Budget Responsibility and National Audit Bill [HL]

Debate between Lord Sassoon and Baroness Browning

Monday 6th December 2010 Grand Committee

[Baroness Browning]

Will my noble friend confirm that, in the event of the Treasury not using the OBR’s forecast, it will give a full explanation of why it differed from the office’s views?

[Lord Sassoon]

Yes, I can confirm that, although that is not in any way the expectation.

On the specific question of the ITEM Club and the model, the club will no longer have a statutory right to be given a copy of the Treasury model because that arose from the Industry Act 1975, which is being repealed. It will be for the Treasury to consider whether it continues to make the model available, but that will not be a statutory matter any more.

On how the arrangements between the OBR, the Treasury and other parts of government work, that will be set out in the memorandum of understanding, including use of the Treasury economic model, although of course it is entirely at the discretion of the OBR as to what tools, models and methods it uses.

On the question of where the assumptions are to be found, I can certainly find them littered throughout the document published last week, including, for example, table 3.6 on page 67, which as I read it is a mixture of inputs and outputs. There are other assumptions made right through the document.

On the critical question of the approach to economic forecasting raised by the noble Lord, Lord Peston, that is summarised in paragraph 3.7 on page 28. I am glad that people find the Treasury monthly report on the latest independent forecasts useful. It is intended that the Treasury will continue to publish that document and make it available on the Treasury website.

I think that the construct between the Bill and the charter covers all the issues on transparency, something that we all seek, and I suggest that the evidence so far of the OBR in practice means that we should have confidence in that construct. On that basis, I ask my noble friend to withdraw his amendment.

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[Lord Sassoon]

My Lords, there will not be another official internal forecast. There will be the forecast of the OBR, but that does not mean that the Treasury should not have the capability to—and it will—look at underlying assumptions on which the forecast is based, to make sure that it understands where the OBR is coming from and feels comfortable with it. There will not be some other internal official forecast; there will merely be a capability within the Treasury—and it is important that there should be such a capability—whereby Treasury officials can look at and understand the assumptions on which the OBR’s forecast is made. That will not require, and there is no intention for, the Treasury to produce any separate forecast of its own.

[Baroness Browning]

My earlier question came from reading the evidence of Professor Wren-Lewis to the Select Committee. He considered that if,

“the Treasury decides that the OBR model is wrong in some sense, I think basically then it is up to the Treasury to decide whether it wants to move to an alternative model or an alternative way of doing things whereby it produces its own forecast and does not rely on the OBR”.

I understand that the Government accepted that when they responded to the Treasury Committee. That was what prompted my earlier question.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Sassoon and Baroness Browning

Monday 29th November 2010 Grand Committee

[Lord Sassoon]

First of all, of course I take everything that is being raised this afternoon extremely seriously, but it would not be helpful to the Committee if I said, in some sort of Panglossian way and in approving terms, that I was equally sympathetic to all the points that were being raised. Points will be raised in this Committee to which I shall be more or less sympathetic and I shall try to give some indication of that, because I do not think that it is helpful to the Committee’s consideration, or to noble Lords at Report, if I just give an equally sympathetic ear to all points regardless of whether I believe that they have merit.

I am sorry that I failed to get across the key simplicities of where we are on Clause 1 and the proposed amendments, but the Bill’s purpose, which has been widely recognised, is to bring a new degree of independence to the construction of the forecast and to the establishment of whether the Government are likely to meet their fiscal policy mandate. Those are huge advances on where we have come from and the Bill is very much focused on that. Clause 1 and the linkage to the charter are all about that.

This Government have many other transparency objectives, but it is not the objective of the OBR and this Bill to stray into other areas related to economic policy-making. The purpose of the budget responsibility parts of the Bill is very much focused on the central core mandate of the OBR. Of course, it would be possible to turn the charter for budget responsibility into a much wider analysis of government economic policy, but that is not the charter’s purpose, nor is it the purpose of the Bill. The discussions about intergenerational transfer of fairness and all those things are important issues, but the key element for the consideration of Clause 1 is that the charter sets the appropriate and focused background in which the OBR can do its work.

We have set out a new and unprecedented set of objectives for fiscal policy, but it is not they but the mandate that flows from them that is the critical element. I am listening to questions about the drafting of the objectives, and I shall consider those carefully in the charter, but that is a very different matter from requiring in the Bill a direct linkage through to economic policy objectives.

[Baroness Browning]

Does my noble friend recall the concern expressed by the Treasury Committee when Sir Alan Budd appeared before it and the regrets expressed by Sir Alan when the interim OBR strayed into the area of employment forecasting? The feeling was that that was very unhelpful to the credibility and reputation of the OBR.

[Lord Sassoon]

I am grateful to my noble friend for reminding us that the OBR should be set a focused mandate. It is then up to the OBR what it considers is appropriate, in its analysis, to explain as background to the mandate that it has been given. It is clearly neither necessary nor helpful to give this Bill different purposes from those that it has—to set a remit for the Office for Budget Responsibility, which is what the charter intends to do, and only that.

Pensions

Debate between Lord Sassoon and Baroness Browning

Thursday 21st October 2010 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to confirm to my noble friend that the Government have announced that compulsory annuitisation at age 75 will end. As an interim measure, we have raised the limit from 75 to 77 years to make sure that people are not trapped in compulsory annuitisation while we consult—as we have been doing—on a new system that gives people greater choice as to how they save for their retirement.

[Baroness Browning]

Will my noble friend look at the length of time it takes for people who exercise an open-market option to receive their money? Very often, they are quoted two to three months. Of course, there have to be exchanges of paperwork and documentation has to be verified, but there can be significant changes in the fund during that time of process.

[Lord Sassoon]

My Lords, my understanding is that, thanks to work being done by the Association of British Insurers and others and the introduction of a new electronic transfer system, the actual time taken to make the transfer has come down from 35 days to 11 days. However, if there are other ways of making the transfer process easier, we will of course look at them.