Office for Budget Responsibility

Lord Barnett Excerpts

Wednesday 6th July 2011 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government what further discussions they have had with the Office for Budget Responsibility regarding their central growth forecast for 2011.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, there is a memorandum of understanding which sets out a framework for co-operation between the Office for Budgetary Responsibility and HM Treasury. It states that they are expected to meet regularly to scrutinise forecasting assumptions. The OBR will publish a list of contacts with Ministers, special advisers and their private offices shortly after each autumn and Budget forecast. All credible forecasters are clear that the UK economic recovery will continue. The OBR will publish a new economic forecast later this year.

[Lord Barnett]

My Lords, I thank the Minister. Paragraph 3.6 of the OBR’s economic and fiscal outlook states that,

“there is considerable uncertainty around all the forecast judgements we make”.

I know that the Chancellor cannot introduce a plan B because it would kill plan A. When the BBC last week gave him an alternative, the Chancellor said that “flexibility” was written into his plan. What does he mean by flexibility? Is it the Treasury’s special reserve? If so, can he remind us how much is in it and how much is left after expenditure on the MoD, Libya and other departments? Is that what he meant? If so, can he exceed it with the permission of the House of Commons? Therefore, is that a sort of plan B?

[Lord Sassoon]

I would love to be able to tell noble Lords what was in the mind of Robert Peston or whoever was being quoted, because it certainly was not the Chancellor. It was somebody interpreting the mind of the Chancellor.

Of course, there are certain ways in which there is flexibility within the numbers, because the automatic stabilisers operate as the economy fluctuates. In that sense there is flexibility, but I have no idea otherwise what that particular commentator had in mind. It certainly had nothing to do with use of the reserve.