Budget Responsibility and National Audit Bill [HL]

Lord Barnett Excerpts

Wednesday 1st December 2010 Grand Committee

[Lord Barnett]

My Lords, I agree with the noble Lord. Although I am sure that the Minister will consider the amendment carefully before we get to Report, I wonder whether it would be simpler for him to add a few words to it—namely, that the Economic Affairs Committee of the House of Lords might be added to this consideration. I am sure that he would be happy to see that done.

[Lord Sassoon]

My Lords, I am quite puzzled by this amendment because we are moving into unusual territory. We believe it absolutely right for the Treasury Committee to have a veto over the role of the chairman, but it is almost unprecedented for Parliament or parliamentary committees to have such roles at all, let alone over non-executive members. One of very few other appointments that is subject to a parliamentary veto of the sort provided for in this Bill is that of the Comptroller and Auditor-General.

In terms of the non-executives, I do not share the analysis of the noble Lord, Lord Eatwell, in terms of expertise. I shall come back to the other constitutionally substantive point, which is that we are not talking about experts in this area in any sense but about those who will bring independence of mind and who will challenge and support. That is potentially a much wider field of candidates. So I think that such appointments would rest on the relatively narrow point about what the Treasury could bring to bear, and actually I do not think that it would have anything special to bring to this. The wider point to be made here is that we would be moving into new and extraordinarily different territory. To take one broadly similar example, the non-executive members of the board of the UK Statistics Authority are appointed by the Minister for the Cabinet Office after consulting with the chair of the UK Statistics Authority. So we are following a perfectly respectable precedent.

In answer to the question of why the names that are being considered for the non-expert, non-executive role should be nominated by the OBR, again we want to strike a balance between appointment by the responsible Minister, who is the Chancellor, while not leaving it entirely to the Chancellor and the Treasury to come up with names. So again there is a perfectly well precedented route by which the authority concerned has a role in identifying candidates. That would include the Debt Management Office, the Crown Estate Office, the museums, the Natural Environment Research Council—I could go on.

Our suggestion in the Bill for how this should work is well-worn territory; there is nothing so different about the role of these non-execs. We have already had some questions about how substantive the role is, but there is nothing that takes the roles of these non-execs into remotely different territory from the role of non-execs in a lot of other well functioning bodies in the broader public sector, and we have broadly followed the appointment processes in those other areas. I am genuinely puzzled by this amendment and do not believe that it would add anything to the strength of the OBR governance arrangements.

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[Lord Higgins]

My Lords, the theme running through all our proceedings has been that the OBR shall be seen to be independent. In that context, its forecasts in particular need to be independent. It would appear that, despite what may be a possible solution, the Treasury will continue to make forecasts at the same time as the OBR is making them, and it will be extremely difficult for everyone to believe that there has not been any degree of collusion if in fact the office is located in the Treasury itself.

This is a simple amendment. It may be that the Minister will happily say right away, “It’s clear anyway from the clause, since the OBR apparently owns property in the context of this amendment’s location. There is not the slightest question of it being located in the Treasury”—in which case we can let the matter rest. I hope that that is so. I beg to move.

[Lord Barnett]

My Lords, it is really all about perception. We all know Robert Chote, the chairman; I respect him and believe him to be truly independent. Being based in the Treasury, with everything that that means, would clearly be wrong, but on the other hand I read recently—I do not know whether this is right—that the OBR was looking for premises outside. It may already have found them, so this amendment may not be necessary. Perhaps the Minister can tell us.

[Lord Sassoon]

My Lords, I hope that we might be able to dispose of this a little more speedily than some other matters today, although it is important. I shall make the situation clear: Robert Chote has announced that the OBR is moving out of the Treasury and will do so—my speaking note says “next month”. I think that we are already in next month. It will be moving out in December. Before Christmas the OBR will be out of the Treasury building and going to Victoria Street, so it will not be too far away. I think that the noble Lord, Lord Burns, noted at Second Reading that the OBR will inevitably work closely with the Treasury. It will be out of the Treasury building but it will not cost its members too much in shoe leather if they occasionally need to have meetings with the Treasury and with other government departments. The OBR is moving out and it is up to that body where it goes. We should not lay down in legislation whether it should go to one place and not to another.

