 I will stand for this. Good morning, ladies and gentlemen, and as deputy Presiding Officer, it's my pleasure to welcome you to the debating chamber of the Scottish Parliament for the opening ceremony of the ninth annual meeting of the Organisation for Economic Cooperation and Development, OECD, parliamentary budget officials and independent physical institutions. What a mouthful. To those of you who joined me at the reception yesterday evening, I apologise for my speech. Welcome back. I hope you enjoyed your evening. I hope you had a good night's sleep. This is difficult when you come to a strange town. Although the OECD has celebrated its 50th anniversary, its roots actually go back further to the rubble of Europe after World War 2. Determined to avoid the mistakes of their predecessors in the wake of the First World War, European leaders realised that the best way to ensure lasting peace was to encourage co-operation and reconstruction rather than punish the defeated, tack-tent the European Union, I'm thinking Brexit. It was established to run the US finance-martial plan for reconstruction of a continent ravaged by war. It made individual governments recognise the interdependence of their economies and paved the way for a new era of co-operation that was to change the face of Europe. As you all know, the success of the OECD brought about the prospect of carrying out its work on a global stage. The US and Canada joined and signed the new OECD convention of 14 December 1960. Today, there are 35 OECD member countries worldwide who regularly turn to one another to identify problems, discuss and analyse them and promote policies to solve them. With a mission to promote policies that will improve the economic and social wellbeing around the world, people around the world, the OECD is focused on helping governments around the world to restore confidence in markets and the institutions that make them function, re-establish healthy public finances as a basis for future sustainable economic growth, foster and support new sources of growth through innovation, environmentally friendly green growth strategies and the development of emerging economies and ensure that people of all ages can develop the skills to work productively and satisfactorily in the jobs of tomorrow. As the OECD network of parliamentary budget officials, PBO and independent fiscal institutions, you play a fundamental role in working on improving parliamentary scrutiny of the budget process and the evolving role of independent fiscal institutions. I am very pleased that this conference has brought together senior staff from parliaments, PBOs and fiscal councils to debate substantive budgeting issues, share practical experiences on working methods, profile new institutions and significant changes in the mandates of older institutions, identify good practices and contribute to standard setting. If I may, I will speak very briefly about Scotland's budget to give you all an overview of the issues that are currently being debated in this chamber by my MSP colleagues. The Scottish budget and public finances will evolve in the coming years, with additional tax and welfare powers being devolved to this Parliament. Receipts from income tax, assigned VAT and air departure tax will form part of the Scottish budget during this parliamentary session. Those taxes, combined with the already devolved taxes of council tax, business rates, land and buildings transaction tax and the land fuel tax, will mean that the taxation as a share of devolved spending will make up approximately 50 per cent of that spending. Those new powers mean that the Scottish budget is moving into territory where its size is subject to some uncertainty, driven by tax policies set in the Scottish Parliament, revenue forecasts, which will be undertaken by the Scottish fiscal commission, as well as Scottish economic performance, which will influence, obviously, tax receipts. The Scottish economy has slowed in recent times—I hope that you did not read the front pages of the papers this morning—relative to the rest of the UK, largely due to the slowdown of the North Sea oil and gas sector. Despite difficult economic times, since the financial crash of 2008, the Scottish labour market has held up fairly well. The latest unemployment rate in Scotland stands at 4.9 per cent, with the employment rate being 73.6 per cent. Scottish productivity has also grown at the fastest rate of any part of the UK. That is a very brief overview of the current climate in Scotland in terms of our budget and economy. I am sure that you will have discussions with our in-house experts, the Scottish Parliament's financial scrutiny units throughout the course of the conference. On to the rest of the conference, I wish you all a stimulating, productive and enjoyable day in the Scottish Parliament. That is the end of my speech. I was not seeking applause—yes, I was. I would like to welcome John Blondell, head of division, budgeting and public expenditures, to address the conference. John, please. Thank you very much. Allow me to start by thanking the Scottish Parliament for hosting us and for you for welcoming us so kindly. It is a rare honour for groups to be allowed into this chamber, which is normally reserved for actual members of the Scottish Parliament. Thank you very much for that honour. When we were going through the various rooms that we have in the Parliament building yesterday for the breakout sessions and the various breakout rooms, and we were thinking back, Lisa and I, to when we started this meeting, that the smallest breakout room would have been too large for this group when it first started. It is truly a