Budget Responsibility and National Audit Bill [Lords]

Justine Greening Excerpts

Tuesday 22nd March 2011 Commons Chamber

[Chris Leslie]

I will not, if my hon. Friend will allow me, because I want to focus on what the OBR needs to take account of.

[The Economic Secretary to the Treasury (Justine Greening)]

I have been listening to the hon. Gentleman for a while, but I want to draw his attention to the OBR’s economic and fiscal outlook, which was published in November last year. I do not know whether he has looked at that, because it contains 50 pages that consider the forecasting issues about which Opposition Members are raising concerns. I thought I would mention that because I get the impression from what he is saying that he has not read it.

[Chris Leslie]

Quite the contrary. Perhaps that was published in the free phase when the OBR, untrammelled by legislation and existing in the ether, as it currently does—we are post-hoc legislating now—had its moment of freedom when it could comment on such things. If the Bill locks the OBR into a narrow band of responsibilities and duties, it is reasonable to worry that it will be limited to commenting on a certain number of aspects. I accept absolutely that, as the Minister says, fiscal policy is affected by growth, and that therefore the OBR has an implicit right to comment, but that has not been made clear enough, which is a sign that she still does not understand the centrality of growth and employment policy to what the Treasury should be pursuing.

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[Ian Murray]

It is a pleasure to follow the hon. Member for Stone (Mr Cash). At the end of his contribution he referred to wishful thinking. Labour Members certainly think the Chancellor’s gamble with the UK economy is wishful thinking. The recent reduction in GDP came as a shock to everyone, and serves to highlight some of the wishful thinking indulged in by those on the Treasury Bench.

I think that everyone supports the establishment of the Office for Budget Responsibility. One of the best measures taken by the Labour Government was the courageous step of making the Bank of England independent. We have all seen the benefits of that, in good times as well as bad, as it can now make decisions for the benefit of the economy, rather than the benefit of the Government.

In the establishment in law of the OBR, the Bill should focus on more than just deficit and debt issues. Clause 1(1) states that the Treasury must look at

“the formulation and implementation of fiscal policy and policy for the management of the National Debt.”

That narrow focus takes us away from what we need most, which is economic growth. It does not even give the OBR the ability to take account of various specific objectives the Government may want to achieve, such as on child poverty or unemployment, or in terms of the impact on the economy of decisions made by the Chancellor and his team.

[Justine Greening]

To reassure the hon. Gentleman, may I point out that the OBR is free to consider the impact of any Government policy on the sustainability of the public finances? It therefore does have the discretion to conduct analysis that it may think necessary to assess whether the public finances are in a sustainable state.

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[Justine Greening]

Clause 5(1) states:

“The Office has complete discretion in the performance of its duty under section 4”.

Does the hon. Gentleman think that that is somehow insufficient to provide the OBR with the absolute discretion it needs to do any analysis it wants to fulfil the main duty he mentioned?

[Geraint Davies]

Having complete discretion is useful, but the word discretion means that something remains a matter of discretion—these things do not have to be done. The OBR has the discretion to go around looking at whatever it likes, but the amendment is saying something different—that the centrepiece of our economic future is economic growth. That has belatedly been recognised by the Chancellor, as we will see in tomorrow’s Budget, when he will say, “I have done all the tax and spend, but, oh no, everything is going wrong because growth is going down the chute, so I had better belatedly do something about it.” The previous Government had sent us on a trajectory of positive growth, albeit that it was a fragile recovery after a financial crisis. The Chancellor has seen that we are going into negativity, so he has scratched his head and realised that growth has something to do with the public finances.

We have been lambasted by Conservative Members who say that the deficit is terrible and Labour left the cupboard bare. They conveniently forget that, as reported by all the economic forecasters, including the Institute for Fiscal Studies, two thirds of the £84 billion deficit came from the international financial crisis. That was not Labour’s fault. When Conservative Members suggest, “Oh, well, we should have had more regulation”, they seem to forget that when we created the Financial Services Authority to introduce more regulation, they said they wanted self-regulation and complained about red tape. In fact, it would have been much worse had it not been for the Labour Government. Furthermore, that regulatory hole in the armoury was commonplace across the globe. That is why Governments in Greece, America, Spain and elsewhere have had problems dealing with the financial deficits they inherited. Obviously, we were more vulnerable to sub-prime debt, as we know because the financial sector is larger in Britain.

