We await the Office for Budget Responsibility’s view of the public finances. But what is really needed is a Parliamentary Budget Office
When George Osborne makes his Autumn Statement on November 29, he will tell Parliament what, in broad terms, it will be voting for next year in the Budget. At the same time, the Office for Budget Responsibility will tell us, supposedly objectively, what the chancellor’s numbers mean for the public finances. Whatever the OBR says, Parliament will probably do what it is told.
Her Majesty’s Opposition is almost always committed to ‘restoring power to Parliament’. Her Majesty’s Government is almost always committed to the opposite, even when they were only recently the Opposition.
Tony Blair and Gordon Brown were committed in opposition to restoring some of Parliament’s control over the public finances. They even spelt out how the government would be held to account by Parliament in the first, 1998, Spending Review. But they ended up treating Spending Reviews in just the same way as governments have treated Budgets for the past century or so – as an unchallengeable package presented to the Parliament as a vote of confidence.
This is strange – Parliament spent several centuries wresting control of the public finances away from the monarch, only to hand it back in the twentieth century to the ‘elected monarchs’ in Downing Street – the prime minister and chancellor. Parliament still formally authorises expenditure and taxes, but in practice the elevation of any vote to the status of a confidence measure ensures that MPs hardly ever vote on the details – unlike in most other advanced democracies.
The US, as usual, does things very differently. Its ‘separation of powers’
is meant to ensure a balance between legislature and executive. But by the early 1970s it was felt that power had tilted too far towards the president. The Congressional Budget Office was set up in 1974 to be a counterweight to the president’s powerful Office of Management and Budget, which has roughly the equivalent of the tax and spend functions of the Treasury.
The CBO was more than just a creature of a, potentially partisan, Congress. It was also meant to become a neutral financial analyst of budget and policy proposals, whether they came from the president or Congress.
Osborne also tried to address the issue of neutral public finance forecasting with the creation of the OBR. It is however a very pale creature compared with the CBO. Its credibility is based almost solely on being run by Robert Chote, the former head of the Institute for Fiscal Studies.
A new book by Philip Joyce, The Congressional Budget Office – honest numbers, power and policymaking, illuminates a powerful alternative.
In almost four decades, the CBO has proved to be crucial in a slew of highly controversial debates. It has several times provided neutral, authoritative financial analyses of contested policies – most recently in the dispute between President Obama and the Republican-dominated Congress over deficit-reduction plans.
Washington insiders interviewed for Joyce’s book readily concede that the CBO has increased the quality of debates about budgets and policies, has shot down some incredible proposals from both the White House and Capitol Hill, and has generally tilted the balance back.
So, could we have a PBO – a Parliamentary Budget Office? Of course, just creating a PBO would not be enough. There would have to be changes to the whole process, such as that used in the Scottish Parliament.
But surely it is time the British Parliament took a serious interest in the public spending it votes through so routinely at the behest of its masters.