testament to how parliamentary budget offices and independent fiscal institutions as budgeting institutions have grown in a remarkably short period of time, from being a very small group to being a very large group, although they are of course very divergent in their mandates and resources. It is truly one of the greatest witnesses to the changes in budget institutions that we have witnessed. Now, we all know that Scotland has been a major centre of the study of economics. It was in this very city that Adam Smith wrote The Wealth of Nations. When I came here, I was hoping to visit his house, but I was told that it was under renovation. But his economic theories 250 years later live on, although parts of it are being renovated. The timing of this event is of course very appropriate, because this very week the Fiscal Commission of Scotland is getting its Goddard statutory footing, so it is now a statutory body. So we congratulate the Fiscal Commission, Lady Susan Rice, on this status, and we look very much forward to hearing more about this institution as she speaks. We have an agenda that features a broad range of experts, and we are very much looking forward to it, but before I close and give the floor to the next speaker, I would also like to mention that many of you know a person who is a member of the staff now, Sherri Nicholl, who is, of course, from this Parliament. We would first of all like to thank the Scottish Parliament for in the beginning lending us to her on succumbent and then for allowing us to keep her. Thank you, Sherri, for everything that you do, and without further ado, please to the next speaker. Thank you very much. Thank you, Mr Blond. I would like to welcome Lady Susan Rice, chair of the Scottish Fiscal Commission, to give the plenary address. Lady Susan, I am going to say a wee bit about you first. Lady Susan, a charter banker, was previously chairman and chief executive of Lloyd's TSB Scotland PLC, the first woman to head a UK clearing bank and managing director of Lloyd's banking group. She also held the position of senior vice president of NatWest Bankor in New York and earlier was a dean at Yale and Colgate universities in America and a published medical researcher. Lady Susan has degrees from Wellesley and Aberdeen University. There you go. I'm sure there's more to it, but that's all I've got down here. Lady Susan, please. Thank you very much, Deputy Presiding Officer, which is also a mouthful and thank you for not saying any more. Good morning to everybody. I must say at the reception last night and this morning, I was so pleased to see a number of familiar faces and I'm looking at some of you just now. That's one of the great things about this annual event and I'm especially pleased that you're here in our wonderful Scottish Parliament. Can I welcome you all to Scotland in what is one of the most exciting years in our fiscal history? The Scottish Fiscal Commission this week became a non-ministerial body, a landmark moment after a huge amount of work which some of you may also have experienced in your own institutions. Now my theme is good things come in threes. You might well ask why. Well, this is my third OECD PBO and IFI conference and there's no doubt that it's a good thing. Three years ago in Vienna, I described what was almost a brand new organisation. It comprised three, part time, unpaid commissioners, none of us were from within government and that was it. No staff, the Scottish Fiscal Commission was set up in June 2014 as a non-statutory body. Our job was to provide independent scrutiny of the Scottish government's forecasts of the receipts from taxes which were newly devolved to Scotland and we had to make a judgment as to whether their forecasts were reasonable or not. We had three, the magic number, three devolved taxes to consider in that first year. Land and buildings tax, landfill tax along with analysis of the economic determinants of non-domestic rates. We published a report, our first one, which was 12 pages long, a bit like a pamphlet and even though we were one of a tiny handful of sub-national independent fiscal institutions, IFIs, we still wanted to establish that we were doing things in the right way and we had to learn what the right way was. When you're doing this in a country you don't have any peers to turn to and that's why however simple our role was then we started at the beginning to mark ourselves against the 22 OECD principles for independent fiscal institutions and we bet quite a number of them even then in our first year but not all of them. Next when I saw you or joined this conference last year I described progress we had made in year two. At that point we'd added an administrator to research assistance, a small annual budget, we had no budget the first year, we developed a visual identity and a logo, started producing out-turn evaluation reports as well as our draft budget report, the commissioners were even being paid in the second year, the forecasts had moved from a two to a five-year horizon and our second report on the draft budget turned out to be five times longer than the first, a bit more like a short story. There was also during that year quite a lot of parliamentary debate about whether we could genuinely be independent of government. We were answerable to the Parliament and appointed by it but in response to ministerial recommendation and we were after all scrutinising the government's forecasts. We had a lot of debate about that and we therefore became rather more public in describing our alignment to the OECD principles because they gave us an external benchmark of good practice. We knew we were operating independently but