Office for Budget Responsibility

Anneliese Dodds Excerpts

Tuesday 24th July 2018 Westminster Hall

[Lee Rowley (North East Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) on securing this important debate; the relatively small number of Members in the Chamber is disproportionate to its impact, and I know our colleagues are desperate to be here and talk about these things. This is one of the most interesting and important debates the House has had in the last few weeks, in either Chamber, because underneath its surface is a series of questions that we as politicians, on both the Opposition and the Government Benches, have about what we want the debate to be around finance, fiscal policy and monetary policy in the coming years, and how we ensure that that is underpinned with a series of structures that make those debates useful and helpful for those who seek to understand and, eventually, vote on them.

I welcome the main thrust of what my hon. Friend talked about in trying to ensure that the Office for Budget Responsibility—the structure that we have in place already—could be expanded, so that it gave an understanding and indication of the costings of the myriad Bills that are introduced, whoever puts them forward, in the white heat of an election campaign, however difficult that is. That would give the electorate an opportunity to stand back—if done correctly and appropriately—and understand what people and parties were suggesting, and how responsible and, in some cases, irresponsible, those parties were being about our future financial and economic health. We have seen, over several decades, across the world, an increasing move to independent structures, whether independent central banks or independent fiscal watchdogs. I think this is a natural extension of that trend, which I would welcome.

I have both non-partisan and partisan points to make, so I will get the non-partisan ones out of the way first, before the hon. Member for Oxford East (Anneliese Dodds) intervenes on me, as I am sure she probably will. These things are important for having an educated democracy. To understand where we are going as a country, how much we are spending and the opportunities that we are putting forward for our communities, the public have to have the information so as to understand the different choices being placed before them. It is an excellent idea to give people the tools to understand the implications of the policies that are being made—with the caveats, which I will come to and which my hon. Friend has explained.

We have myriad policies that sound brilliant in isolation, and it seems they should have been implemented decades ago. In isolation, that makes the Government look as if they have been mean or not cared about certain areas. There are often reasons, however, why policies are not implemented. There are reasons things are not necessarily a good idea, even though they look good on paper. There are opportunity costs to decisions that are made. If we can have a discussion about economics and implications, we will be stronger as a democracy.

That discussion must necessarily accept that the world is complicated. In politics, there is a tendency to simplify discussions, particularly about finance and fiscal policy, to a point where they become meaningless. We talk about billions, gaps and black holes in finances without understanding the economic implications and realities of the assumptions underneath them. Wherever we are on the ideological spectrum, it is important to improve the quality of debate about our finances and about where the Government—whoever is in government—seek to take them in future.

I welcome the proposal from that non-partisan perspective and from a partisan perspective, because if it had been in place in 2017, it would have blown apart the Labour manifesto, which was the biggest work of political fiction and fantasy I have seen in my lifetime. I say that not to annoy the hon. Member for Oxford East, but on the basis that on 12 May 2017 the Institute for Fiscal Studies said:

“This manifesto cannot be summed up in mere numbers.”

It also said that the tax measures were “highly uncertain”, that key elements of it were not explained, and that there was an inherent contradiction in borrowing more and seeking to reduce debt. I know that there is a way to do that, but the quantum of debt that the Labour party manifesto suggested was entirely unrealistic. If the Labour party had got in, and if I were not here today as one of the six Members of Parliament who gained a seat from it, we would be in a problematic economic and fiscal position.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I will do the large-scale demolition later, but I will ask the hon. Gentleman one question now: where were the costings in his party’s manifesto?

[Lee Rowley]

No one assumes that the 2017 election was perfect on both sides. I accept the principle of what the hon. Lady says to some extent: we did not have a good economic debate in the 2017 election, and I hope proposals such as this will improve the quality and standard of future debates.

My underlying point, which is partisan but not party political, is that I am extremely concerned about the level of debt that western democracies have taken on over several decades—that is one of the reasons I am in politics. That debt is storing up huge challenges for our children and grandchildren in the coming decades.

