Richard Hughes, the chairman of the OBR, has warned that public transport may need to permanently have subsidies to ensure no cuts to services.
He told MPs on the treasury select committee: “It remains to be seen what the financial model for public transport is in the long term.
“We don’t know to what extent people are going to start returning to work five days a week. Revealed preference seems to suggest people are going to work from home more.”
He added: “Assumptions about when ticket revenues into the transport system recover to pre-pandemic levels I think have to be kept under constant review and it may be the case there is a permanent hole in the rail system, the Underground in London and local transport systems, which are going to have to be subsidised in perpetuity if they’re not going to cut services.”
Hughes also told MPs that the impact of EU migrants leaving the UK during the pandemic was having an impact on the economy, with about 50% of those who left not expected to return.
He said: “There is an element of loss of migrants who would have otherwise come here or stayed here to stay in the workforce. That is a minority of the effect on the labour force but it is nonetheless a significant one.”
Hughes added: “EU migrants were particularly favourable to the UK finances in the sense that we tended to not pay for their education.
“They came here and were largely in employment. They often didn’t bring dependents with them. What we didn’t know is whether they would stay and collect a pension, or go home,” he said, adding that compared with migrants from other nations, EU workers “had some fiscal advantages”.
He added: “The bigger loss comes from the fact that we have a less trade-intensive economy which is less connected in terms of trade with the rest of the world and it has consequences for the long-run productivity of the economy as a whole rather than necessarily the individuals who were either here or not.”
Overall, the number of people leaving the workforce, either through returning to home countries or residents taking early retirement, was expected to be about 160,000, he said.