it was the OECD principles as a reference point that let us talk about ourselves when challenged in a positive way and not defensively. So quite a lot of progress in our second year but the evolution has continued. For our third budget round in 2016 income tax receipts as you just heard and threshold setting powers were added to the list of devolved taxes so we began talking real revenue for this country and as you might expect the report on the draft budget that we produced last December expanded even further, this time it was 10 times bigger than our first year, pretty much a novella and who knows next time maybe a novel, maybe Amazon will have to wait and see what happens and our activity throughout last year was like a well-oiled machine. We had matured as a group of commissioners who were scrutinising others' forecasts. We set the agendas, called the meetings with the Scottish Government forecasters, we challenged them, we also started a process of knowledge transfer beginning to work with the models ourselves, changing assumptions in order to test forecast sensitivities. At the same time two new bills were passed, the Scotland Bill 2016 in the Westminster Parliament and the Scottish Fiscal Commission Bill in the Parliament here. Together they both fundamentally changed our purpose and provided the primary legislation and framework for us to operate on a statutory basis. So just as we thought we'd matured into our role as scrutineers, we've spent 12 months in a transition program to put ourselves into statute. Last Saturday, April 1, I won't say that it's April Fool's Day, but it was April 1, we emerged from that cocoon as a non-ministerial body operating under statute but still independent of government. We've set the protocols and standing orders and agreements needed in order to operate to the highest public sector standards, that's very important to us, and we've hired a team of analysts. Why? Because today, while we're still called the Scottish Fiscal Commission, we now have to produce ourselves the central fiscal and economic forecasts for the Scottish budget. We're now responsible for forecasting onshore GDP for Scotland, income tax receipts, land and buildings and landfill taxes, non-domestic rates, demand-led social security expenditure with air departure tax coming our way shortly and after that aggregate levy. Around 17 billion pounds of taxes, which were formally set, received and redistributed by the UK government, are now coming under the control of the Scottish government. Our analytical team have been recruited or seconded into the commission from academia, the private sector, and both the UK and Scottish civil service, and I'm delighted that Mary Spowage is here, Mary, you're up there, who's our deputy chief executive and that she's participating in these meetings. Their experience includes fiscal forecasting, macroeconomic modelling, housing market analysis, public sector finances and data and statistics. As with any organisation, we also have a corporate services function and a senior responsible officer. That person, once appointed, will report to me as the chair, together with my fellow commissioners. We have Professor Alistair Smith and David Wilson, who are also joining us and I hope that you meet them. Over the coming months, our own staff now will develop the models and forecasts, the outputs with challenge and direction set by us, the commissioners, we're also their bosses. We'll have to scrutinise the work produced by our own staff in order to gain assurance around the reasonableness of these forecasts because at the end of the day, the forecasts are the commissioners. We are responsible in law and we're answerable to parliament. A curious structure. And if we're still one of only a handful of subnational financial institutions today, we're also one of only three ifsies to produce its own forecasts. Please wish us luck. So that's our story and I hope next year there'll be very little to report to you. But this year I thought I might just finish by summarising a few of the challenges we've had and how we're steering through them. First, along the way it was essential for us to influence the legislation to have clear boundaries for what we are and are not to do. Parliamentarians, the press, the public all have different views about what they want us to do. So it's been essential to have boundaries enshrined in law so that we can say we don't do that and we do do this. Second, it's also essential for us to ensure that the rather complex structure we now have still allows us to act independently in perception as well as in fact. Third, looking ahead we'll need to adapt our brand new organisation as it settles in. One always has to do that with new organisations and establish our professional credibility not only through reasonable forecasts but also through good communication. We think we have a chance of meeting these three challenges if we focus on three goals. One is to develop a strong reputation as an authoritative, independent and transparent body. That's about our forecasting. The next is to deliver value for money for the taxpayer. We need to be efficient, adaptable and operate to a high standard. That's about our organisation. Third, we'll do these things as we've done from day one by learning from all of you and drawing clearly on the OECD principles. So I'll close by saying thank you for your help even if you didn't know you were helping us and I salute all of you and I hope you enjoy these two days. Thank you. Thank you. Thank you, Lady Susan, for that address. I'd like now to call Alice Rivlin, First Director of the Congressional Budget Office United States to give the