Let us get away from the myths about why we have the deficit and deal with the challenge of how to get rid of it. We get rid of it by striking a proper balance between growth, making savings over time and ensuring that the bankers pay their fair share. It is convenient for the Conservatives to say that there is only one way of achieving the task. Instead of having a balanced approach to maximising growth, making the bankers pay their fair share and making credible savings that are realistic over time and would halve the deficit in four years, Conservative Members say, “No. We don’t want to halve the deficit in four years; we want to get rid of it in four years, and we do not want to use growth or involve the bankers. The bankers are our mates after all, so they can have some more money. What we will do is make the cuts twice as fast in just one way—through savaging public sector jobs and services.”

Then, remarkably, growth starts to recede so that the sums no longer add up, as there is obviously an interrelationship between private sector growth and public sector funding. Thus they suddenly realise that they have to do something about growth. The amendment is about recognising that the centrepiece of macro-economic planning and fiscal responsibility is growth. It is all very well for the Minister to say, “Oh well, the OBR will have absolute discretion; it can look at growth if it likes, but if it doesn’t want to, it doesn’t have to.” That is the problem; its eye is off the ball. We need to get the finances in proper balance without destroying communities, which is what Labour Members stand for.

[Geraint Davies]

I will try and speak more slowly. My point was that the international financial crisis affected all countries’ debt, not least that of Greece. Obviously, it has its own banking system, underneath the European Central Bank. There was a common cause for many of the deficit problems around the globe. It was not uniquely Labour’s fault, as the Government make out. The amendment seeks to clarify the factors that are generating the fiscal future, including growth.

[Justine Greening]

The hon. Gentleman keeps talking about the deficit as though it was something that descended upon us. The bottom line is that the UK had a structural deficit. That means that his Government were spending more money on public services than was being generated in taxation, even in the good years, so we were never going to be in a position to start paying off any of our debts, which is why the markets got so concerned about continuing to lend to us. That is a structural deficit, and it is a fact, even if the shadow Chancellor will not accept it, and that is why we have to have a deficit reduction plan in place.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. This is a fascinating debate, but not for today. If we could get back to the specifics of the amendments before us, perhaps we could make some progress.

[Geraint Davies]

I am grateful for your advice, Mr Deputy Speaker, and for the Minister’s intervention. In a way, her intervention makes the case for having growth at the centre of the OBR. I am sure that when she reads her words, which I appreciate were spoken with some emotion and anger, she will wish that she had picked them more carefully.

When we look at the facts and strip out the impact of the international financial crisis, which is about £84 billion in terms of our structural deficit, there was a residual deficit, to which the hon. Lady refers. There was an excess of expenditure over income, but that was taken into account in future planning. There was a savings plan from the previous Chancellor, as she knows, to cut the deficit in half in four years. That was not exclusively reliant on cutting public services and jobs. Rather, it relied on stimulating growth.

The OBR’s estimates of growth have been downgraded. Those higher levels—2.6%—would have provided more fuel to get the deficit down. I recall that the projected deficit in the pre-Budget report was £30 billion less than had been predicted previously. In other words, growth had been occurring faster than was thought. Now it is growing less fast—in fact, it is growing negatively.

[Justine Greening]

Just on the off-chance, I wonder whether the hon. Gentleman would be able to set out what the £14 billion of cuts were that his party was planning to start in April.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We are going much wider than the amendments. Could we please confine our comments from now on to the amendments before us?

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[Chris Evans]

I totally agree. If I may digress a little from the amendment, it is all very well paying off the deficit, but if there is no economy at the end of it we can forget about it all and worry about all our futures. I have tried to keep my comments brief and say in closing that I support the amendment because we need to know how the Government arrive at their decisions so that this House can properly scrutinise them.