Speaking about debt has gone out of fashion in the last couple of years; it has not been a central part of our discourse, as it was when we had a large deficit several years ago. It is a credit to the Government that that deficit has been brought down, but it has not been eliminated. On a daily basis, we still add costs and create debt for our children and the people who will be here in 30 years’ time. Although debt is less than it was eight years ago, we should never forget that it is still significant. Between 2002 and 2014, debt as a proportion of GDP rose in every western democracy in the G7. In some cases, that rise was minimal, but in others it was extremely large. Western democracies have a debt addiction that will be problematic in the long term.

As a country, we have moved from paying £30 billion annually in interest payments to paying nearly £50 billion in recent years, and that will only increase. The problem with paying £50 billion is that some of the conversations that we have here every week—about how much money we should put into the health service, the education system or welfare—would be much easier if we were not spending 8% of our budget on debt repayments to financial institutions elsewhere in the world, just so we can hold money that we spent many years ago and that cannot have any benefit today.

That £50 billion is the equivalent of building a hospital every four days, of employing thousands of nurses, doctors and other people in the public sector, or of significant cuts to income tax. The problem is that if we, as a representative western democracy, do not arrest our continued debt addiction, in 20, 30 or 40 years’ time, the figure will be £75 billion or £80 billion in real terms.

Many people have suggested that extending the remit for independent fiscal watchdogs, as my hon. Friend the Member for Ochil and South Perthshire has proposed, does not work, because it is ultimately impossible to model some of the underlying implications as there is an inevitable political bias in the assumptions that will be utilised to assess the activities, and because they might not be truly independent.

My hon. Friend also talked about the situation in 2014-2015, when the former shadow Chancellor suggested that the Office for Budget Responsibility look at Labour’s manifesto costings, but it did not have the capacity to do that. Those are all interesting points, and probably worthy of debates in themselves, but we have to decide whether we want to improve the quality of debate on financial and economic policies—and I do. The extension of the OBR’s remit would be a positive step in that direction.

Those watchdogs work and are useful, as my hon. Friend showed by talking about the Congressional Budget Office in America and institutions in several other countries around the world. I will point to two examples from Australia, where I have family; I am particularly interested in the political machinations there.

In 2007, the Liberal party, which I would closely ascribe to if I were in Australia, was moving out of office and the centre-left party was coming in under Kevin Rudd. In the heat of that election campaign, there was a big debate between John Howard, the Prime Minister, and Kevin Rudd, who would become Prime Minister, about financial and economic costings. The centre-right Government were trying to splurge to win an unprecedented fifth term in office, so they proposed approximately double the increase in spending that the centre left proposed.

I would naturally support my Liberal friends in Australia, but they were not proposing the right policies at the right time, and in doing so, they were not recognising the challenges of an overheating economy. Australia’s independent watchdog came along and said that the proposals would cause problems, which gave the mantle of economic credibility to the Labor party—something that is rarely done across the world.

Kevin Rudd is not a natural fellow traveller for me, but his biography says that

“barely 10 days out from voting day…we had won the all-important battle for fiscal credibility…the political dividends were reaped not only from a slew of Australian financial and economic commentators but from the international credit rating agencies too. Fitch stated that Australia would retain its AAA credit rating if Labor was elected”.

That is an example of why this kind of policy, and this kind of proposal, is really important.

If we fast-forward to the 2013 Australian election, Kevin Rudd was at the end of his second term as Prime Minister and was seeking to splurge to stay in office. In the white heat of the election campaign, his party put out a number of scare stories about why the incoming coalition Government were going to cut loads of things, cause huge economic problems and really affect the economy—the kind of thing that we hear quite regularly. The Australian published a book called “Triumph and Demise” by Paul Kelly, an eminent journalist in Australia, in which he said:

“In the second-last week of the campaign, the heads of Treasury and Finance issued a statement repudiating Labor’s claims”

on the costings of the coalition—the opposition. He continued:

“It was an unprecedented event, the biggest story of the campaign and a humiliation for Rudd as prime minister. Rudd had over-reached and been repudiated by his own advisers. The symbolism of a dying, dysfunctional and dishonest government was irresistible.”

