To OBR or not to OBR? That’s the manifesto audit question

by Stephen Tall on June 26, 2014

libdemmanifesto 2010 wordleEd Balls wants it. Danny Alexander seems pretty keen on it, too. What is ‘it’? Asking the independent Office for Budget Responsibility (OBR) to audit the manifestos of political parties.

On the face of it, that’s a good idea. Transparency’s a good thing and surely the public deserve to know as much as possible before we cast our once-in-five-years ballot which decides the next government? The case in favour is persuasively put by Giles Wilkes, until recently a special adviser to Vince Cable who has seen the workings of government from the inside, at his blog here:

While [the OBR] works out to one decimal place what will have to be spent on overall departmental spending, it doesn’t go the final half-inch and explain what that means for individual departments. It would be trivially easy to do so – just as it would be trivially easy to work out the debt and deficit implications of different parties’ plans. Hey, even I could do it.

The OBR should be tasked with working out the likely implications for individual departments of all three parties’ pledges. A bigger prize for Labour etc would be to be able to say “Your fiscal surplus can only be achieved if you do XXXX to the NHS, YYYY to the schools system, or ZZZZ to the other departments”. In my view, this would rebalance the debate in a very welcome way.

However, the case against is also pretty strong. Here, for example, are Philip Booth and Ryan Bourne from the Institute of Economic Affairs (IEA). And yes, I know what many LDV readers think about the IEA, but their point is a valid one – that much in economics and politics is contested:

[The] “tax and spend” policies of governments interact with other policies. For example, the impact of a change in stamp duty could be offset by (or, potentially made greater by) a substantial liberalisation of planning controls. Immigration, employment regulation and so on all interact with the tax system so that policies presented at elections are a package, not a menu of bland accounting numbers.

So if one is costing tax and spend policies, one should also ‘cost’ immigration policies, the merits or demerits of nuclear deterrent policies as insurance against attacks, the effects of policies on employment, and so on. This would be incredibly difficult, and the assumptions should be challenged and debated.

In case readers think we are nitpicking, it should be borne in mind that the Government has missed its deficit reduction targets not as a result of its spending and tax figures being wrong, but because of the lack of economic growth caused by a whole range of other policy mistakes and unforeseen events.

I’m all for transparency and for a well-informed electorate. However, I’m not sure putting the OBR in this invidious, inevitably politicised, position is the right thing to do.

Besides, we already have a couple of organisations undertaking this role: the Institute for Fiscal Studies and the Centre for Economics and Business Research. Before the 2010 election, I wrote about the IFS’s Election Briefing 2010 verdict. On the Lib Dems, for example, it found our proposals added up – that is to say, our spending commitments were balanced by our proposed cuts and tax rises.

However, the IFS was also clear that the party’s manifesto got nowhere near identifying the cuts needed to start tackling the budget deficit – we identified only 25% of measures needed. We did better, according to the IFS, than either Labour or the Tories, mind you.

Did the IFS verdict make any impact on voters’ decisions? I doubt it. The media largely ignored it, preferring the gladiatorial contest of the televised Leaders’ Debates. And in any case the voters would mostly have concluded that there wasn’t much difference between the parties and besides what more do you expect of politicians? These are issues, I suspect, well beyond the powers of the OBR.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, and editor of the 2013 publication, The Coalition and Beyond: Liberal Reforms for the Decade Ahead. He is also a Research Associate for the liberal think-tank CentreForum and writes at his own site, The Collected Stephen Tall.