Getting the OBR to cost Labour Party policies ahead of the election would be a step forward for our democracy. But the results wouldn’t be cut and dried – experts and economists can never solve this issue completely
While energy freezes have dominated the coverage of the Labour conference, another very important move by the party is in danger of being neglected.
In a wide-ranging speech, shadow chancellor Ed Balls talked about getting the Office for Budget Responsibility to run the rule over any spending promises that Labour makes in the run-up to the election. This is a fascinating development on a number of levels.
First, it raises the issue of whether this is something the OBR should do – and would want to do. Widening the remit in this way was discussed at the time of the bill setting up the OBR, but the concern was that this would drag it too much into politics. Labour people, as much as the government, feared its abuse by the other side.
But surely this is something that the OBR is equipped to have a go at. In its absence, from my experience working for the opposition, you often ask parliamentary questions to try to get ‘official’ costings of policies that will stand up if and when the other side attack you over them. Failing that, you have to try to ask academics or organisations like the Institute for Fiscal Studies to have a go – since these are seen as independent and fair.
Second, one may ask why the Labour Party thinks this will help them – and it all comes down to not trusting the politicians. In a fringe meeting I chaired at Labour’s conference this week, Bobby Duffy of Ipsos Mori explained that the public really don’t trust politicians when it comes to them justifying what they are doing. Clearly, Labour saying how much their policies might cost will butter no parsnips with the public.
But this might go further than the costs (or savings) of policies. What about whether their policies will actually work – after all, it is this as much as the costs that people often worry about. Maybe we need more independent analysis of the likelihood of policies working and their good and bad effects. In the absence of a proper analysis, only those violently pro or anti a policy ever usually fund research into it.
Last, one might ask how on earth even the OBR could actually calculate these costings, let alone analyse the benefits alongside them. Let’s take a topical example. Knowing how much the High Speed 2 rail link might cost over a 20-year period and being able to set against it the beneficial effects over an even-longer time frame, you have to make a large number of assumptions that can be challenged but cannot be proved one way or another. No wonder people disagree.
In the run up to 1997 election, the Conservative government resolutely said that a minimum wage would destroy up to two million jobs, a figure repeated endlessly in answering parliamentary questions. They did this by making assumptions about its rate, about how wage distribution would be affected by its introduction and by the response of unemployment to a rise in wages. All were contested and clearly ideologically driven to some extent, but could not be proved 100% wrong.
Labour had different views – based on alternative research – and proved to be right. This means that, although independent costings are important, we will need to see the assumptions used and have them properly audited too. And then we will simply have opened up a debate.
Transparency and openness in going to the public with OBR costings would certainly be a step forward in our democracy, and so Ed Balls is heading in the right direction. But experts and economists can never solve this issue completely.