I would not particularly like to have been in John Howard’s or Kevin Rudd’s shoes, but that demonstrates that if we get structures right and have an independent watchdog that can look and say, “This doesn’t work. This is wrong. These numbers are obscured,” that can improve the quality of debate and focus people on the underlying questions that are being asked.

However, that will only ever be useful if we, as politicians, and the country at large, recognise that statistics are not necessarily the be all and end all, that there is a wider context to be gained from them, and that we need to treat them with caution, as my hon. Friend outlined. But in principle, the extension of the OBR’s remit is extremely important. Although I recognise that there are challenges, if we are looking to take steps to improve the quality of debate—both within this place and without, in the wider community—we should seriously consider ideas such as this, which I welcome strongly.

--- Later in debate ---

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mr Gray. I thank the hon. Member for Ochil and South Perthshire (Luke Graham) for securing the debate, as well as the Backbench Business Committee.

I am delighted that we are talking about the remit of the Office for Budget Responsibility. I strongly agree with the hon. Member for North East Derbyshire (Lee Rowley) that it is an important issue. I regret that we do not have many Members thronging the Chamber; the last time but one I was here was for the debate about safe standing for football grounds, and it is a shame that we do not have the huge numbers we had then. It is incredibly important to talk about the robustness of figures when it comes to budgeting. I have to say, if you will permit me, Mr Gray, that it is also a delight for me to be able to talk about Labour’s manifesto and spending plans. It feels like summer has come slightly early for the Labour party—perhaps not quite as early as the Prime Minister had hoped. Still, I am pleased to be able to cover those subjects, but I will do so briefly, Chair, so as not to strain the patience of those in the Chamber.

Labour, of course, supports the OBR. We have had a good summary and discussion here of its origins and its work, and Members have usefully referred to how it follows on from similar independent fiscal institutions in other countries, not least those in the Netherlands and the US. The hon. Member for Strangford (Jim Shannon), who is no longer in his place, rightly mentioned the significant expertise we have in our OBR, how it compares favourably with other parts of Government and how we need to ensure that we support the people who work there. I very much want to pay tribute to all their hard work.

The OBR’s analysis, particularly in recently years, has been enormously helpful, especially in performing the task—referred to briefly by some Members—of having a long-term perspective on Government spending and its potential impact on economic sustainability. Of course, it was the OBR that pointed out, at the time of the last spring statement, how projections for both GDP and productivity and investment growth are set to be lower than anticipated, thus counteracting, perhaps, some of the media coverage that has suggested that as a country we are out of the woods in some way. On the long-range issues, the OBR has suggested that much work needs to be done if we are to get our economy on to a more sustainable basis. I very much agree with the hon. Member for Ochil and South Perthshire’s praise for the OBR’s accuracy in that regard, even though the office sometimes has negative, or at least concerning, lessons to impart about the long-term economic sustainability of our country.

The OBR has been unafraid to speak some perhaps uncomfortable truths when necessary. There was much discussion of its role around the time of the last Budget, when the new stamp duty holiday policy was being introduced. The OBR was concerned to look at its potential impact on house prices. It was criticised for doing so, but it was absolutely right that it did.

The hon. Member for North East Derbyshire helpfully mentioned some of the trade-offs involved in policy making and suggested that we need more of a focus on those, particularly when assessing the economic impact of Government policies. I strongly agree that that issue needs to be much more explicit. We need a far better quality of debate in that regard, and the hon. Member for Aberdeen North (Kirsty Blackman) gave us some very good examples of where short-term savings appear to have been made in Government budgets but have long-term impacts, often not for central Government but for local government. In practice, debt has been transferred over recent central Governments to local governments, foundation trusts and other bodies. In many cases, the debt has not gone away; it is just in a different place, and we need a greater focus on that.

