Budget Responsibility and National Audit Bill [HL]

Lord Barnett Excerpts

Monday 6th December 2010 Grand Committee

Moved by

[Lord Barnett]

25: Clause 4, page 2, line 32, at end insert “but shall not be regarded as an audit”

[Lord Barnett]

My Lords, Amendment 25 is in my name and that of my noble friend Lord Peston. Everything that I have heard so far this afternoon in these brief debates confirms to me why my noble friend Lord Peston and I have been right to wonder whether the huge expense of setting up the whole of the OBR is worth it. In particular, this amendment relates to the whole issue and is central to it. Indeed, the only person whom I have heard using the word “audit” in relation to this 150-page OBR report is the Chancellor. He is worth quoting. He said:

“I can confirm to the House that the OBR and its new chair, Robert Chote, have audited all the annually managed expenditure savings in today’s statement”.—[Official Report, Commons, 20/10/10; col. 949.]

My experience of auditing is now a bit out of date. Indeed, once you become a major partner in an audit firm, particularly a senior partner, you do not do a lot of actual auditing. Yet I did a little before that and I am bound to say that, when you give a clear audit certificate, there are no exceptions to it. How on earth can you give an audit certificate in relation to the OBR report? The fact is that it is just not possible to give a wholly unqualified audit certificate in relation to the OBR report. Perhaps I might give one or two examples of why it is impossible.

The words “uncertain” and “uncertainty” go right through this report. Quite obviously, I am not blaming the OBR for that. If you are making, as it is, forecasts and assessments, there is bound to be uncertainty. It quite rightly admits that openly. It is not worth quoting all the examples when there are so many of them, but it refers, in the case of the central forecast, to significant uncertainty. Now if, in your report, you have a significant uncertainty that relates to the whole of the report, how on earth can the Chancellor say that everything that it has said is right and that it is all audited? Perhaps the noble Lord, Lord Sassoon, can tell me what it means. It is not clear to me. It is nowhere in the report, but it was at the heart of the Chancellor’s Statement introducing the comprehensive spending review. He said that the OBR had “audited” the annually managed expenditure savings. In fact, the OBR report refers very often to “estimates”. I assume that it will be accepted that you cannot audit an estimate. Page 25 talks about an “equal likelihood” of growth being up or down—it could be all kinds of things. To say that there has been an audit is clearly nonsense. It is done solely to let the public know that this great new independent OBR is giving the Chancellor an overall audit. However, it has not given him an audit, because it cannot. The report states that it is “difficult to draw conclusions”, but the Chancellor says that there has been an audit. The report says that there are “expectations of interest rates”—I wish that the Chancellor would give me some examples of expectations that could be audited; I have never heard of one. I have not come across anybody who can give me a certain forecast of interest rates for tomorrow, let alone for five years, but those “expectations” are central to the forecast, which itself is significantly uncertain.

I worry about Robert Chote, who has taken on the job of chair of the OBR. It is clear that he is an independently minded man who did a great job with the Institute for Fiscal Studies. However, he is allowing the Chancellor to use him. I am very sorry to see it. The Chancellor is using the respected independence of Robert Chote, and now the OBR, to say what a great job he is doing. That is very worrying, because there is a clear danger of the very perception of the independence of the OBR being undermined. I have quoted previously from the foreword to the OBR’s 150-page document, but it is worth doing so again. It states that,

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

It then lists the many government departments whose expertise has been used. Despite having asked Questions, I still have not heard from the noble Lord, Lord Sassoon, or from anybody else how often, either formally or informally, the OBR has met the Chancellor and his colleagues. It is not unimportant to know these things. It is all part of the very perception of the OBR. I hope that the noble Lord, Lord Sassoon, will at least see that it is important to accept the amendment, because it goes to the heart of the independence of the OBR, which the Government want to have us believe. I find it hard to believe. I am sorry that the Government are using—I use the word carefully—Robert Chote and his colleagues to give the Chancellor the aura of being right, when it is clear that they cannot do so and are not doing so. I beg to move.