keynote address. Alice is a senior fellow in economic studies at the Brookings Institute Centre for Health Policy, an expert in monetary, fiscal and health policy. She has held several high-profile positions during her extensive career. She was the founding director of the Congressional Budget Office in 1975 and later director of the Office Management and Budget and Vice-Chair of the Federal Reserve Board. She's taught at Harvard, George Mason and the new school universities and has served on the boards of directors of several corporations and is president of the American Economic Association. Alice was named one of the greatest public servants of the last 25 years by the Council of Excellence and Government in 2008 and she's a woman. Excellent. Miss Rivlin. Thank you very much. That was a wonderful introduction, Deputy Presiding Officer. It's such a mouthful. I'm greatly honoured to be here in the Scottish Parliament for this remarkable gathering and I must say I think I hold the record of being the person in this room who has the longest association with the OECD and that's because I'm not young and my first job out of university was with the Marshall Plan organization in Paris as a very junior economist on the staff of our mission there and our job was, among other things, to represent the United States at the OECD and one Saturday morning in the summer there happened to be a review of the economy of Ireland and my senior colleagues all somehow had something else they wanted to do on a holiday weekend in the summer and it fell to the most junior person in the office to represent the United States at this meeting and I was exceedingly excited to be there in my early 20s as the voice of the United States and I can remember what happened but I remember it was very exciting. I'm very pleased to see this large gathering. 42 years ago when I was asked by the Congress of the United States to start the Congressional Budget Office there were hardly any examples of legislative budget or fiscal offices. We didn't get much guidance in the law as to actually what, how the CBO was to be organized, in fact none at all, and we looked around for models and we really didn't find any none in other countries that seemed applicable and a couple in American states, California had an active legislative advisor he was called and he was very helpful as we made nitty-gritty decisions about who to hire and what kind of staff and what would be useful to the Congress but now it's very different. We have a large group of OECD countries and some developing countries as well with legislative budget offices or independent fiscal agencies. They're able to reach out to each other to talk about technical matters to share stories of triumphs and defeats. New parliamentary fiscal offices as Lady Susan has emphasized here in Scotland and also in Ireland have a ready group of mentors eager to offer advice on how to get started and what to do and what not to do. So I find this situation very reassuring. I am proud of the Congressional Budget Office which has had able leadership over the years and has come to be a highly respected organization which Congress and the public rely on for budget projections and policy analysis despite sometimes strident sniper fire from politicians on both the right and the left. I'm not sure what the academic community that teaches and researches the U.S. budget would do without the CBO. It's a strong institution and I'm not worried about its coming through our current political turmoil. I'm especially gratified to see Bob Shunstein here. He was one of my early hires and has had a very long career at the Congressional Budget Office. So it's great that these similar organizations are sprouting out up and generally thriving under the varying conditions in many parts of the world. They're led by an impressively well qualified set of experts passionately dedicated to fiscal responsibility and producing solid information to help politicians make informed decisions. So it's exciting for me to interact with this whole roomful of smart people who care about assisting legislators to make more informed decisions. We must have proved our worth to the political world or we wouldn't all be gathered here in Edinburgh this morning. But at the same time I sense we gather in part for protection and mutual support in trying in turbulent times. It's never been easy to provide politicians with objective nonpartisan information on budget matters in time to help them with the hard decisions that they must make on tight schedules. But it has become more difficult in recent years. So I'd like to share with you some more this morning some thoughts about the difficulties facing our institutions and perhaps some thoughts about what to do about it. My remarks will draw on the United States experience because that's what I know about. But I believe we all face many of the same challenges. Nobody ever said it was easy to work as a parliamentary budget official or lead an independent fiscal institution. If you wanted a job that would not draw criticism and controversy you chose the wrong career. These are inherently difficult assignments that require not only technical and analytical skills but the ability to win the confidence of politicians without telling them what they most want to hear because they often want magic solutions and your job is to tell them there aren't any. Parliaments by definition are full of politicians with widely different views on what is best for their country. Disagreements are often an intense irrespective of whether the actual difference in views is wide or narrow. Politicians win elections because they believe deeply