Above all, we need a far greater focus on our long-term productivity problems and the OBR has played an important part in encouraging evidence-based debate on the topic. In the long run, if we do not deal with our investment gap, which in Britain is far larger than in many comparable countries—our investment has not gone back to pre-crisis levels at the same speed as elsewhere—we will not have the capacity to raise sufficient Government revenue in the future. We have to deal with those issues quickly, and bodies such as the OBR help us to do that and perhaps to move beyond some of the sterile debates about making short-term savings that do not promote long-term sustainability.

Labour is such a strong supporter of the OBR that we agree with the hon. Member for Ochil and South Perthshire about an extended remit. The OBR has helpfully raised the salience of long-term challenges for the UK’s public finances due to demographic change—something the hon. Member for Henley (John Howell) usefully mentioned—but Labour Members feel that it could have a more expansive role when it comes to a long-term threat that is not sufficiently considered by the Government, that of climate change and environmental degradation, to which many experts, not least Lord Stern, have drawn attention. We ask the OBR to report in particular on the fiscal risks of climate change, which could include the impact of raised food costs, the costs of flooding, and lost productivity caused by extreme weather events.

The current Government may be sanguine about lost revenue; we saw just last week another Treasury Minister talking about the potential trade-offs between being able to move goods across borders in the event of a no-deal Brexit and potentially losing revenue by not being able to collect VAT. No study has been done on the potential impact of that. We have had nothing from the Government that spells that out, but we should have. We need transparency on such issues and on the short and long-term risks to the public finances, particularly in relation to, as I said, environmental damage.

Widening the OBR’s remit would go with the grain of developments in many other countries. The hon. Member for Aberdeen North rightly referred to the fact that we always need to look at international examples. She helpfully referred to some of the thinking that was done about the Scottish Fiscal Commission; other Members referred to that as well. I agree with her that negative lessons can often be particularly important—learning from what has not worked as well as what has. Certainly we can learn from the EU’s fiscal forecast and the countries that look more expansively at environmental matters.

Adding more of a focus on environmental matters to the OBR’s remit would go with the grain of what the Bank of England has been doing by incorporating a consideration of banks’ exposure to climate change-related risks and stranded assets as it regulates banks. It would echo the approach of many long-term investors who are increasingly considering environmental matters when it comes to assessing the promise of different investment opportunities. The OBR would probably be willing and happy to do something that would usefully build on its existing activity.

We also want to strengthen the independence of the OBR, requiring it to report to Parliament rather than merely to the Executive, as was helpfully mentioned by the hon. Member for Ochil and South Perthshire. That is the approach of the CBO in the US, and it could be usefully adopted here. It is not unusual for an independent fiscal institution to report to the legislature rather than the Executive, and it would aid the OBR to show that it is a truly independent evidence-based body that can have a real impact on policy making. It might also then lead to a greater salience of its reports at a political level and at the level of public discourse and debate as well, which would be a good thing.

There are many other areas where we need more data and analysis to truly assess the impact of economic decision making. One area that has come up frequently in recent Budgets concerns the lack of distributional analysis of Government economic decisions. I am pleased to see support for that from the hon. Members for Ochil and South Perthshire and for North East Derbyshire, who are nodding. The Department for Work and Pensions carries out such analyses frequently. The Treasury appears to do such analyses, but it does not report them publicly very often, which is a problem. The Government have a duty under the public sector equality duty to consider how their decisions affect people with protected characteristics, but at the time of a Budget, for example, we do not have that analysis in front of us, so we cannot examine the impact of policies on different groups, and it is very difficult for members of the public to assess the impact on them.

Recent policies have had very different impacts on different groups of people. If we look at changes to social security, the incomes of lone parents, particularly black and minority ethnic lone parents, have dropped substantially by up to around £9,000 in some cases, and that has not been made clear from Treasury analyses before Budgets. It is important to have a clearer handle on such impacts at the time when we actually vote on such measures.