--- Later in debate ---

[Lord Sassoon]

I am grateful to my noble friend for trying to bring this back into perspective. Of course the OBR scrutiny, as the noble Lord, Lord Eatwell, acknowledged just now, will be based on challenging the assumptions underpinning the AME costings. How it then formed the judgments that it did is for the office, not me, to interpret. However, I am happy to point noble Lords towards what has been published and see whether there is anything else that the OBR thinks would be helpful to say on the matter after the discussion this afternoon. Clearly, the OBR will not sign off on its scrutiny of AME savings if it does not think that the methodology and the numbers are reasonable.

[Lord Barnett]

My Lords, there is no need for noble Lords to waste their time looking at websites. I submitted a Written Question to the Minister asking when the OBR scrutinised these particular points. The Answer stated that the noble Lord, Lord Sassoon, passed my question to Robert Chote, who quickly gave me an answer. He referred in particular to chapter 3 of the 150-page document. I went through chapter 3 very carefully. Like the noble Lord, Lord Peston, I could not see in the whole of the chapter any details about scrutiny—far from it. Chapter 3.2 states:

“This is our central projection, or in other words, we believe there is an equal likelihood that growth will turn out to be higher or lower than we forecast”.

How do you scrutinise that? Or perhaps you should audit it. Or perhaps I have been going over the top, as the noble lady, Baroness Noakes, said. If I really wanted to go over the top, noble Lords on the Committee would know that they have heard nothing yet.

The noble Baroness, Lady Noakes, seems to think that she is still sitting on the Front Bench. I do not mind that. She was very good on the Front Bench. Occasionally she got it right. However, today she tells me that I am over the top. I wish someone, perhaps the noble Lord, Lord Sassoon, would explain where I am over the top. I have said that Robert Chote is being used by the Treasury. That is undoubtedly the case, and all that this brief debate has done is emphasise that. Indeed, the Minister has still not replied, or perhaps he has accidentally overlooked replying, to my Question about how often since or before this report Robert Chote and his colleagues met the Chancellor and other Ministers.

[Lord Sassoon]

Forgive me, but I went through the detail of what was published on the OBR’s website by Mr Chote, and I shall say it again. According to the document released by the OBR on its website, between 4 October and 29 November 2010 there have been seven substantive contacts between the OBR and Treasury Ministers, special advisers and their private office staff, including four e-mails, two meetings and one transmission of a hard-copy document. The details of the two meetings are included in the log on the website. I have tried to give this information and I repeat it now. There have been two meetings—on 4 November and 18 November. The details are set out on the website.

[Lord Barnett]

I must tell the noble Lord that I may not be doing my job properly, but I do not spend my life going through Treasury or OBR websites. Perhaps I should; it might make me better informed. I would not go “over the top”, as the noble Baroness described me. I doubt it. It might make me even more so. The noble Lord, Lord Sassoon, has now told us information that I confess I had not read on the website. It may be that every other Member of the Committee has read it on the website.

[Lord Peston]

I did not.

[Lord Barnett]

I am sure that the noble Baroness, Lady Noakes, read the website carefully. She did not quote it to me, but I now have the figures, which are a bit disturbing. I will read them with greater care later. Once again, Robert Chote is doing the job that the OBR is being set up to do—to tell the world how good the Treasury is. I had a little experience at the Treasury for five years. Officials are excellent, in my experience. I can see them over there, but they are not nodding, because they would not do that. The noble Lord, Lord Sassoon, can nod on their behalf. He is quite right; they are very good. I always found them to be excellent. However, that does not make the Chancellor right in saying all the things he says, either in introducing the comprehensive spending review or at any other time. I confess not only to being not over the top but to being too moderate in my remarks. I am very concerned.

[The Deputy Chairman of Committees]

My Lords, a Division is taking place. Does the noble Lord feel that he can wind up in 30 seconds, in which case I am sure he can carry on?

[Lord Barnett]

I beg leave to withdraw the amendment.

Amendment 25 withdrawn.