Peter Oborne

Suddenly, the Chancellor has extra money to play with

Suddenly, the Chancellor has extra money to play with

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Mr Len Cook lives with his wife in a flat near Victoria and can often be seen eating a modest lunch at Goya, a quiet family restaurant in Pimlico. In the evenings he is a keen theatregoer. Later this year he returns for good to his native New Zealand. In the meantime he faces two tasks, both of them daunting. The first is to secure the royal marriage of the Prince of Wales to Camilla Parker Bowles.

Mr Cook is the Registrar General. This means that he is in charge of marriage certificates. On Tuesday Len Cook ruled that the proposed civil marriage between Charles and Camilla was legal, dismissing 11 objections, one from a Church of England clergyman. It is 70 years since Stanley Baldwin maintained that the marriage between Edward VIII and Mrs Simpson was out of the question, and nothing in British law has changed since then. But Len Cook has saved the day through use of the Human Rights Act, hastily dismissed two years ago by Prince Charles as a ‘piece of politically correct interference’.

The second of Len Cook’s duties is yet more onerous. The little New Zealander is not merely Registrar General. He is also the National Statistician. Before returning to New Zealand he has been required to help New Labour win its third successive general election victory. On this matter too he has been both ingenious and, it turns out, accommodating.

The problem Len Cook is required to deal with is easy to explain. New Labour has unleashed a massive public-spending boom over the past four years. This has had consequences for the national accounts that anyone might have anticipated. Gordon Brown’s golden rule is no longer a symbol of financial rectitude. Instead it is a reminder of profligacy. Practically all commentators agree that Britain’s public finances have become a problem and that there is a huge £10–£12 billion per annum shortfall to be filled in the immediate future. The IMF is winding itself up to issue a pungent public warning to the British government to take action to bring borrowing back under control when it publishes its World Economic Outlook next month.

This is an unhappy state of affairs on the eve of any budget, let alone next week’s statement. Conventionally there are two methods of dealing with this kind of problem. One is to reduce spending so that it matches income. A second is to boost income so that it matches expenditure. Both of these remedies are quite exceptionally unattractive to Gordon Brown. It is unthinkable that he should announce tax rises, still less spending cuts, six weeks before a general election. On the contrary, the Chancellor has been casting around for financial sleights of hand which will create the illusion that fresh money has been found from somewhere.

There are various methods of achieving this. One is to announce existing spending plans as if they were fresh. Last Monday’s Financial Times gave credibility to this old trick with a front-page story headlined, ‘Labour to give £10 billion to the sciences’. In fact, as the strongly pro-New Labour FT failed to note, not a penny of this was new money. All of it had been announced in last July’s spending statement. Gordon Brown’s capacity to pull off this kind of stunt is limited only by the supply of credulous or obliging journalists.

Other wheezes open to the Chancellor are the invention of anti-tax avoidance measures. The beauty of these devices is that nobody on earth can challenge estimates of how much can be raised, because only the Treasury possesses the information upon which the figure is based. Even in retrospect the estimates can never be shown to be false, because no one can ever say for sure how much would have been raised had the measures not been put in place. Last year’s budget included some £1.5 billion elicited in this fashion, and doubtless more will be ‘raised’ this year.

But the boldest of these devices, all of which will crop up in one form or another in the budget announcement next week, is rewriting the rules. This is where Len Cook and his Office for National Statistics come in handy. Len Cook has just reclassified some parts of current spending on road repairs and maintenance as capital expenditure. This move has a benign effect on the Chancellor’s golden rule, which determines that Britain may only borrow in order to invest over a current cycle. Current spending — which is how road repairs and maintenance used to be classified — fell foul of this rule. Capital spending, its new status, is held to be virtuous and does not. Best of all, Cook’s adjustment works retrospectively, so that his decision has taken £2 billion out of spending over the current cycle.

Rarely has such a boost been more desperately needed. Six weeks ago, with Labour sailing to victory, next week’s budget did not seem too important. New Labour strategists were eager to minimise the role of Gordon Brown, and therefore his budget, as the election approached. That has changed. The unexpected failure of Alan Milburn to run a competent campaign, and the equally unexpected outbreak of Tory competence, has instilled nervousness in Downing Street. Poor Alan Milburn is being briefed against not simply by the Brownites, a phenomenon to which he is well used, but by the Blairites, a novel and menacing predicament. The scene is set for Gordon Brown, Milburn’s nemesis, to return as a deus ex machina from his foreign travels and revivify New Labour fortunes.

Suddenly, thanks to this latest accounting wheeze, the Chancellor has extra money to play with. No one doubts the probity of New Zealander Len Cook. Though to a layman, road maintenance sounds very like current spending, the exceptionally complex government rules of national accounting have not been breached. The fact that this new money has suddenly emerged from nowhere, on the very eve of an election campaign, is just a happy coincidence.

But this episode does highlight one unhappy anomaly in the British constitution, and it is time it was rectified. It is unsatisfactory that Len Cook’s direct boss is Gordon Brown, the Chancellor of the Exchequer and the very same individual who stands to benefit from Cook’s latest decision. It is time that the Office for National Statistics was put on an independent footing and made accountable to Parliament and not to the government of the day. The shadow chancellor, Oliver Letwin, proposed this last year. New Labour pledged to take this step before winning power in 1997, but broke its promise to do so. There are many advantages in such a move. It would take government statistics out of politics and increase public trust. Above all, it would protect future national statisticians.

Later this year Sir Len Cook — he has surely earned a knighthood — will return to New Zealand accompanied by the fond thoughts of the Prince of Wales, the Duchess of Cornwall and the Labour party. He has a high reputation for scrupulous integrity. But for the avoidance of doubt in future, the Office for National Statistics should be taken out of Treasury control.