On the point about greater evidence and analysis before economic decision making, the hon. Member for Aberdeen North rightly referred to the need for greater post hoc evaluation of economic decisions. She referred to the case of tax reliefs, which is something that I have worked on for some time. We rarely have post hoc evaluation of the impact of tax reliefs in the UK, which contrasts with the situation in many other countries. India has an annex to the Government Budget that covers tax reliefs, but we do not have that in the UK. There is a real contrast with how we assess spending decisions in terms of direct spending programmes as against foregone income in the form of tax expenditure. There is a huge gulf there and we need to deal with that. The OBR could play a part in that, and we should think about that for the future.

The Labour party’s position remains that the core role of the OBR should be to scrutinise the Government’s fiscal and economic plans, but it should do so in a more expansive and open manner than previously, as I have explained. An extension of its remit to cover party manifesto pledges might be warranted, but if it occurs it must be in concert with an extended remit to examine governmental spending commitments and it must be adequately resourced to enable it to fulfil that task. I am aware of the Dutch example that the hon. Member for Ochil and South Perthshire referred to. I was pleased to see him inter alia praising the role of trade unions in decision making, which was slightly unexpected but good to hear. We can usefully learn from the Dutch example and the extended remit to look at Government spending plans. We had an interesting discussion about the Australian situation that the hon. Member for North East Derbyshire mentioned.

The hon. Member for Ochil and South Perthshire referred to the CBO and its more extensive role in ongoing policy making—not just at Budget time; it looks at discrete policies on an ongoing basis. Before we talk about potentially extending the OBR’s remit in that manner, it is important to focus on the activities of the Treasury first. In many cases the Treasury should carry out analyses, anyway. There is the question of independence; I do not take that for granted. But in many policy areas we do not even get to the level of understanding what the Treasury analysis is, let alone then having that independent analysis as a guarantor.

I do not agree with the hon. Member for Aberdeen North on everything, but I did agree with her on Brexit. Internal analysis has been conducted within the Treasury, but it has been like trying to get blood out of a stone to allow Members, let alone the public, to see that analysis. If the Treasury were a little more open about its processes, we would be in a different situation and we could then consider whether there should be additional independent analysis, but let us have more open analysis from the Treasury first.

Some Members referred to Labour’s spending plans. I regret that the hon. Member for North East Derbyshire tried to wriggle out of my question about where his party’s spending plans were set out in pounds and pence. He spoke elegantly and eloquently, but he managed to wriggle out of it because his party failed to include any costings anywhere in its manifesto at the general election. As my right hon. Friend the Member for Hayes and Harlington (John McDonnell) has commented, the only numbers in the Conservative manifesto that we have been able to see are the page numbers. We have seen nothing about how different approaches to spending would be carried out. We have seen a similar approach continuing in Government. The huge elephant in the room in this discussion concerns plans for NHS spending. A commitment has been made to a huge boost to NHS spending, but we have no idea where the additional funding will come from. Initially there was a suggestion that it would come from a so-called Brexit dividend, but it does not appear from the current approach to Brexit that there will be any such dividend. We heard whispers about where the funding will come from, but they are just whispers.

[James Gray (in the Chair)]

In the context of the OBR.

[Anneliese Dodds]

In the context of the OBR, the problem is that we have just heard from some Members that the OBR’s remit should be extended to cover party political manifestos, and we have the Government making a huge spending commitment during its period in office, and yet no details have been provided for how the spending will arise. Many public servants are reading the tea leaves, not least those in the police, and assuming that the spending will come from cuts elsewhere. They are probably not wrong to do so.

Some Members referred to the discussion of Labour’s spending plans at the general election. It was possible to have that discussion because Labour had set out its spending plans in our grey book. I can see the hon. Member for North East Derbyshire smiling. He will smile even more when I provide him with some summer reading: Labour’s grey book, “Funding Britain’s Future”. It is very simple to read. I am sure other Members who are former accountants will find its layout very simple because it sets out on one side where more revenue will be derived and on the other side where expenditure will go. It is enormously simple to understand.

