Office for Budget Responsibility (Manifesto Audits)

Jesse Norman Excerpts

Wednesday 25th June 2014 Commons Chamber

[Ed Balls]

I believe that the Chief Secretary to the Treasury is on a visit to the United States. It may be that the Chancellor is engaged in rather more immediate and urgent matters that have cropped up in the past 24 hours, or it may be that he will arrive in the next few minutes to respond to this debate. I had assumed that the Chancellor would respond to this debate. I do not know whether you, Madam Deputy Speaker, have had any other guidance. Anyway, let us hope that he turns up.

In the meantime, and fully consistent with that consensus, it is our view that now is the right time to take a further step to enhance the role of the OBR. I will come on to explain our strategy and seek the views of the Chancellor, so he has about 10 minutes to get here.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

Sure. If the hon. Gentleman is playing for time in order to facilitate the arrival of the Chancellor, I will take as many interventions as is needed for the Chancellor to wing his way over from whichever lawyer’s office he is sitting in at the moment.

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[Jesse Norman]

I think the Minister present is fully capable of discharging any function required to see off the shadow Chancellor. A statement from the Institute for Government said:

“More feasible than making any hasty change to the OBR remit at this point would be to consider this option in detail during the five-year review of the OBR’s operation due to take place in 2015.”

How does the shadow Chancellor respond to that?

[Ed Balls]

I am making a speech in an attempt to build a cross-party consensus. If the hon. Gentleman thinks that the Chancellor, or whoever is in his place, will see me off, that might say something about their approach to this important matter.

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[Ed Balls]

My hon. Friend, who regularly advises me on my speeches, can obviously see where this speech is going. I have worked hard to try to secure consensus. Despite the support of many influential figures, I have not yet managed to succeed in making it a cross-party consensus. The reason for that is that, so far, the Chancellor has not engaged. He has refused to co-operate with the discussions. He has not responded to my proposals and letters. He has not even turned up today.

The question is: why is the Chancellor so reluctant? The reason cannot be the need for primary legislation, because we will support it. It cannot be the timetable because, despite the protestations of Government Members, the head of the OBR confirms that there is time to get this done and to get it done properly. The Chancellor says that he wants to protect OBR independence, but so do we, and the head of the OBR says that this reform need not jeopardise that independence.

[Jesse Norman]

Will the right hon. Gentleman give way?

[Ed Balls]

No, the hon. Gentleman has already had one go.

What is the issue? What is going on? I am afraid that it is not hard to conclude that the Chancellor sees this as an opportunity to play political games. [Interruption.] The more that Government Front Benchers laugh, the more we see the political games they want to play.

We know from the head of the OBR that if an agreement to proceed is reached by the end of June and we can conclude its details by the end of the summer, the OBR can independently audit all our tax and spending commitments for the next general election. It is just a matter of political will. The Chancellor wants to place political traps—through his aides, he very often tells people that he is setting them here and setting them there—but he is not willing to back an important reform in the national interest. What is going on?

Why is the Chancellor so keen to prevent Labour from having its manifesto independently audited, and so reluctant to put his own party’s manifesto through the same scrutiny? Might it be that, as the head of the Institute for Fiscal Studies said at the last Budget, the Chancellor is “getting into bad habits” by making tax changes that appear to bring money into the Exchequer in the short term but have a long-term permanent cost to the public finances; or that, as the IFS said at the last autumn statement, he

“continues to make specific promises on spending increases while stating that he will keep total spending at the same level”

and that he “can’t keep doing that”? The risk for the Chancellor is that people draw the conclusion that he wants the freedom to make promises in his manifesto that he knows he cannot afford and will not deliver, while making claims about Labour’s manifesto that he knows to be false, and blocking our desire for proper independent audits.

I have to tell the Chancellor and other Ministers that we remember the Conservatives’ uncosted promise to abolish inheritance tax last time around; and as for the Liberal Democrats’ promise to end tuition fees—enough said. My advice to the Chancellor, if he had turned up, and to the Chief Secretary, if he were here, would be that if they do not want to be reminded again and again of those mistakes, they should support our proposal and help us to forge the cross-party consensus we need.

It is hugely disappointing that the Chancellor seems determined to oppose this reform. I have tried hard to persuade him to put politics aside and to do the right thing. Our proposal would be the first ever such independent audit. We believe that it is essential to restore public trust in politics and to improve the nature of our political debate. It is not too late for him to come to the House to say, or to tell his Front-Bench colleagues, that he has changed his mind. I urge the House to vote to persuade the Chancellor to do just that—to change his mind, to stop playing politics and to stop blocking this important reform. If he fails to do so, people will rightly ask: what are they so scared of?

