Osborne must make the workings of the OBR even more transparent

Forget the hubbub about Gove’s schools list, the most damaging story for the government this week could well be on the cover of today’s FT.  Alex Barker does a great job of summarising it here. But the central point is that the Office for Budget Responsibility changed its forecasting methods just before the Budget, with the effect of reducing how many public sector jobs would be lost due to the government’s measures. This isn’t damning on its own: statisticians constantly tweak their forecasting methods. But when you consider that the OBR’s new methods incorporated policies which haven’t even been announced yet (including one which pre-empts the findings of John Hutton’s pensions commission), then it starts to look more dubious.

David Cameron used the revised figures to claim that there would be fewer public sector job losses under coalition plans than under Labour’s plans. But as the FT points out, “the OBR accepts that the prime minister’s claim was based on comparing policies not yet announced by government and was the equivalent of comparing apples with oranges.” I doubt this was malicious on Cameron’s part – but, if his predecessor had done likewise, it’s exactly the kind of thing that we at Coffee House might have called a Brownie. So it’s only fair to point it out now.

All this is damaging because, at core, the OBR is such a promising idea – and one which, I think, is already making a positive contribution to the fiscal debate in this country.  But any serious question marks about its independence or motivation now, and it could be sunk before it has even had chance to bed in. I said a few days ago that George Osborne might gain from making the hunt for Alan Budd’s successor more transparent. There’s an even stronger case for that now.