that their cause is right, that the policies they espouse are going to lead to general welfare. In the face of uncertainty they choose to feature and genuinely believe the evidence that supports their point of view. They believe that their policy proposals will be highly effective and not very costly. This is a human trait. The psychologists have plenty of evidence that people tend to grab on to the evidence that supports what they already believe but I think it's especially true of politicians. Democracies need politicians dedicated to a variety of different policies and eager to argue their point of view but elected leaders also need reality checks. They need a competent neutral evaluator of competing policy claims and they need breaks on spending, taxing and borrowing, left to their own devices and knowing that they must remain popular in order to keep their jobs. Politicians would tend to spend more, tax less and pass the debt on to future politicians and taxpayers and they know it. They turn to budget technocrats to keep themselves honest and responsible. The congressional budget office was created for reasons that are idiosyncratic to the United States. Reasons having to do with the balance of power between the executive and legislative branches under our constitution. However, it has become increasingly important in recent years for reasons that are common to all advanced countries. The difficulty of making budget decisions that balance the needs of an aging population with opportunities for the young in the face of slower economic growth and rising debts. The drafters of our constitution in 1789 were the leaders of a successful revolution against the English crown in which resentment of English taxes played a significant role. That may resonate a bit in Scotland. They wrote a constitution with sharp separation of powers between the legislative and executive functions and gave to Congress, not the president, explicit power to tax and borrow, subject only to presidential veto that a supermajority could override. I stress this history, especially right now, because I'm often surprised at how many observers of American politics, even some in the United States, failed to understand how limited American presidential power really is. We make such a ridiculous spectacle of our presidential elections and we spend so much time and money on the election process that many observers naturally assume that the American president must have awesome powers. In fact, the American presidency is a fairly weak office, especially with respect to domestic affairs. The president cannot change laws, spend money, increase or lower taxes without engaging in detailed and often arduous negotiations with the independently powerful Senate and House of Representatives and occasionally with the courts. One might think that it would be easier for a president to win battles with Congress if his own political party had a majority in both chambers, and sometimes that's true, but party loyalty and discipline have not been strong features of American democracy, unlike many of the parliaments you come from, as President Donald Trump is in the process of discovering. Despite campaigning vigorously on the promise of repealing and replacing President Obama's signature health initiative, the Affordable Care Act, President Trump has so far been unable to get his own Republican party to agree on a way of fulfilling that promise. Disagreements between the right wing of his party and more moderate Republicans prevented a majority from coalescing around one proposal, even in the House of Representatives, where Republicans have a substantial majority. Even if the compromise were to pass the House, it would face an uncertain future in the Senate where the Republican majority is narrower and procedural rules give the minority more power. And the CBO's score of the president's replacement proposal played a significant role in that part of congressional debate. So the CBO was created as a result of President Richard Nixon's overstepping his presidential powers in the early 1970s. Congress reacted by reasserting their control over fiscal matters, creating a new budget process for making budget decisions, including a budget committee in each House and the Congressional Budget Office. This new agency was charged with providing nonpartisan objective budget forecasts and analysis of fiscal alternatives in both the House and the Senate. The president had such an agency already, established in 1921, and now called the Office of Management and Budget. Congress decided it wanted a similar agency working for them, but to fit into the congressional context it would have to be nonpartisan and responsive to both the House and the Senate. And that meant giving the director of the congressional budget office a lot more independence than the director of the Office of Management and Budget, who works directly for the president. I've held both jobs, and I much prefer the CBO. While the origins of the CBO reflected these idiosyncratic U.S. structures, its growing responsibility and preeminence and prominence stem from the economic and fiscal pressures that all advanced countries share. Beginning in the 1980s, the Congress began imposing rules on itself to enforce fiscal rectitude, rules designed to hold down annual deficits and keep the national debt from rising faster than the economy was growing. Similar rules appeared in other advanced countries that face comparable budget challenges. The fiscal rules on deficits and debt in the Maastricht Treaty embody the same concept, albeit without a workable enforcement mechanism. If fiscal rules are to be enforced, there has to