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Moved by

[Lord Barnett]

12: Schedule 1, page 13, line 23, at end insert—
“( ) The staff must be employed solely by the Office, and not be civil servants transferred temporarily from other departments.”

[Lord Barnett]

Listening to the previous debate, I am even more confused than I was before about which staff are now being employed by the OBR and what the plans are for the future. Perhaps the noble Lord can help us on that. I know from a Written Answer in which I got a proper answer from the noble Lord that 12 Treasury members were still working officially for the OBR—full time, I assume. As I now understand it, having listened to the previous discussion, there are a lot of non-executive members as well as executive members. Quality will be required in the new members of the OBR, but they will not necessarily be non-executive or executive members.

I do not quite understand what we are talking about when we refer to “staff”. For example, I understand that Robert Chote, quite rightly, retired from his position as head of the Institute for Fiscal Studies. I am not clear whether that institute is continuing with another head. I think that it probably is. I see the noble Baroness, Lady Noakes, nodding—perhaps she is the new chair—but it is just adding to the 50-odd independent forecasters that we have, or whatever the number was before, plus one. I should be glad if the noble Lord could clarify that.

In Amendment 12, my noble friend Lord Peston and I say that the staff must not be civil servants, because we were both worried about them either remaining as officials of the Treasury or being temporarily transferred to the OBR, which we would not find very satisfactory. The whole point about the OBR is that not only must it be independent, which I am sure it will be, but it must be seen to be independent. If we are not careful, because of its proximity to the Chancellor and the Treasury, it will not necessarily be seen to be as independent as it should be. For example, on the previous amendment my noble friend Lord Myners talked about the OBR moving its office to Victoria Street. However, it may be moving to the offices of the Department for Business, Innovation and Skills for all I know. Perhaps the Minister can clarify that as well. My noble friend was worried about whether they would have to keep traipsing backward and forward between the OBR offices and the Treasury, rather than inviting any Treasury officials to whom they want to talk to come to them. The foreword of the recent OBR report makes it clear that it sees not only the Treasury. It states that,

“we have also drawn heavily on the help and expertise of officials across government”.

There is a whole load of them, including Revenue and Customs, and the Department for Business, Innovation and Skills. The OBR officials go to lots of offices, so there is a wide-scale connection with government. I do not object to them seeing officials in government departments—that is sensible—but it makes me wonder, when I see the number of departments that the OBR visits, just how big it is, or is going to be. Perhaps the noble Lord, Lord Sassoon, could tell us how many staff the OBR has now, how many are full time, how many are part time, how many are quality, how many are not quality—doing the footwork, you might say—how many are experts, how many are executive, and how many are part-time executive. For example, are Robert Chote and the two people with him full time or part time? I do not know. Unfortunately, I have not seen the minutes of the Treasury Select Committee, where the answers may have already been given. Perhaps the Minister can tell us. I beg to move.

[Lord Newby]

My Lords, the provision in paragraph 8(2) of Schedule 1is sensible. It states:

“Staff are to be employed on such terms as to remuneration and other matters as the Office may, with the approval of the Minister for the Civil Service, determine”.

Surely that is the sensible way of doing it, with the chairman deciding which staff he wants. It would be slightly surprising if none of them came from a Civil Service econometrics background, which would bring strength to the office. Just because they have come out of Whitehall does not mean that they are somehow tied hand and foot to Treasury thinking. No doubt, people will come in from academia and elsewhere. It is for the chairman himself to decide who the best people are to do the job.

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[Lord Barnett]

My Lords, I was trying to be brief. I introduced this amendment by asking just a few questions so that we might reach the target number of amendments that the Government want to reach today. I am not trying to delay the Committee but we have now spent 32 minutes on this amendment. I am not objecting to that; I welcome the views of Members of this Committee, such as the noble Lords, Lord Burns and Lord Turnbull, my noble friend Lord Myners and, indeed, the noble Lord, Lord Sassoon, himself, who have worked in the Treasury rather more recently than I have. I apologise for trying to be brief and for not expanding on what I might say at a later stage. However, I have now elicited a reasonable amount of information from the noble Lord, Lord Sassoon. I should make it clear that in no way am I or, I am sure, my noble friend Lord Peston seeking to obstruct Lord Chote—no, that comes later; I am making a forecast now. We are not seeking to obstruct the OBR from employing the best possible people.