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[Nicky Morgan]

It is all very well for the right hon. Gentleman to have a conversation with the head of the OBR, but we do not know the details of that conversation; if he is going to release a transcript, I would be very interested to read it. In fact, the letter dated 15 January makes it very clear that

“To embark on this exercise in a rush, or with insufficient resources, could be very disruptive for the parties and very damaging to the OBR.”

Is the right hon. Gentleman saying that he wants it to be damaging to the OBR? I do not think that he does.

[Jesse Norman]

On the topic of misinformation, does the Minister share my surprise that the shadow Chancellor should have misrepresented the position of the Institute for Government on this, when he suggested that it was giving up on the idea of a reform of this kind in this Parliament? In fact, what it said—it was an expert judgment— was that:

“More feasible than making any hasty change…would be to consider this option…during the five-year review…due to take place in 2015.”

Does she not share my view that the shadow Chancellor should be invited to correct the record on what he said about that?

[Nicky Morgan]

I thank my hon. Friend for that very good point. He has eloquently set out the misrepresentation by the shadow Chancellor of what was said by the Institute for Government. I am sure that perhaps through later speakers and in the winding-up speech the Opposition will have a chance to correct the record.

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[Nicky Morgan]

My hon. Friend is entirely right; it will take time to recruit skilled members of staff to carry out the project that the Opposition say the OBR should be able to do within a matter of months.

[Jesse Norman]

Is my right hon. Friend aware that Mr Chote also made it very clear that his job would be made additionally complicated by the run-up to a general election? Is she surprised that the shadow Chancellor comes here to present his views with no form of back-up, official record, transcripts or anything on which this House might properly rely?

[Nicky Morgan]

Nothing in politics surprises me any more, so I am not surprised that the shadow Chancellor has done that. I am just surprised that he thinks that the House is going to buy it.

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[Mr Geoffrey Robinson (Coventry North West) (Lab)]

Perhaps it would be correct for me to state at the outset that, in view of the six-minute limit, I do not intend to take any interventions. I hope to confine myself to fewer than six minutes. I will not take an intervention, even from the hon. Member for Hereford and South Herefordshire (Jesse Norman), whose interventions so far have been a waste of time. Time is at a premium. On that basis, I will make some progress.

I do not think that I have heard a more blatant party political set of arguments, electorally inspired, from any Government since I have been in the House. The Government are going against the grain—

[Jesse Norman]

Will the hon. Gentleman give way?

[Mr Robinson]

No, I am not giving way. I have made that clear already, although not out of any fear of what the hon. Gentleman might say. The Government are afraid, though. They are afraid that, if our proposals before the election were properly and independently costed, as they will be—we will probably try to get it done independently in some other way if we have to—it would give them the credibility that the Government seek to deny them by being misleading and by obfuscating, at which they are experts—the Chancellor in particular, who is not here.

When we look at what individuals have said about the proposal, it is clear that it is possible—no one has tried harder to secure this than my right hon. Friend the Member for Morley and Outwood (Ed Balls), the shadow Chancellor—to achieve consensus across the House if right hon. and hon. Members on the Government Benches want it. The hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee, said on 15 October 2013, around the time that my right hon. Friend was writing to the Chancellor on these points:

“I made clear in the Commons that this should include examining, at their request, the fiscal policies of opposition parties at election time.”

The whole point is that election time and the run-up to the election is the appropriate time to do this. That is why my right hon. Friend started this in October—nine months ago. It is a complicated, difficult process, but why have we had nothing from the Chancellor since? Why has he refused to engage in that?

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[Jesse Norman (Hereford and South Herefordshire) (Con)]

I speak in part as a member of the Treasury Committee and as a member of the council of the National Institute for Economic and Social Research and a senior fellow of Policy Exchange.

One of the tragedies of modern politics is that so many issues are no longer discussed soberly and on their merits but are viewed purely through the prism of party politics. The present subject of debate—whether, and if so how, manifesto policies should be costed by the OBR—is one of potentially great importance that could shape political debate across many years and many future Parliaments.

The shadow Chancellor, who is no longer in his place, despite his strictures about the Government Benches, has attempted to politicise this debate and drag Robert Chote’s name into it. Let us simply say that expert opinion on the issue is divided. The Institute for Government has described the pre-election timing as “hasty”, and the IFS has questioned the very idea of the OBR undertaking this role. As I will show, there are several crucial issues of principle as well as practice. They must be addressed before legislation can be considered.

First, there are practical matters of funding and staffing. Let us not forget that the motion states that manifestos should be costed. Manifestos are very long and their policies are often described very briefly and vaguely, so there would be an enormous amount of work. When Mr Chote and others appear before the Treasury Committee, they refer to individual clusters of policy, not whole manifestos.

[John Glen]

Is it not also significant that there is room for great interpretative range? There is a massive number of think-tanks and analysts out there who will all draw different conclusions. The idea that one entity could somehow create a reliable and completely authoritative conclusion about any single manifesto is totally unrealistic.