[Luke Graham]

Will the hon. Lady give way?

[Anneliese Dodds]

I would be very happy to do so.

[James Gray (in the Chair)]

To intervene only about the OBR, I call Luke Graham.

[James Gray (in the Chair)]

To speak only about the OBR, I call Anneliese Dodds.

[Anneliese Dodds]

I absolutely will, Mr Gray. The hon. Gentleman suggested that the OBR’s remit could be extended to look at such figures. As I said, Labour is not against that. We might be interested in looking at that, but the figures have to be provided in the first place. Sadly that was not the case for his party at the last general election. I humbly suggest that as a first step towards that outcome, his party might follow mine and set out some of its spending. That would mean that we could have a discussion with other independent bodies in advance of an election, as occurred with Labour’s spending plans.

We had a useful, productive discussion with the Institute for Fiscal Studies, which looked into our assumptions. There were differences of view in relation to some areas of spending. For example, Labour suggested that it should not be assumed that removing the pay cap, which is something that we have committed to do for public sector workers, will be only a cost, because revenue would be positively affected by the additional national insurance that would arise from slightly higher wages. The IFS does not take that into account, so we had different assumptions on that. However, Labour wants to have that debate and discussion. To do that, we need to have the figures out there in the first place.

I thank the hon. Member for Ochil and South Perthshire again for securing the debate. I also thank all those in the Chamber and, particularly, those who work so hard for the OBR to ensure that we have an independent, unbiased assessment of our public finances. Finally, I wish everyone a very enjoyable summer.

--- Later in debate ---

[Anneliese Dodds]

May I briefly ask whether the British economy was growing when Labour left office?

[Robert Jenrick]

The British economy had just suffered a severe recession, and we inherited the largest peacetime deficit since the end of the second world war. Nothing exemplifies the situation with the public finances more than the note that was left on the desk in the Treasury office down the road saying that there was no money left.

The OBR produces the official economic and fiscal forecasts for the UK. It does not cost Government policies, but scrutinises and certifies costings initially prepared by the Treasury and other Departments to estimate their impact. That is an important point, to which I will return in a few moments. The OBR also provides detailed public reports, including the fiscal risk report every two years, which we have heard about, and the fiscal sustainability report, which was published last week and which keeps us at the frontier of fiscal management internationally and demonstrates our commitment to fiscal transparency and accountability. I am pleased that, as we heard in the debate, Scotland has followed suit and, since 2014, the role of the Scottish Fiscal Commission has been strengthening. That institution is in its relative infancy, but it appears to be building credibility and working to help keep Scottish finances in check.

The OBR has won international acclaim. Earlier this year, Kevin Page, in a paper for the Centre for Economic Policy Research, said:

“The OBR’s commitment to transparency is likely the gold standard in the IFI community.”

He added:

“The OBR deserves to be considered a leader among”

independent fiscal institutions

“for the transparency of its work and the credibility it derives”,

as we have heard from hon. Members. Protecting that credibility should be as much a priority for Parliament as it is for Government.

Since 2010, there have been a number of calls to expand the OBR’s remit, including proposals, as we have heard today, to report on distributional analysis, performance against child poverty targets, environmental matters and living standards. Each has merits, and deserves discussion and further thought. The OBR was deliberately set up to report on the sustainability of the public finances, and to date that is where we have let the matter settle. Asking the OBR to expand into areas beyond its core expertise and experience carries with it risks to its credibility. We need to consider that carefully before taking any such steps.

The OBR has also been called on to produce costings of policy proposals for Opposition parties. Again, we have heard about that today, and it has been raised by successive shadow Chancellors, including Ed Balls before the 2015 general election. Respected institutions such as the Institute for Fiscal Studies already perform that function well, and we should bear that in mind as we consider such proposals. As we heard from my hon. Friend the Member for Ochil and South Perthshire, the IFS recently exposed the folly of some of Labour’s proposed tax increases.

