pick up on a couple of things. Caroline Gardner mentioned the interplay between pensions and other issues, and the fact that higher earners are bumping up against their cap. One interesting thing about that is that, if people do not retire and continue to work and are not then putting more into their pension, that means that they are paying more income tax, so that is a potential benefit for the public finances.
We have talked a lot about the tax side but, on the spend side, we could do a lot more to understand that better. To go back to the infrastructure point, I agree that infrastructure is good, but one piece of infrastructure can be a lot better than another. For example, when we were doing the Manchester city deal, there were two tram schemes with exactly the same cost of £800 million but, in terms of economic benefit, the difference was a factor of 10 to one. It is really important to get a more rigorous analysis of the spend, the benefits and the opportunity costs.
On migration, I have already said that something along the lines of the post-study work visa would be helpful. At UK level, KPMG and many other businesses—as I am sure the CBI knows well—are struggling with the tier 2 cap. We cannot get people in because of that. People have not been able to join us because of that, so it is constraining.
The dependency ratio is really interesting. If I were a policy maker, I would get some work done on whether the dependency ratio is exactly right for now, because the workforce has changed so much. We have talked about older workers being in the workforce and we use a standard measure of the dependency ratio to calculate potential costs and benefits. If I had some spare time, I might consider whether that standard measure is the right basis going forward. It is worth looking at that.
I have one final point on flexibility and policy choices. If, as we are seeing, we are adrift by a lot of money—potentially we could be £250 million or £500 million adrift—it is important to understand flexible policy choices, where the tap can be turned on and off. Obviously, that is hugely complex and difficult for public services, but there should be an understanding of the flexibility in the system to do that. For example, there is a big commitment on early years provision, but is that something that can be flexed if money is tight? I am not necessarily advocating that one way or the other—that is an illustration of the point. It is pretty important to have that flexibility in policy.
We have talked about data. Obviously, you have to use standard data sets to set the budget, but we get lots of real-time data that lets us know whether things are on track. To go back to Elaine Lorimer’s point about commercial and residential property, we know that, in the past six months, there has been way more commercial property investment in Scotland than there has been for quite some time. We know that the south and the south-east are struggling so, if anything, the balance is going the other way.
We have done forecasts that show that house prices in Scotland will continue to grow at higher rates for the next five years, whereas our chief economist’s estimate is that prices in London will drop and prices in the other regions will go up a bit, but not nearly as much as they have been going up. That real-time data that is coming through will not particularly help you in your budget setting, because you need the historical data, but it is certainly there and available for policy makers to know whether you are on track and where the potential gaps may be.