[Jesse Norman]

My hon. Friend is absolutely right, and I will move on to that point shortly.

The OBR is a new institution. Would it be right to put its recently created reputation at risk by inserting it into the political process in the run-up to an election? The answer is obviously no. These issues need to be calmly and soberly addressed, not patched together late in a Parliament. The proposal would require primary legislation, which will take time and consideration. It should not be rushed into on this timetable. The Institute for Government was perfectly clear that it should not be adopted as a hasty change to the OBR’s remit at this point in the Parliament.

The second question is this: would such a new role compromise the OBR’s key functions? There is an obvious danger that it might. The remit would require careful amendment. Clear rules would be needed on how many policies could be costed, if not a full manifesto, and on which political parties would be eligible. The OBR could not be expected to invigilate in hard cases or act as judge on these issues. It would undoubtedly be attacked by parties that were ineligible to have their policies costed.

[David Mowat (Warrington South) (Con)]

My hon. Friend has referred two or three times to policies being “costed” by the OBR. In fact, the motion refers to auditing, which has a precise meaning. I think that is the weakness of the Opposition’s case. What does an audit opinion mean? It would be qualified, true and fair, and in reality there would be several caveats, which we would end up arguing about.

[Jesse Norman]

That very important point speaks better than I can to my hon. Friend’s expertise. I suspect what the Opposition mean is “costed,” so their failure to understand the difference is reason alone to reject the motion. “Costing” was the word used by the Treasury Committee and that is what I would call it, too.

There is some risk of bias against insurgent parties that were growing in public support but did not have many MPs, or in favour of declining parties for the opposite reasons.

I remind the House that there are deeper questions to be addressed. Is it actually possible to have all policies costed in a genuinely authoritative and independent way? The answer is far from clear. Many policies are non-financial, many are vague and many have complex interactions with other policies that may themselves not have been costed, and many have implied costs that will not be captured by a direct costing exercise. It may be that the OBR will not enjoy the relative immunity from political controversy enjoyed by the civil service when it ends up costing Government and Opposition policies. Parties may try to gain the OBR, as they have attempted to do in Holland.

My final question is this: is it wise for the state to be pushed further into the political process? My hon. Friend the Member for South West Devon (Mr Streeter) has made this point, but let me reiterate it. It is a far bigger question than we have time to debate today, but just as there are perfectly proper concerns about the state being dragged into funding political parties or into press self-regulation, so there are proper concerns that the state should not be pulled into costing party policies. After all, parties have been producing policy ideas, themes and, indeed, platforms, if not manifestos, for more than 200 years, ever since the time of Burke, Fox and Pitt. The British public have found themselves able, mirabile dictu, to make judgments for that period, even without the wisdom of the Office for Budget Responsibility.

This very debate shows how this topic has already become bogged down by partisanship. Why does the Labour party now seek to have manifestos audited? The reason is that its polling data overwhelmingly demonstrates that Labour is hopelessly short of economic credibility. The shadow Chancellor himself is specifically responsible for—indeed, he incarnates—that lack of economic credibility. He was a key figure in the previous Government, who left our country so vulnerable to financial crisis. He had to be dragged kicking and screaming to accept his mistakes in office as a soft-touch regulating City Minister. He is still in denial over the success of plan A. The irony is that his performance on this very issue perfectly exemplifies the reasons for his diminishing authority: first, he was against costing policies, but now he is for it. For naked short-term advantage, he is prepared to politicise the OBR and its head, amid a lot of pious words about cross-party consensus from one of the most divisive figures in politics of the past two decades.

In conclusion, this is an important issue, but the shadow Chancellor embarrasses himself twice over: first, by placing it in such a party political context, and secondly, by ignoring the real problem for him, which is the catastrophic failure of trust in politicians and political parties today—a failure to which he himself has been no small contributor. The causes of that loss of trust have little to do with politics. They run much deeper to the decline in Britain’s influence around the world; the loss of standing of Parliament over so many recent scandals; feelings of powerlessness among the general public; an apparently increasing sense of outrage fanned by parts of the media; and a general unwillingness to grasp the complexity of Government or to give those in power the benefit of the doubt.

The time has passed when the shadow Chancellor could expect to be heard on this or any issue. He has thrown that right away. He has lost what authority he ever possessed. Today’s debate shows precisely why he will never, and should never, regain it.

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[Jesse Norman]

Might it be worth my hon. Friend sharing my view and correcting the record? The OBR was set up by transferring existing civil servants from the Treasury into a new entity. It is therefore not right to say that it was set up quickly and could therefore be expanded quickly. It already had those civil servants, which was why it was allowed to succeed and start so quickly. Growing it is an entirely separate matter.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. Before the hon. Member for Poole (Mr Syms) replies, I point out that Government interventions are having the consequence of talking out any Members who are still waiting to speak, and there are quite a number. We will start the wind-ups at 6.40 pm.