Who is lying about UK budget plans? The OBR test.

Over the next five months you will be told by the Conservatives that Labour’s spending plans will ‘cost billions’, are unaffordable, will put the recovery at risk - I could go on and on. Is there any truth in all this? Well you can read what I and othershave written, but that involves looking at lots of numbers which, even if you are an economist or economic journalist, takes time. So here is a very simple reason why you can ignore all these Conservative claims.

Some months ago Ed Balls asked the Chancellor if the OBR, which does all the government’s number crunching, could also look at Labour’s fiscal plans. Now the OBR is independent, and interrogates what the government tells it to make sure it is not being deceived. So they would do the same to Labour’s fiscal plans, if instructed to do so. If Labour’s fiscal plans really are irresponsible, or do not add up, here was an excellent opportunity to expose that using an independent authority.

George Osborne refused Ed Ball’s request. Now Osborne will say that there were various technical issues, and that such a move might damage the OBR’s impartiality, but remember that Osborne is the most political of Chancellors. If he saw a clear way to damage Labour’s economic credibility, do you think he would let such concerns bother him for a second? (The OBR’s equivalent in the Netherlands does this kind of exercise, and the Dutch political debate is much better as a result.) So there really is only one conclusion to draw. Allowing the OBR to cost Labour’s plans would have done Labour more good than harm.

So it really is that easy. Do by all means look at all the numbers (which come to the same conclusion), but if you want a simpler reason to ignore Conservative claims about Labour’s future plans, this is it. The OBR test is clear, compelling and correct. (And any fair minded journalist who reports these Conservative claims should at least note the OBR request and refusal.)

What about the other way around: is what Labour say about Conservative plans just fear mongering? In this case we do have OBR numbers, and they said about existing plans (which exclude Cameron’s conference tax give-away but also any additions to the coalition’s welfare cuts):

“Consistent historical data for RDEL [Departmental Spending] are not available over a long period, but the closest equivalent in the National Accounts implies that by 2019-20 day-to-day spending on public services would be at its lowest level since 2002-03 in real terms (based on whole economy inflation), since 2001-02 in real terms per capita and since the late-1930s as a share of GDP.”

To see what those numbers might mean in practice, let Rick start you off.

Update

At their press conference today where the Conservatives ‘costed’ Labour’s plans, Osborne was twice asked about the OBR refusal. According to the Guardian the first time he did not answer. The second time he said

“The OBR brought in an external reviewer last year. The review concluded that it was not right to let the OBR audit opposition spending plans now. But this can be looked at in the next parliament.”

Balls proposal was first made, and rejected, in October 2013. Kevin Page’s review was not published until nearly a year later, so will not have been the basis of Osborne’s rejection. [1] Osborne’s reply is interesting – he is not rejecting the idea in principle, but just for now. Now it is true that the OBR is relatively young, and would need more resources to do this, but they are reportedlyup for the task if asked. So my key point still stands. If the Chancellor really thought that OBR analysis would damage Labour, would he let caution and some small extra costs get in his way?

[1] Here is what Kevin Page’s reviewactually said:

“Given that the organisational underpinnings of the OBR are in their institutional infancy and are interdependent with a host of government departments and agencies, it is recommended that caution be exercised in considering the expansion of the OBR’s mandate (e.g. costing certification of opposition manifestos). The OBR may not have the organisational capacity to expand its remit without further drawing on the resources of other government departments. In addition, the particularly narrow legal framework of the OBR and its interdependencies with the executive branch may risk creating perceptions of conflicts-of-interest.”

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Ditulis oleh AndreSurbakti pada tanggal Senin, 05 Januari 2015