Office for Budget Responsibility

Lord Desai Excerpts

Monday 14th June 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Higgins for his questions. Funding the deficit will be critical. As I pointed out, the level of borrowing will continue to rise throughout the forecast period to £74.4 billion in public sector net debt terms in 2014-15. The scale of the task should not be underestimated. What is critical to funding the deficit in a safe way is maintaining the UK’s credit rating and central to that is having a credible plan. The foundation stone of that credible plan is the revelation today of the true state of the nation’s finances, with some decent forecasts five years out on which all else, including the funding plan, can be built.

My noble friend’s second question was about the mechanics of selling debt. The Debt Management Office operates under a clear and transparent plan, which sets out exactly what the Treasury requires it to raise in the markets each year, consistent with the Budget forecasts. So far this year, the office has carried out that plan successfully and I have every expectation that it will continue to do so.

[Lord Desai]

My Lords, if the Office for Budget Responsibility is to be independent, it is essential that its report should not be made a political football—we do not discuss the MPC’s report in the manner in which we discuss the OBR’s report. I particularly welcome the fact that the OBR has not only a fan diagram for the growth rate but one for public sector net borrowing. However, it would have been better if the report had presented a range of numbers for the debt and the deficit, as well as for growth. If growth is uncertain, as it surely is, especially as you go forward, all the numbers on the deficit and the debt are equally uncertain. I am speaking neither for nor against what the Government intend to do but, if we set up a specialist agency, it should perform its function in a way that illuminates the uncertainty surrounding public policy. That uncertainty will help the Minister’s right honourable friend the Chancellor as well as everyone else, as it is important not to pretend that the numbers for 2014-25 are hard and fast, as the noble Lord wishes to do.

[Lord Sassoon]

My Lords, the noble Lord, Lord Desai, has made an important point by drawing attention to the huge illumination, to use his word, of the public finances and the forecast going forward. He makes some interesting technical points about how some of the data should be forecast. All I can say is that, if Sir Alan Budd is not listening now, I will take back the noble Lord’s points and relay them to him, as it is for him to decide how he lays out his forecasts in future.