I want to be crystal clear: like everyone else, we are both concerned about the independence of this body. As I indicated on Second Reading, I was not in favour of setting it up—unlike every other Member of this Committee—but we must have it. I do not object to that now but I want to know exactly what is going to happen. I was told by recent senior officials of the Treasury that people could be popping in and out and that there was no career structure. Perhaps the plan is that the OBR will be temporary, I do not know. I thought not; I thought it was another permanent independent forecasting body that was perhaps doing a lot more work than the Institute for Fiscal Studies or any of the other independent bodies. I would welcome any further information on that.

I do not wish to pursue the matter further now, other than to make clear that we are seeking to ensure the true independence—and the perceived true independence—of the OBR. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Moved by

[Lord Barnett]

13: Schedule 1, page 14, line 3, at end insert—
“( ) The Office must make public the nature and membership of any committee or sub-committee it sets up, and subsequently the report of any such committee or sub-committee.”

[Lord Barnett]

My Lords, this is a simple question and I hope that the Minister will be able to reply. I have nothing more to say. I beg to move.

[Lord Sassoon]

My Lords, Amendment 13 is intended to create a legal obligation for the OBR to publish the nature and membership of committees or sub-committees and to publish the reports of those committees. It is inconsistent with the right of the OBR under paragraph 11 of Schedule 1 to determine the procedure of any committee or sub-committee. We should not seek to fetter the way in which the OBR organises its committee structure and processes. While I am happy to talk at greater length, we should leave it up to the OBR to determine how its committees and sub-committees should operate. This would be consistent with everything that we have said about the independent and unfettered way that it should go about its business.

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[Lord Peston]

My Lords, there are three amendments in the group, but I want first to say a brief word about the amendment spoken to by my noble friend Lord Barnett. I am intrigued by what is set out in the Bill: the setting up of a committee or sub-committee that may consist of or include persons who are neither members of the office nor members of the staff. I asked myself what this could possibly be about. The Minister decided that he did not like that by quoting the most trivial example he could have dreamed up, and went on to say that they might have set up a committee to deal with personnel matters and that that should not be known. I do not see why that should not be known; transparency means transparency, it does not mean “transparency but”. I want to know what serious argument the Minister could possibly put forward to explain why the office is not obliged to let us know if it sets up a committee. I had assumed that we were talking about a committee of experts on optimal forecasting methods and that sort of thing. We need a more serious response from the Minister.

A fortiori, the amendment tabled by my noble friend Lord Myners requires a serious reply. If you believe in transparency, would there be any circumstances why the minutes of the Budget Responsibility Committee should not only be published but be made available to the public at the same time as they are made available to the members of the committee? Both of those are matters of significance.

I come now to the third amendment in the group, just to say that it is also important. My noble friend Lord Barnett will enlarge on it in a moment, but again I hope that we are given a serious answer, rather than a trivial example to explain why the Minister does not like it.

[Lord Barnett]

I shall say a word about Amendment 34. It seeks to provide that:

“The Office will place in the public domain a record of all meetings with the Chancellor … and other ministers”.

When I tabled a Question for Written Answer on this matter for the noble Lord, Lord Sassoon, he asked Robert Chote to answer it. Mr Chote has duly written to me and I shall quote from it:

“We will be publishing a list of contacts between the OBR and ministers, special advisers and their private offices shortly after each autumn and Budget forecast, beginning with our forthcoming forecast on November 29th”.

I do not know when the list is going to be published and I have not seen it, but it is clear that regular formal or informal meetings with the Chancellor and other Ministers are a very important matter for an independent forecaster, one that is not available to our other 50-odd forecasters. So I hope we will have an answer to this very soon. That is the whole purpose of Amendment 34.

I shall not add to my remarks because I am trying hard to curtail my contributions so that we get to the target figure of amendments that the Government want to see dealt with. But far be it from me to prevent Members of the Committee speaking.

