There’s more detail about Osborne’s new Quango, the Office for Budget Regulation. As far as I can make out, it has five functions:-
1) Trashing Brown. The main point of a Never Again commission is to drive home an attack line: Brown Has Done A Very Bad Thing With All That Debt. It helps recast the narrative of the Labour years as one of profligacy, not prudence. Brown reinvented the history of the Major years, and constantly talks about them as being some kind of Long Black Wednesday. It’s important that Cameron starts to frame the economic debate in this way. In the 2005 election, they hardly spoke about the economy – as if cedeing that Brown had done a good job. Finally, the Tories have snapped out of it.
2) Pledge to voters. Like Osborne’s “triple lock on stability” and his “debt responsibility mechanism”, the OBR is complex-sounding and intended to indicate to the public that the Tories mean business. It’s intended as a guarantee on a politician’s promise.
3) Handcuffs for Labour. The thinking is that a Labour PM couldn’t abolish the OBR so it would be a check on, say, a Prime Minister Purnell getting back in and going on a debt binge. (Interesting that the Tories’ plan for government already factors in defeat. Don’t they think Salmond will win his referendum?)
4) Checking the executive. The OBR is itself a comment on parliament’s uselessness at holding government to account. The Tories have given up, hence the new quango. Osborne intends for the OBR to have the teeth and authority of the Congressional Budget Office is in the US.
5) Moral support. If a Prime Minister Cameron wants to cut spending, the idea is that the idea is he’d have some backup with an OBR calling on him to do so. So he can say to Labour critics: “look, the independent OBR says I need to do it. Things are really tough”.
And practically? I doubt another quango will have much impact. Governments run rings around quangos when they want to, especially if they set the remit. The so-called “independent” Bank of England found its MPC members picked by the Treasury, and instructed to ignore ballooning debt and focus only on interest rates. Even externally, the EU supervises the UK deficit, declares us in breach of the 3% limit and is ignored. Osborne’s OBR would do growth forecasts for budgets – but these already audited by the National Audit Office. Nor is this really an issue. From 97 to 06 Brown actually had quite an enviable record as a forecaster.
So the OBR is mainly a political manoeuvre, not an economic one. But it’s well-intentioned, won’t do much harm and if it becomes as trusted as the CBO is in Washington than, who knows, it might even do some good.
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