The courtship rituals of the Treasury and the Office for Budget Responsibility last ten weeks. The consummation is a fiscal event, such as the Budget coming in the autumn, if we survive.
Eligible young ladies used to have dance cards on which to enter the names of their suitors. The Treasury has a scorecard on which its proposed measures are drawn up for the OBR to score. The analogy is with the cricket field rather than the ballroom.
The OBR score indicates its forecast for spending, receipts and public debt. It also takes into account knock-on effects of a policy change. This is called dynamic scoring. I had to ask Veronica about this and, since it’s years since she split up with her unsatisfactory City trader, she might have got it wrong.
In 2021 the OBR had to explain that the dynamic effect of a rise in tobacco duty was so large that 80 per cent of the increase was lost to the Treasury. After the increase, people changed their behaviour: some gave up cigarettes, some rolled their own and not a few got cigarettes from illegal sources. Is that where all those Turkish barbers come in?
There was a response that benefited government coffers when it cut the top rate of tax from 50 to 45 per cent in 2012. The static effect would have cost the Treasury £3.8 billion. But behavioural changes, such as hours worked, meant the OBR’s estimate of the loss of revenue was only £100 million.
Dynamic scoring shares an etymology with the score cut in pork skin to make crackling – from a productive ancient Germanic word that also gives us shear, shard and share (used for ploughing).
Dynamic scoring is also a variant of the scoring done by our Anglo-Saxon forebears cutting a score in a stick every time they’d counted 20 sheep. ‘The days of our age are threescore years and ten,’ says the Psalm, ‘and though men be so strong that they come to fourscore years, yet is their strength then but labour and sorrow.’ We know the score.
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