[Justine Greening]

I am pleased to have the opportunity finally to respond to some of the points that have been made and to the amendments that have been tabled. It is important to say first that I very much welcome the contribution that Members not only in this House but in the other place have made to get the Bill to its current stage. Despite the debate we have had on growth, which of course is important, I think that there is broad support across the Chamber, as there was in the other place, for what the OBR is intended to do and for setting up such an office that can work effectively.

All the amendments relate to growth, so perhaps we have stared the debate that will no doubt continue tomorrow after the Budget. We believe that economic growth and job creation are absolutely vital, and Members will see tomorrow that that is a core part of the Budget. I agree with many of the comments that have been made about why we need to see growth as part of the Budget. I want to take the time to clarify some points that have been raised.

The debate so far has been about policy and strategy, but the OBR is not a policy-making body; it is there is look at the forecasting and produce the official forecast for the UK Government. It is precisely not intended to make policy. One of the things we have been very careful to do in setting out how the clauses and the charter work is ensure that the OBR’s independence, impartiality and transparency, which are also vital, are not compromised.

[Geraint Davies]

Having said that, will the hon. Lady accept that some of the OBR’s responsibility should be to forecast what it regards as the impact of policy changes from the Chancellor? For example, if he was to announce suddenly that he will let the private sector deliver public services so that entrepreneurial capacity will be taken out of export-driven growth and put into making easy money out of monopoly-provided public services, would it not be right for the OBR to say, “Hold on, that capacity has gone over there so our growth will go down”?

[Justine Greening]

I hope I can provide some clarification. The OBR has the freedom to consider the impact of policies on sustainable public finances, including employment policies. If the hon. Gentleman looks at some of the forecasts the OBR has already made, he will see forecasts for employment, average earnings, ILO unemployment, the percentage of the claimant count and, of course, growth. Hon. Members talked about the OBR’s assessment of growth and what it will show over the coming years. The OBR is already producing an awful lot of the analysis that hon. Members want to see, but it is fair to say that today’s debate will—I hope—be of interest to the OBR in understanding what information and analysis it might feel it needs to provide to convey what it wants to, which is some assessment of the economic growth forecast for this country.

Let us be clear that the duty of the OBR is very clear and is set out in clause 4. It should examine and report on the sustainability of public finances but, as hon. Members have said, Government policy clearly impacts on that. By definition, the OBR will consider how policy impacts on the sustainability of public finances.

[John Mann]

From what the Minister is saying, I presume that if the OBR—or even the Treasury Committee, but the OBR in particular—were to say that it was unable to provide the analysis that it would like to because it was not sufficiently resourced, that would be seen as a serious question for the Government to address.

[Justine Greening]

The hon. Gentleman will be aware through his role as a member of the Treasury Committee that when the chair of the OBR, Robert Chote, was asked whether he felt it was sufficiently resourced he said he felt it was. The hon. Gentleman will also be aware that one reason we have carved out sufficient money not just for this year but for the whole spending review period, which will be reported on separately, is to ensure that the OBR understands that it is sufficiently resourced not just for this year but for the years ahead, so that it has that certainty about its resource base to do the work it needs to do.

[John Mann]

That is a vital point, because Robert Chote was speaking as the first permanent employee. Others are now employed by the OBR who might have different perspectives and priorities. There is a critical question: if the OBR feels restrained by resources, will that become a politically contentious issue as regards objective statistics? Presumably, in such a case, if the OBR was kicking up about being unable to provide the detail in independent statistics, the Government would regard it as vital to address that resource need.

[Justine Greening]

I can go back to the reply I just gave the hon. Gentleman. The charter and the Bill clearly set out the OBR’s duties and Sir Alan Budd, as the interim chair, produced his report and talked about what he thought that the duties of the OBR should be, about its resourcing and about how it should be run. Of course, we reflected many of those comments as we introduced this Bill to set up the OBR. If we take that together with the fact that the permanent chair, Robert Chote, has said that he does not feel that there will be an issue with resourcing, we can be relatively confident that the OBR will be adequately resourced to fulfil the duties clearly set out in the Bill.