[Anneliese Dodds]

indicated dissent.

[Robert Jenrick]

The hon. Lady shakes her head, but the IFS said that those would lead to taxes being raised to their highest in peacetime history. The IFS also questioned whether they would raise as much as the shadow Chancellor claimed, and said that they would hit working families hardest. We do not always need to rely on the OBR to twist the knife, as the IFS has certainly done so repeatedly.

[Anneliese Dodds]

May I respectfully ask how exactly the IFS was able to analyse the Conservative party’s policies, when there was no indication in its manifesto of how any of them would be funded? It appears slightly peculiar to pick on the small number of criticisms made by the IFS of some elements of Labour’s assumptions when no information whatever was provided by the Minister’s party.

[Robert Jenrick]

I would not characterise the IFS’s criticisms of the Labour party’s manifesto as “small”. They were pretty fundamental; the remarks I have just described speak for themselves. The IFS did analyse the policies of the Conservative party in the lead-up to the last manifesto, but let us stick to the question before us today, and apologies to you, Mr Gray, for deviating from it.

A number of arguments have been made today for widening the remit of the OBR. Over previous years, such arguments have been looked at in some detail. Back in 2014, Robert Chote wrote in response to Andrew Tyrie, now Lord Tyrie, who at the time was Chair of the Treasury Committee, setting out his views on the matter. He said that, while some of those arguments undoubtedly had merit and deserved proper consideration by the Government and by Parliament, it was important that we consider

“the significant practical issues that would need to be addressed”.

Let me briefly set out some of those, which we would all need to consider.

My hon. Friend the Member for Ochil and South Perthshire referred to the US Congressional Budget Office. That is a good comparison, although the US system varies from our ours in a number of ways—in particular, Congressmen, Congresswomen and Senators have a much greater ability than Members of the House to initiate legislation that carries with it significant financial implications. However, it is worth considering the remit of the CBO, and its capacity.

The CBO undertakes analytical work in-house and has around 235 members of staff, with an annual budget of around $50 million. In comparison, the Office for Budget Responsibility has just 27 members of staff and costs us around £2.5 million. The OBR is clearly dwarfed in comparison. Although that is not in itself a reason not to proceed, we would have to consider the financial consequences of doing so.

The CBO is required by law to produce cost estimates for nearly every Bill approved by a full budget committee of either the House or the Senate, and produced 740 such formal costings last year, so a significant amount of work would be required. It is worth pointing out that the CBO does not—this is perhaps a more relevant comparison for some of the issues we have discussed this morning—evaluate the costings of candidates for Congress, or indeed of presidential candidates. Clearly, to increase the remit of the OBR would require it to have a significantly larger operation.

Undertaking Opposition costings as part of the parliamentary process would have important implications for the OBR and departmental resources in all Departments, including the Treasury, but the greatest impact would be felt were it to be involved in manifesto costings. The time that the OBR and Departments needed to produce costings would pose very particular difficulties during general elections, some of which are unplanned. It is difficult to see how parties could be afforded the customary flexibility in developing their manifestos until a relatively late stage in the election process, to reflect the public debate in the run-up to the election. Instead, they might have to submit detailed proposals two or three months ahead of a general election. Of course, we could consider that, but we would have to consider carefully the implications for the general election process and the way we have traditionally approached that.

The policies in scope for OBR costings also differ in type from the policies that have dominated the political debate. The detailed costing process at fiscal events covers only tax and welfare policies, which are clearly very important and a significant element of general elections, but are not all the issues reflected in a general election or all the policies in manifestos.

The other point to note is that the OBR does not produce the work in-house. It relies on detailed data produced for it by Departments, including the Treasury, which are then submitted to the OBR for scrutiny and analysis. As the hon. Member for Aberdeen North (Kirsty Blackman) said, the quality of the information is extremely important. Civil servants in Departments would be required to work through political parties’ manifestos and then provide high-quality approved data to the OBR, with which it could do its usual costings.