[Lord Turnbull]

My Lords, it seems that an analogy is being drawn with the Monetary Policy Committee, whose minutes are produced. What happens at the Bank is this. On the preceding Friday of the week in which the committee meets, the members spend the whole day going through virtually every possible economic indicator and receive reports from the agents around the country. That is a meeting, but no minutes are taken. I think the members then meet on the Tuesday afternoon and hold discussions during which they try to sift out what the main measures are to be. Again, there are no minutes, or certainly none that are published. The members then come together at the formal meeting, which is where they take decisions and where the minutes for the record are produced.

In other words, they do not produce a running commentary. We are told here that the BRC has more than 40 challenge meetings with officials from other departments, in addition to numerous meetings at staff level. That is complete overkill and, I would say, a false analogy with the Bank to assume that each of those meetings has to be minuted and published. This thing is published—there are 150 pages of it—and it is produced twice a year. Everything else is work in progress, which leads to the production of the report. We should be satisfied with the fact that it is produced, eventually, after talking to whomever the committee wants to and whatever progress it wants to make. Some of that will include what is or is not in the Budget; some of it goes to the nature of fiscal policy. What is eventually produced is this report. Those are the minutes and I do not think that we need anything beyond them.

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[Lord Barnett]

My Lords, again I intended this to be a very brief debate, but already it has taken 22 minutes. I am obliged to the noble Lord, Lord Turnbull, for replying to my amendment. Sometimes I have the feeling that he is a frustrated ex-permanent secretary who, having taken control of Ministers, the Opposition and everybody else, now finds himself having to listen to arguments that he would have dismissed out of hand before. I hope that he will forgive me. I appreciate what he said, except when he claimed that there was no analogy between the MPC and the OBR. I deliberately never referred to the MPC. I more than recognise the difference between the MPC, which was given a job to do under the Bank of England Act, and the OBR. I recognise that the OBR is a forecasting body, but it looks as if it will be rather more, judging by the 150-page document before us.

The Minister, who has formally replied to the debate in place of the noble Lord, Lord Turnbull, said that once again—in Amendment 13, I think—we wanted to say something that was unnecessary because the OBR can do it anyway. Again, though, if it can do it, why not leave it in the Bill? However, we will come back to that on another occasion. Meanwhile, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

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[Lord Higgins]

In fact, as my noble friend has discovered, the letter was also available to the Committee today. In it, this complicated issue has been very condensed, and we will no doubt wish to return to it later.

As I say, I still have problems in believing that the OBR will carry out its duty in the terms that I quoted earlier unless it can take into account the Government’s general economic policy, which is one of the means in subsection (2)(b) by which the Treasury intends to achieve its fiscal policy, otherwise known as the fiscal mandate. In any event, it seems to clarify the situation if we accept the wording in the amendment.

Amendment 27, proposed by the noble Lords opposite, is, rightly, linked with this amendment. It raises an important point: what is meant by sustainability? The essence of what I understand that the OBR is going to do is report on whether the fiscal policies—and, I thought, the economic policies—are sustainable. At this stage, so that we have some idea what we are talking about, we need a clear definition from the Minister of what is meant by “sustainability”. One problem, of course, is that one can sustain the finances at various levels. Without knowing what the economic policy is, it will be difficult to know at what level it is proposed to sustain the financial side of the Government’s operations. We need to know, since it is in the Bill and it is important, what “sustainability” means.

[Lord Barnett]

My Lords, the noble Lord, Lord Higgins, has referred to Amendment 27 in the name of my noble friend Lord Peston and myself. The amendment itself says:

“In any report on the sustainability of the public finances, ‘sustainability’ must be defined”.

I have tried hard to obtain some kind of definition of “sustainability” in the sense in which the Minister has used it—I have tried to elicit information on many of the words that he has used, as he knows—but that word, in some of the contexts that it is used, is a little difficult, to say the least. That is why we tabled the amendment; we need to know what is being talked about here.

Again, I have tried to be helpful and brief. I would like the Minister to explain briefly what is meant by “sustainability”.