Let me turn briefly to the amendments. They all concern growth and the problem is that they start to stray into the OBR’s becoming bound up in policy rather than analysis. Amendment 1 would require the charter to include the Government’s economic policy objectives and the means by which that objective would be attained—what has been called a growth mandate. The charter, however, is a fiscal policy document that transparently sets out the fiscal policy framework. The purpose of the charter, the OBR and the Bill is to create the fiscal policy framework that supports the Government’s delivery of our fiscal policy objectives. Rightly, the charter focuses on fiscal policy issues, as was the case with the previous Government’s code for fiscal stability.

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[Geraint Davies]

In conversation with the Institute for Fiscal Studies, I asked various questions about growth and its calculations and it was pointed out to me that the IFS was in essence made up of micro-economists who were aggregating up to deliver predictions about Government fiscal outputs. I respect what the hon. Lady is saying, but it seems to me that she is basically saying that the OBR will be doing something very similar. It is very easy to make such predictions if we say, “Assuming that everybody is still employed, that we have taxed them this and that they spend that, this will happen.” What is more difficult is to model the impact of individual policies in a Budget on growth and hence on the public finances. The hon. Lady is giving us some reassurances, but I think the point of our amendment was to push her to say that this would become a priority for the OBR so that we could have a richer understanding of the growth scenarios in the future. I appreciate that some of that is done, but we want more.

[Justine Greening]

Ultimately, a key clause—I think clause 5—sets out that it is at the OBR’s discretion to decide how to carry out its duty. A fundamental building block of the OBR’s credibility is its independence. I assure the hon. Gentleman that the risks he mentions, such as the concern that the OBR might not carry out robust analysis, are mitigated by other safeguards in the Bill. For example, one duty of the OBR will be to produce a report on the accuracy and robustness of its forecasting. As he will be aware, there are also non-executive directors who will be there on a day-to-day basis to challenge how effectively the OBR works and every five years, at a minimum, there will have to be a completely external peer review of the OBR’s workings.

I think we have managed to strike a balance by setting up the OBR in the way I have described—on the one hand by giving it independence, so it has that key element of credibility, and on the other by including some safeguards, in terms of its structure, its management and the review, so that, if for some reason it does not produce the quality of forecast that we need, those safeguards will be in place to ensure that we tackle the issue. Let us not forget that the OBR is accountable not just to Parliament, but to the Chancellor, because it produces the official forecasts.

Finally, amendment 4 suggests another new related role for the OBR, which as we have heard would be to assess the Government’s growth mandate. As I said in response to amendment 1, the Government seek to achieve their economic policy objectives through a range of policy tools and frameworks, not just through fiscal policy, but the OBR has been established to increase the credibility of the Government’s economic and fiscal forecasts and to hold the Government to account for their economic and fiscal policies.

That highly valuable role is recognised by a wide range of domestic and international commentators. The hon. Member for Swansea West mentioned the Institute for Fiscal Studies, and it warmly welcomed the establishment of the OBR, which, through its role, has already provided forecasts of key economic variables. In its November report, the OBR set out forecasts for the next five years, covering a range of key macro-economic variables, such as GDP and its forecast growth, inflation, employment, average earnings, unemployment and the output gap. In addition, the OBR will have the freedom to consider the impact of Government policy on economic growth and employment within our regions and nations, and in line with its main duty. I therefore consider all the amendments to be unnecessary, and I hope I have addressed the issues that hon. Members have raised.

[Mr Cash]

I do not want to put my hon. Friend on the spot, but I am troubled by a motion that the Government tabled in relation to a European document. I have an idea that they did not really mean to do so, but I just want to make the situation completely clear. The motion said that the Government and the House of Commons were only primarily responsible for fiscal matters and direct taxation. Will the Minister be kind enough to get that out of the way, so that we might now know that they are exclusively and solely, not merely primarily, responsible?