be a referee or a scorekeeper. Someone has to provide an accepted answer to questions like how much will this proposed budget or spending measure or tax change add or subtract from the current deficit and the future debt. It was this scorekeeping role that put the CBO into the spotlight and made it necessary for staff to make estimates of the budget impact of exceedingly complex legislation as it was being considered, and a subjected CBO to often strident attack from politicians whose legislative objectives were threatened by the CBO score. The scoring role precipitated technocrats with their data sets and their statistical models and their algorithms into positions of power in the policy decision process. It became normal for the drafters of major tax and spending legislation to consult with CBO during the process of writing the bill because the CBO score would determine whether their proposal conformed to the budget rules. Indeed, the details of programmatic legislation are often drafted and redrafted in consultation with the CBO in order to achieve a more acceptable score. Some politicians and policy advocates complain that the CBO has excessive power and that designing the best policy becomes lower priority than getting the right score. CBO, of course, is only trying its best to help facilitate enforcement of the fiscal rules that the politicians in Congress have imposed on themselves, but they sometimes do come across as unelected technocrats presuming to prevent the elected representatives of the people from making the laws. Sometimes our budget rules have worked well in the sense that they produced a framework for opposing political forces to resolve their policy differences while containing deficits and debt. The rules adopted by the Congress in 1990 kept annual appropriations and required that the deficit-increasing effects of either tax cuts or benefit increases be offset. Those rules helped produce a budget surplus by the end of the decade, but weakening of the rules produced some bizarre consequences. In 2001, President Bush proposed tax cuts that were estimated by the CBO to inflate budget deficits in the long run. So, Congress designed the tax changes to be deficit-neutral over 10 years as the budget rule required, and then to terminate automatically at the end of 2010, which at the time seemed like a long way away. We'll think of something before then. But of course 2010 eventually came and the threat of a big tax increase in a weak economy brought on an artificial budget crisis that could easily have been avoided. The increasing polarization of our two major political parties has increased the visibility of the Congressional Budget Office as scorekeeper. The breakdown of negotiations between President Obama and congressional leadership over measures to contain future debt, which was then known as the grand bargain, led to a truly crazy budget scenario in 2011. Congress charged a select committee with coming up with a grand bargain and designed what they thought was going to be an action-forcing mechanism, proportional cuts in domestic and defense spending that were acceptable to neither party, and the thought was they were so undesirable that the grand bargain would be reached. But the threat failed to produce an agreement, and the result has been six years of short-run patches to keep the government running while divided political leadership failed to resolve basic differences over the path forward. Partisan ranker has led to gridlock, which is not a good advertisement for a representative democracy. The budget outlook in the United States reflects the same underlying forces familiar to most of the countries represented in this room. Commitments to an aging population for retirement income and healthcare. In our case, the population is aging less rapidly than most of yours, but we have a peculiarly expensive healthcare system. Slower growth, which increases the need for higher public as well as private investment in efforts to increase future productivity, science skills, modernizing infrastructure, and so forth. An out-of-date tax system that cannot be expected, especially in the face of slow growth, to produce sufficient revenue to pay for both the cost of maintaining the elderly, adequate government services, and finance productivity enhancing investment. This combination of forces leads to projections of a long-run rise in the debt-to-GDP ratio on top of very high levels of debt, currently about 73% of the GDP, largely attributable to the great recession that followed the financial crash, although other factors such as the cost of war in the Middle East have played a role. To pragmatic centrists like me, it seems obvious that compromise solutions are the answer. The United States needs to restrain the cost of healthcare, modify our commitments to older people, especially those with more than adequate incomes, invest wisely in future productivity, and overfall haul our tax system in ways that could produce more revenue in a less growth-inhibiting way. That could mean shifting from heavy reliance on wage and income taxes to more reliance on consumer taxation, adding a VAT, which is an important source of revenue to almost all of you, except us. A carbon tax is also an attractive option, but more to discourage the use of fossil fuels than to generate revenue. However, although this collection of reforms seems compelling to academics like me who don't have to face the voters, it involves compromises which are deeply polarized political leaders are unable to make. Indeed, compromise across party and ideological lines has become a dirty word in American politics. Republicans are stridently opposed