Marking Labour's homework

Ed Balls, the Shadow Chancellor, will speak today at the Labour Party conference. He has already made one appearance today, on this morning’s BBC Radio 4 Today programme.

During the interview, Balls suggested that Labour should be allowed to submit its budgetary plans to the Office for Budget Responsibility. The OBR, headed by the highly-respected economist Robert Chote, was set up by George Osborne shortly after he became Chancellor. Just as Gordon Brown had arrived in No 11 in 1997 and immediately given away power to set interest rates to the Bank of England, Osborne sought to take some of the political heat out of fiscal policy by setting up an independent spending overseer. The OBR’s responsibility is to comb through the government’s spending plans and make a fuss when needed.

Osborne’s creation of the OBR was a canny move—so is Balls’s suggestion that the Opposition should use it, mainly because it is very unlikely ever to happen. Balls will then be in a position to complain about not getting his way. There is no doubt some political capital to be made from this.

However, the OBR has issued a less than ringing endorsement of Balls’s suggestion. In a statement, Robert Chote said: “If Parliament did want us to undertake this role, then there would be a number of practical issues to address.”

“Among them,” continued Chote, “we would need to ensure that we had adequate internal resources to do the job, as well as guaranteed access to the necessary data and analytical expertise within Whitehall.”

The phrase “adequate internal resources to do the job,” is a calm but frosty reminder to Balls that if the OBR is to crunch twice the amount of economic data it handles at present, then it would require a substantial increase in personnel.

The restructuring of a relatively small public body such as the OBR would not be impossible—but in turning it into an organisation that scrutinises both the government and the opposition’s sums, it would lose the unique character that made it such a good idea in the first place. There are several excellent think tanks that already concentrate on the fiscal plans of government and opposition parties—why create yet another?

But worse than this, the idea of giving the OBR oversight of the opposition’s plans would mean taking a valuable non-partisan organisation and rendering it politically white hot.

If this happens, an immensely effective organisation will have been destroyed.

 

UPDATE: 13:15

Paul Johnson, Director, Institute for Fiscal Studies, says: “It is not open to the OBR to examine and cost the proposals of opposition parties, or indeed any policies not announced in formal government statements. That is beyond their remit. There is a case for extending the remit. Having clearly costed manifestos would surely improve the transparency of debate. But such a duty on the OBR would need to be carefully considered and enacted. It would not be sensible to dump manifestos on the OBR a month before the election. Introducing the OBR into the process could have quite profound—and potentially rather positive—effects not only on transparency but on the way that manifestos are prepared, written and presented. This would be a significant expansion in the remit and powers of the OBR”.