Office for Budget Responsibility (Manifesto Audits)

Damian Hinds Excerpts

Wednesday 25th June 2014 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

I am grateful to you, Mr Speaker.

There are arguments in favour of the proposal and of doing it in time: it could help to ensure that only realistic proposals are put in front of the electorate; also—the shadow Chancellor made this point jokingly, but it is a serious one—within parties it could help to strengthen the hand of those seeking to impose fiscal discipline against those who wish to offer the earth, of whom his own party has more than its fair share; and it could open a dialogue early on between the OBR and a group that might soon be in government; but there is one big argument against it, and it was alluded to by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I am talking about the danger of a false sense of security being attached to a party’s programme for government.

It is right, and it happens, that independent and respected organisations make appraisals of parties’ proposals. We need extreme caution, however, if we seek to institute a single gold-standard appraisal with a sort of state licensing behind it which could be attached to a manifesto. It would be extremely difficult for the organisation involved to avoid political controversy, and there would also be a danger of closing down further debate and additional scrutiny from elsewhere. With tax and spending, it is never as simple as saying, “Oh, cost the proposals”, because behavioural assumptions are, of course, relevant as well.

When it comes to forecasting, J. K. Galbraith said there were two types of people:

“those who don’t know, and those who don’t know they don’t know”.

Fortunately, the OBR is in a group that knows it does not know, but unfortunately it has to deal with other people who have a hunger for simple binary answers and do not deal in “don’t knows”. Forecasting is a series of fan charts, an examination of assumptions, an appraisal of the risks and upsides—and, crucially, seeking ways to mitigate those risks. The media, however, will look for a simple yes or no, and we can bet that any party going through the process will find a way to say that the organisation concerned has said yes, which makes it dangerous. The OBR knows that, and it knows that it is a nuclear option to say “No, the official Opposition’s proposal for government does not get our seal of approval.” That is not a power it would use, so the implicit yes is not worth a huge amount either.

I am in favour of there being wider capability for analytical scrutiny of political parties’ proposals, and that could be done either through the OBR or through Parliament itself via the Select Committee system. To be reliable and to avoid politicisation, an institution should not be making forward-looking projections relating to individual proposals. They should be either backward looking or generic—backward looking in the sense of “what did happen with the changes to the top rate of income tax?” or generic in the sense of “what is the evidence from this country and around the world relating to elasticity of tax rates?” If such things are to happen, they should happen gradually, but it is very risky to have a single state-licensed, gold-standard approval mechanism for any party’s manifesto.