to any increases in taxation. Indeed, they favor reducing income tax rates, especially for upper income people. Democrats are just as vociferously opposed to any reductions in benefits to the elderly, the poor, the disabled. This standoff has led to rejection of many sensible centrist plans, several of which I helped right, and years of gridlock in which the only budget actions have been short-run measures to keep the government functioning while the basic issues remain unresolved. The prominence of CBO scoring in all of this has turned technical scoring issues into political fights. Even the exceedingly complex issue of how to score government lending and loan guarantee programs has attracted political attention. Two scoring issues in particular have loomed large, how to handle uncertainty in presenting forecasts to policy makers, especially long-run forecasts of spending revenues, deficits, and debt, and how to account for the feedback effects of fiscal proposals on economic performance at the macroeconomic level known as dynamic scoring, which is basically a special case of the basic question, what constitutes sufficient evidence for policy action. The problem of forecasting the future of anything, including the economy and the budget, is that it's impossible to do it accurately, and it's still necessary to make forecasts in order to have a basis for deciding to take actions that will affect the future. Budget forecasts obviously have to start with economic assumptions about GDP growth, part of Lady Susan's responsibility that she has emphasized, employment and inflation, and we all know how uncertain macro forecasts are, especially over the long run, and in the face of cataclysmic events like the financial crash of 2008. Contingent forecasts of spending and revenues given the macro assumptions and existing laws are more accurate, but over time laws change, and the cost of implementing the same laws also changes. We have a major example in the United States at the moment. Our healthcare spending growth, which has been very high over the years, has slowed down in recent years, and it makes a huge difference in projections of future debt, whether the slowdown continues or reaccelerates. The only sensible response of a forecaster is to make the best estimates they can, make their assumptions clear, give policymakers full information about why the forecast might be wrong and by how much. The Congressional Budget Office has been assiduous in drawing attention to uncertainty, providing ranges, confidence controls, and so forth, but admitting uncertainty has some risks in itself because politicians can easily make uncertainty an excuse for fiscal irresponsibility. In the face of uncertainty about future deficits and debt, it's very tempting, if you're a politician, to promise future benefits and tax cuts at the same time. And CBO often hears, you've been wrong before, so why should we believe you now? On dynamic scoring and the adequacy of evidence, our conservative politicians believe passionately in smaller, less intrusive government, but their most fundamental belief is in cutting taxes, especially income taxes, and they believe that will bruise economic growth substantially. The evidence is not nearly as strong as they think it is, and it obviously makes a difference whether the tax cuts are accompanied by spending cuts that might reduce growth or by debt increases that could increase interest rates and discourage investment. CBO has taken a lot of criticism from the right for not adequately recognizing the beneficial effects of lower income tax on economic growth, and now similar arguments are being made on the left with respect to growth enhancing benefits of social spending. Early childhood education and nurturing wellness or prevention programs in health. Advocates are often more ready than the CBO analysts to assume positive results from one highly intensive demonstration program can be replicated at the national level. Progressive anger at the CBO's alleged failure to recognize the future budget savings from social spending is as loudly expressed as conservative anger over the CBO's supposed sin of not adequately recognizing the benefits of income tax reduction. Both are special cases of the difficulty of assembling persuasive evidence of the effectiveness of policy changes. Now these kinds of issues have been debated by social sciences for decades, and the good news is that data and analysis are much more sophisticated than they used to be, and the potential for evidence-based policymaking is greater than it was decades ago when I started out as a junior policy analyst. But there's bad news too, which is why I started by saying these are trying times for people like those gathered in this room. Parliamentary and independent fiscal agencies attract people who value rationality, data analysis, ecometric models, evidence-based policymaking. We may have some difficulty defining what we mean by truth, but we do believe that some things are demonstrably true, and some are not, and that evidence matters. One of the later speakers at this meeting is talking about a post-truth society. I hope that is not what we now live in. But now we do find ourselves in a world in which evidence is widely disregarded, fake news stories circulate and are widely believed, and politicians, at least some of them, feel entitled to make up their own facts and attack those who question them. Maybe I'm overreacting to our newly elected President Trump, but I fear he is not unique and that his electoral victory is the symptom of a deeper problem. Populist reaction against elites in the establishment is not surprising. The governing