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[Justine Greening]

I do remember the motion to which my hon. Friend refers. We were trying to be very clear, as he will be aware, and no doubt deeply unhappy, that some aspects of our fiscal and taxation system—for example, VAT—are set in relation to a broader pan-European directive. As we have discovered, that is one reason why the Opposition’s policy on reducing VAT on fuel alone is simply illegal, and I hope I can reassure him that we were trying to be very clear that it is primarily the UK Parliament that takes those decisions.

Perhaps I can reassure the rest of the House that growth is already an integral part of this Government’s approach to turning around our country’s public finances and economic fortunes. I understand why the amendments have been tabled, but they are unnecessary.

[Chris Leslie]

I am grateful to the Minister for her generosity in at least admitting that our debate and amendments will be of interest to the Office for Budget Responsibility. Indeed, I hope that is the case. We have tried our best on many occasions, and my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies), for Edinburgh South (Ian Murray) and for Islwyn (Chris Evans) in particular have in plain terms tried to impress upon the Treasury Minister our anxiety that the Chancellor, in his blinkered obsession with hasty deficit reduction, risks harming the wider society and economy, particularly when it comes to jobs and economic growth. We have said that on several occasions, and it was important to reiterate the point today.

I understand, however, that the Minister has explained that the implied terms of the Bill do, indeed, allow for the OBR to focus on economic growth and employment matters. The Opposition hope that the OBR, at least, will do so, even if there is a deficiency in the Government’s strategy on the matter. We will no doubt debate those questions more, in terms of substantive policies, over the coming days.

The Opposition feel that fiscal policy cannot be looked at in isolation from economic growth, because the two are inextricably linked, and we will continue to make that point, even if Ministers seek to separate them. For the time being, however, I do not feel it appropriate to push the amendment to a vote, so I am happy to withdraw it. I think the Minister has heard the point. My hon. Friend the Member for Bassetlaw has accused me of tabling pro-Government amendments, and for that reason alone I should take them off the Table, given that we have other matters that the House will want to consider on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2

Annual Budget documents

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[Stewart Hosie]

Amendment 2 calls for the OBR’s reports to be published. The Treasury Committee said:

“The OBR should have discretion in the models it uses in drawing up its forecasts. It is a matter for the organisation itself as to whether it is content to use is the Treasury models, or wishes to make changes. Whatever course the OBR takes, there would be benefits in it being as transparent as possible about the models it uses.”

I assume that that would also include the assumptions that underpin those models. The Government’s response was positive. They said that they would

“provide the OBR with full access to Treasury and other forecasting models, as well as support to scrutinise and develop these models.”

Again, I assume that that means the assumptions that underpin the Treasury models and whatever other modelling it wishes to undertake. The hon. Member for Nottingham East (Chris Leslie) said that the OBR could take those models and assumptions from the Treasury, and he is absolutely right about that.

The OBR currently publishes a number of assumptions. For example, the impact multipliers were included in the June 2010 report, showing the one-for-one impact of capital expenditure cuts. Reports at the time of the Labour Government published assumptions about oil prices, and North sea corporation tax and petroleum revenue tax was used to calculate those yields. Given that several such assumptions are already published, and that the OBR can take all those assumptions, models and changes and create new ones, does it have the discretion to publish what it sees fit? Would it not be better to have a guarantee from the Minister that it will not unnecessarily withhold assumptions where it is important for us all to have transparency? Instead of the Treasury putting the material in the Library, we should ensure that the OBR has the ability to do that, so that we have the information and can come to a proper, reasoned view on whether we believe its figures.

That is a simple question, and I am sure that the answer is yes; I certainly hope so. There is no reason why we should not have that transparency so that we can all guarantee the efficacy of the reports that the OBR produces.

[Justine Greening]

On amendment 2, the Government are committed to increasing transparency in public life. That transparency is essential to good fiscal policy, as the hon. Member for Dundee East (Stewart Hosie) said. In fact, the Government already provide the costing methods and assumptions for policy proposals. Those were made available in policy costings documents at the last Budget and spending review, and copies were made available to the House. That is a step change in transparency in fiscal policy making. Specifically in relation to the OBR, the additional transparency referred to in the amendment is already required by the statutory charter for budget responsibility, which says at paragraph 3.9:

“The Budget Report shall provide, at a minimum: an explanation and costing of the impact of all significant fiscal policy measures introduced by the Government since the last Budget and an explanation of the methodology used to cost the fiscal impact of each of those measures”.

