Stephen Tall has a characteristically thoughtful response to my strident call for the OBR to go deeper into evaluating party policy. His major objection is that we run the risk of “politicizing” the OBR.

This is an important risk, and one that echoes warnings given by the IEA and Ryan Bourne amongst others.  Ryan on a ConservativeHome piece has already pointed out the ineluctable political choices behind making fiscal forecasts, picking that usual Conservative favourite, dynamic responses to tax cuts (i.e. the Laffer curve).  Such people never tend to pick the idea that spending on science and infrastructure might boost the economy.

I find this frustrating because I was aware of this political intention all of five years ago.  What people don’t seem willing to see is that the OBR has already been put in a politicized position, by the partial analysis it is forced to carry out. This is not manifested through the accuracy or partiality of its economic forecasts, where it stands on the IEA PanGlossian “tax cuts pay for themselves” view (which isn’t working out all that well right now).  It comes from the way it can allow any Departmental Spending total the government wants (or needs) to be shoved in there, without scrutiny.

Consider this.  Suppose there were to be a slowdown but the government still wanted to be able to proclaim the same borrowing totals.  Given AME rising and tax falling, this would mean the OBR pencilling in still lower RDEL numbers.  This could go on without limit.  There is currently nothing in the set up that prevents a government proclaiming that it has announced a highly credible plan, with spending totals that we know are quite impossible.

A government being able to sway the fiscal debate without limit is what the OBR was set up to prevent.  The implicit assumption is that *any* departmental spending total can be hit, it is just a ‘political’ choice to do so, therefore the OBR can butt out.

This tactic is already working.  Much of the media narrative is already limited to “how does whichever government hit these totals?” The idea that there are other totals – very different ones – that are much more in line with “fiscal credibility” doesn’t get an airing.

Politicization or the absence of proper rounded scrutiny is a risk: Stephen and others are right about that. I felt fairly lonely warning about that risk in 2009. But it is a risk that is at its greatest if an institution is allowed to be created with an incomplete remit.  As I must have said before, it is in the questions deliberately unasked that the real political choices are made.

 

 

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