elites have messed up badly in all of our countries in failing to avert the financial crisis that devastated so many lives, in tolerating extremes of distribution of wealth, income and influence, failing to take climate change seriously enough, and in failing to intervene in the devastation natural and manmade that's impelling millions to risk everything to find refuge in a safer place. Lots of swirling forces have come together. Political turmoil and desire for change, polarization of views and high decibel election campaigns, terrorism, xenophobia, fear of change, decline of faith in institutions generally, governments, religious institutions often for good reasons, explosion of information and the social media everywhere you look and falsehood, fake news and high tolerance for unverified claims. Independent official, budget officials and parliamentary budgeteers are caught in the middle of this, trying to do their jobs, produce accurate relevant estimates and projections and keep the nation's fiscal house in order. It's hardest for the newcomers who have not yet established a track record and gained the respect of contending politicians on the public. So what to do? I don't see any alternative to continuing to work hard at getting the analysis right and communicating results as comprehensively and as thoroughly as possible both to elected policy makers and the public. Politically motivated criticism goes with the job and should be expected. I have faith that providing the good information to elected representatives that you are all providing is still the best formula for good public policy making and I'm glad that so many intelligent hardworking people are gathered here to show that they're willing to take on the job. Thank you. If you'll allow me to say Alice, as I think the only politician in the room, I take your scolding of us on the chin on behalf of my species, though the caveat is I've always been a back bencher so I'm one of the good guys. What I was interested to, if I may also say, is what you said about President Trump. As we're lay observers, it took the judiciary challenging the presidential executive order about people travelling from certain countries to bring home to us the valuable checks and balances within the American constitution, which I don't think we were so aware of prior to that. What you said about the Republicans in Congress not always working on block, I'd like to see more of that in Scotland. We are a very small Parliament and we tend to find that the whips are too good at their job and there are too few and one of them I have to praise myself, back benchers who are prepared to take on their Government and it's really back benchers or members of the ruling party that can bring their Government to account more than any opposition. Your comments about tribalism in the coming months ahead because of the possibility of a referendum in independence I think we'll find political tribalism and fewer examples of being able to work together, which is just part of life. Your comments about an ageing population so true in Scotland, so many issues there. I'll take it on the chin as I say on behalf of all politicians. We do try and I do say to people when they want something, I'll say, tell me how much it costs and where the money is coming from and that's the simple question. It's hard if our Government is easy for fault in the back benches, that's why I like it, there's a comfy life. Anyway, thank you very much. Beautiful, interesting speech and can I ask Lady Susan Rice to give a vote of thanks to all our speakers. Thank you. Deputy Presiding Officer, you have, and providing as well, you have just beautifully summarised Alice Rivlin's comments and I won't repeat all of those but the point of talking about the institutions, the institutions in America, so that's where I'm from originally, but I wear a Scottish hat very proudly as well. It is different from this country and the impact that they have is different and I think one learns something about all of that. Could I thank all our speakers? Jan obviously always very happy to hear you and just my personal and our collective thanks to the OECD for guiding and pulling the conversations we have here forward every year. There's more and there are new things, so huge thank you there. Alice, I've just met you last night but I think like a lot of people have known of you and so for many of us we know a name and we think we know you but now we do. You're outspoken, you're clear thinking, I think you're right that we all here probably share this inclination to evidence, to rational thinking. I think what we've also learned recently is that there are a lot of people out there who don't absolutely look at the world the same way we do so you're right we should stick with what we're doing because that's what we believe in and what we do well but we need to be able to communicate even more effectively I think the results of what we do so thank you for a very interesting story history lesson right up to now and to the future that was very very good and behalf of all of us again thank you very much. Thank you very much ladies who didn't mean to pre-empt I just I can't stop myself talking I just wanted to say something from the political point of view which you threaded in and out of your speech it's very interesting can I thank you for all your contributions this morning I'd like to wish all delegates a successful conference here at the Scottish Parliament I hope you get time to see a bit of the city of Edinburgh the sun's coming out for you so take advantage of it doesn't happen every day in Scotland and I'll now close this meeting with Parliament