In relation to the Bill, I draw the hon. Gentleman’s attention to clause 4(6), which explicitly refers to the OBR’s reports being clear in explaining the factors that it took into account when preparing the report—not only the assumptions that he mentioned but the main risks that it considered to be relevant. So there is a safeguard not only in the charter but in the Bill to ensure that there is transparency about how the official forecasts have been arrived at.

On amendment 6, the OBR is accountable to Parliament in order to enhance Parliament’s ability to hold the Government to account for fiscal policy. The OBR’s forecasts and analysis will be laid directly before the House. The budget responsibility committee will be appointed with the consent of the Treasury Committee, and will be available for scrutiny. There will be separate reporting to Parliament of the OBR’s expenditure, and, as many Members have already discovered, relevant written questions will be answered by the OBR. The OBR is also accountable to the Chancellor, reflecting its role in producing the official forecast, which will form the basis of the Chancellor’s Budget decisions.

Herein lies the challenge to Labour Members. The OBR will provide the Government with timely access to the information necessary to reach policy decisions ahead of fiscal policy events. The Treasury Committee recognised that in its report last year, when it said:

“Involvement In the Budget process necessarily involves close contact between the Treasury and the OBR”.

Close working also means that the OBR has access to all Government information to ensure that its conclusions reflect the most accurate and up-to-date information. It is therefore right that the OBR provides the Government with pre-release access to its forecast in order to ensure the accuracy of both it and the Budget documents, which are published simultaneously.

It is also right that there is transparency in the approach to the sharing of information. The OBR has chosen to follow the well-established pre-release practices put in place by the Office for National Statistics. I can assure the House that this arrangement does not compromise the OBR’s independence. It is an approach that has worked well for the ONS. The OBR has been transparent about when reports have been shared. It confirmed in its November “Economic and fiscal outlook”:

“We have come under no pressure from ministers, advisers or officials to change any of our conclusions.”

The OBR’s access to Government information distinguishes it from other UK forecasting organisations, and ensures that the Chancellor and Parliament are provided with the most up-to-date information regarding the latest UK economy and public finance figures.

I understand the rationale behind amendment 6. However, given the practicalities of the OBR’s accountability to the Chancellor and its role in producing the official forecasts, we feel that it is better for it to act on its own decision to follow the ONS pre-release guidelines. I will resist both amendments.

[Chris Leslie]

I am getting used to the hon. Lady’s resistance to our amendments. One day we will persuade her to accept even the smallest, most generous Opposition amendment, but perhaps not to this Bill.

I understand the points that the hon. Lady made about amendment 2 and costings. I know that there have been attempts to broaden access. If and when we hit obstacles or refusal to publish, we will come back to her to try to get more information into the public domain. However, I accept that she is committed to a particular direction of travel, so we shall not press the amendment.

On amendment 6, the Minister seems to understand that several members of the Public Bill Committee might have hoped for an Office for Budget Responsibility that looked more akin to the Congressional Budget Office or a parliamentary budget office, and was a little bit closer to the legislature and less cosy with the Executive. She knows why we want that. If the OBR places absolute primacy on its independence and impartiality, we must surely move away from any perceived suspicion that it is too close to or cosy with the Executive of the day.

We know that there is due to be a review of the OBR within a number of years. How that review will take place is a bit of a moot point, but we will come to that in due course. The Economic Secretary understands that we will be watching carefully for circumstances in which the OBR is too close to the Chancellor of the Exchequer. It is vital for it to remain distant from, and impartial between, the political parties. It must also have a good dialogue with Parliament.

Those are the important points that we wanted to make, and we know that the OBR will be listening to this debate. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Third Reading

Queen’s consent signified.

[Justine Greening]

I beg to move, That the Bill be now read the Third time.

