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Political Party Policy Costings (Office for Budget Responsibility)

Volume 584: debated on Wednesday 16 July 2014

Motion for leave to bring in a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to amend the Budget Responsibility and National Audit Act 2011 to allow the Office for Budget Responsibility to scrutinise and certificate the policy costings of political parties represented in the House of Commons.

This Bill would allow the Office for Budget Responsibility independently to audit tax and spending measures in the manifestos of the main political parties. I think that would provide tough and serious scrutiny for all political parties. Although the Bill is not specifically about forecasting, I remind Members of the comments of the American economist J. K. Galbraith:

“The function of economic forecasting is to make astrology look respectable.”

That is a little joke for economists, but perhaps in years gone by economic forecasting owed more to its being an art than a science. The innovation of the OBR, however, has done much to improve transparency and the manner in which economics is discussed and debated in this place. The Bill would build on that reform and improve the way in which the OBR is able to contribute to democratic debate about the economy.

If I may, I shall provide three short reasons to explain why I think the Bill is a good idea. First, it would not introduce a particularly large change; it is rather modest. The OBR’s current purpose is to provide independent scrutiny of the Government’s policy proposals. Providing scrutiny of those seeking Government office is, in fact, a relatively small change, as it is already central to the OBR’s mission and a natural extension to what it does. It is neither complicated nor difficult for us to decide to accept the Bill, which would require just a few clauses. It would not introduce a wholesale change or invent any new bodies; it would merely extend existing responsibilities. It would introduce a moderate change to what the OBR already does.

Despite it introducing a small change, I think the Bill could make a huge difference to the quality of economic debate. In a good year, the spending of public money should always be done carefully. Even when times are better than they have been recently, we should think hard about each pound spent in the public’s name. At times like the present, however, when all our constituents have had to face four very difficult years, scrutiny of the spending of public money and taxation becomes all the more important, particularly to those who are the hardest up in our society, who have often worked hard to pay the taxes we collect.

At the end of this Parliament, we know that the Chancellor will leave any future Government with very serious challenges, both on the deficit and on borrowing. Any future Government would need to be careful and cautious. Without being too party political at this point, the Chancellor has failed the test he set for himself. We will still have a significant deficit, and the value to political parties of the OBR performing this function would be significant at a time when we need to be so careful about the spending of public money.

Proper scrutiny and transparency will help political parties to get it right and help the public to choose in a well informed way. In fact, Robert Chote of the OBR said that

“independent scrutiny of pre-election policy proposals could contribute to better policy making, to a more informed public debate.”

I think he is right. Our experience tells us that where scrutiny and transparency are carried out in a considered and well resourced way, we get better policies in the end. The academic literature is absolutely clear on this point—independence and transparency are crucial to the political process, generating good economic results. That is almost certainly why other countries—the Netherlands, Australia, Canada, and even the US Congressional Budget Office—already do this and have similar functions to help political parties and, more importantly, the public to see what is going on in manifestos by independently auditing tax and spend measures.

For those three reasons—this would be a relatively small change; despite its modest nature, it would have significant impact on assisting the public and our democratic process; and various countries whose economies and democracies are similar to ours already carry this out—the Bill provides a straightforward way to use the powers of this House to help the public to understand our economy a little better, to choose in a democratic way which of the political parties they want to vote for, and to understand what is going on in manifestos at election time. I can think of very few reasons why we would not want to proceed, and I have provided three very good reasons why we should do so.

Question put (Standing Order No. 23).

Ordered,

That Alison McGovern, Ian Murray, John Woodcock, Bill Esterson, Gregg McClymont and Barbara Keeley present the Bill.

Alison McGovern accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 23 January 2015 and to be printed (Bill 79).