As we have heard, this is an important Bill. It puts the new Office for Budget Responsibility on a statutory footing, and puts in place reforms to the corporate governance of the National Audit Office.

As part of a new and enhanced fiscal framework, the OBR is being established to make independent assessments of the public finances and the economy. For the first time the judgments underpinning the official forecast will be determined by independent experts, not Treasury Ministers. Since the coalition was formed last year, every official forecast for the economy and the public finances has been produced by the independent OBR. When the Chancellor presents his Budget tomorrow, it will be accompanied by the OBR’s official forecast. The establishment of the OBR has been welcomed by the International Monetary Fund and the OECD.

The main duty of the OBR, as we have heard, is to examine and report on the sustainability of the public finances. The Bill makes it explicit that the OBR has complete discretion over how it carries out its statutory duties. That is a broad remit. It is not limited to forecasting, but the OBR will be required, as a minimum, to produce economic and fiscal forecasts at least twice a year; make an assessment of the likelihood of the Government meeting their fiscal mandate alongside those forecasts; publish a sustainability report at least once a year; and publish a report on the accuracy of its forecasts at least once a year.

The OBR must perform its duty objectively, transparently, impartially and on the basis of Government policy. Those principles will protect independence and ensure that there is a clear separation between analysis and policy making. Analysis is rightly the domain of the OBR, but policy making is the responsibility of publicly elected Ministers.

The charter for budget responsibility will set out further details on the OBR’s remit. A full draft was published in November, and a final version will be laid before Parliament once the Bill has come into force. The OBR will report directly to Parliament on the public finances. The budget responsibility committee will be available for Select Committee scrutiny. The OBR’s forecasts and analysis will be laid before the House. On funding, there will be separate reporting of the OBR’s expenditure in the estimate that the Treasury presents to Parliament. In addition, the OBR will be able to submit an additional memorandum, alongside that of the Treasury. As we have heard, written questions will be passed to the OBR to be responded to. All those measures will enhance the ability of Parliament and the public to hold the Government to account for their fiscal policy.

The OBR will have its own legal identity, and will be a civil service employer, to allow appropriately skilled staff to move easily to and from the OBR. The OBR’s executive responsibilities will be led by the three-person budget responsibility committee. Its members will be appointed by the Chancellor, and the Bill provides the Treasury Committee with a veto over their appointment and dismissal. The Chancellor has said that he is giving the Treasury Committee that veto to ensure that there is no doubt that the individuals leading the OBR are independent and have the support and approval of the Treasury Committee. All staff will report to the chair of the OBR, and that person will control the hiring and firing of staff. To provide support and constructive challenge, there will be at least two non-executive members. Advertisements for those members will be issued shortly, so that they can be in place before the summer recess.

Part 2 of the Bill modernises the governance of the National Audit Office. It will strengthen the resilience and integrity of that body, which is best placed to assess the Government’s use of public funds at this time of fiscal constraint. It builds on the recommendations of the all-party Public Accounts Commission’s 15th report and has commanded support on all sides of this House. The provisions passed through the House in substantially the same form in the previous Parliament, when they were considered as part of the previous Government’s Constitutional Reform and Governance Act 2010, just before the election.

The Bill has benefited from much parliamentary scrutiny. Before it was introduced, the Treasury Committee produced a detailed inquiry into these matters. I am pleased to say that the Bill is very much in line with the recommendations made in that report. I thank the Committee for the interest it has taken. When the Bill was introduced in the other place it received extensive debate. The Government tabled a number of amendments to bolster the OBR’s remit and to enhance the arrangements for the scrutiny of its work, which were welcomed.

Finally, the Bill has been debated at length in this House. I thank all hon. Members who have spoken and participated, in particular the Opposition spokesmen, the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that hon. Members will agree that even though we have not reached a meeting of minds on some of the detail, there is much more on which we agree in principle.

The Bill is a key part of the Government’s fiscal reforms. It will provide an independent assessment of the public finances and the economy, with official forecasts from independent experts, not Treasury Ministers. The Bill will provide a strong institutional foundation for the future through the OBR, and I commend it to the House.