Budget Responsibility and National Audit Bill [HL]

Lord Eatwell Excerpts

Monday 29th November 2010 Grand Committee

Moved by

[Lord Eatwell]

1: Clause 1, page 1, line 5, after “fiscal” insert “and economic”

[Lord Eatwell]

My Lords, before we start our discussion of the Bill, let me say how grateful I am to the Government Chief Whip for postponing the beginning of this Grand Committee until now. It would have been impossible to have prepared a reaction to the Autumn Statement in time without her indulgence, for which I am most grateful.

There is an inconsistency in the Bill, which Amendments 1, 3 and 4 in my name are designed to correct. The inconsistency derives from the fact that the charter, which is referred to in Clause 1, is supposed to provide guidance as to the main duties outlined in Clause 4. Clause 4 lists those duties as sustainability, fiscal forecasts and economic forecasts, yet Clause 1 calls for guidance only on fiscal and sustainability issues; it makes no mention of economic issues. That is the core inconsistency.

The issue to be addressed is rather more than formal, as sustainability issues and, indeed, fiscal balance are not independent of economic performance. For example, it is quite possible to have a sustainable very small state or a sustainable very large state. Equally, it is possible to have a sustainable stagnant economy and a sustainable dynamic economy; in fact, I am sure that that is what the Minister would claim the coalition is creating. More specifically, different assumptions about the performance of the world economy as a whole will impact on the fiscal forecast and on any concept of sustainability. If we are to provide consistent advice in the charter to the Office for Budget Responsibility under its duties in Clause 4, the amendments in my name, which would introduce the word “economic” into the clauses, should be accepted.

Moreover, the charter introduces a fourth element, which is the promotion of “intergenerational fairness”. It would be helpful if the Minister could, when he sums up, define exactly what this means. Perhaps I could help by setting out what it cannot mean. It cannot have anything to do with the fiscal balance as such, as the size of a deficit defines the content of redistribution between different groups of current and future generations of UK citizens—essentially, redistribution between taxpayers and lenders. It certainly has nothing whatever to do with redistribution between generations. What it can mean is that there is some impact on investment and the growth path of the economy, but that is very much economic policy—the very dimension that has been left out of Clause 1. That is why I want to introduce the word “economic” into Clause 1. I believe that this is exactly the point that my noble friends Lord Peston and Lord Barnett make in their amendment in this group. To make this entire story consistent across Clauses 1 and 4 and the reference to the promotion of intergenerational fairness, it seems imperative to introduce the word “economic” in the places suggested in the amendments. I beg to move.

[Lord Higgins]

I am having some difficulty in tracking down the reference to intergenerational transfers. Am I right in thinking that the wrong line is given in the noble Lord’s first amendment?

[Lord Eatwell]

It is in the charter, which is referred to in Clause 1, and I shall attempt to find it for the noble Lord. I have a fresh copy here rather than my marked-up copy. Paragraph 3.1 of the draft charter states that an objective is to “promote intergenerational fairness”.

[Lord Peston]

My Lords, I shall speak specifically to the amendment in the name of my noble friend and myself, but what I say will also be very relevant to the other three amendments in the group.

Overwhelmingly, economists—I certainly include myself here—regard budget responsibility, or more generally financial soundness, as desirable, but within serious economics that desirability would be a means and not an end in itself. The end that one would have in mind in asking, “Why financial soundness?”, or, “Why financial responsibility?”, is the behaviour of the real economy. I know nothing in economics that tells anybody anything other than that the behaviour of the real economy is what we should be concentrating on. That is the specific purpose of my noble friend’s amendment and it is quite specifically the purpose of Amendment 2.

Noble Lords whose memories go back a long way will realise that the amendment in my name and that of my noble friend Lord Barnett is simply an echo or, perhaps more than that, more or less a restatement of Section 11 of the Bank of England Act 1998, which set up the Monetary Policy Committee of the Bank of England. Essentially, it is derived from the very famous subject of that section. We wish precisely that to appear in this Bill. Indeed, it would be absolutely absurd for the Monetary Policy Committee of the Bank of England to take account of Her Majesty’s Government’s economic policy for growth and employment—the real economy—and for the OBR not to do so. It is difficult to think that anyone could rationally have talked themselves into that position and I cannot believe that that is the position that the Government want.

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[Lord Eatwell]

I introduced the charter into this in the sense that Clause 1 refers to the charter for budget responsibility and we have the draft before us. I do not think that it will be subject to parliamentary scrutiny. It will be placed before Parliament but will not be subject to scrutiny. I was therefore taking advantage of the Committee because, as the draft charter has been published, we have the opportunity to discuss it.

[Lord Newby]

Just as a point of clarification for the noble Lord, Lord Eatwell, Clause 1(7) states:

“The Charter (or the modified Charter) does not come into force until it has been approved by a resolution of the House of Commons”,

so it has at least vestigial parliamentary scrutiny.

[Lord Sassoon]

I shall explain the way I see it and deal with the things that may be relevant this afternoon. We are talking about the charter, which we have produced in draft to aid scrutiny of the Bill. I hope that people will think that that is helpful. There were, quite rightly, demands to see it, which is why we produced it a week ahead of the Committee stage. It will be formally laid in another place following Royal Assent to the Bill, so it necessarily remains in draft until that point. We will listen carefully and, if there are issues that touch on the charter that could in our judgment improve the drafting, we will take them on board.

The relevance of the charter is how it fits with the architecture relating to the responsibilities of the OBR. We also have to remember that certain things in the charter do not directly relate to the fiscal mandate but are background information to it. I take the point that we should not get too far into discussions of irrelevant things, but intergenerational fairness is part of the fiscal objective that is in there as background information to the fiscal mandate, which comes in the subsequent paragraphs and links directly to the responsibilities of the Office for Budget Responsibility. The noble Lord, Lord Eatwell, is correct that intergenerational fairness can take on different definitions, but here we are using the term in a fiscal context to mean that future generations should not be burdened by deficits or the cost of servicing debts accumulated to pay for consumption by current or previous generations.

[Lord Eatwell]

That was the point that I was trying to make in a speech that I made in the House the other day. If there is a deficit and you are paying interest on that deficit, it sounds like a burden, but you are paying it to the people who lent you the money and they are predominantly other British citizens, so all that you are doing is transferring part of national product from one lot of British citizens—the taxpayers—to another lot of British citizens, the lenders. You are not actually creating an intergenerational transfer. An intergenerational transfer can be made, as the noble Lord, Lord Higgins, pointed out quite accurately, by changing the volume of investment in any one year, which changes the growth rate of the economy and affects future income per head. A fiscal measure alone is not an intergenerational transfer.

[Lord Sassoon]

I am grateful to the noble Lord, Lord Eatwell, for his explanation of how intergenerational transfers work. I am not sure what difference it makes to the analysis but, for better or worse, it is not the case that substantially all of the debt—he did not use that term—is held by UK citizens or bodies. The burden of debt that we have is well spread among international holders as well.

We should not get too far side-tracked. Intergenerational fairness is an important point, but the objectives for fiscal policy are, as I say, the background in the charter. People can see the context in which the critical elements of the Treasury mandate are set out in paragraphs 3.2 and 3.3 of the draft charter. Those are the two elements that bite particularly on the mandate of the OBR. The full objectives for fiscal policy include supporting and improving the effectiveness of monetary policy, which relates to the independent operations of the Monetary Policy Committee of the Bank of England. We must remember how the architecture fits together.

Let me say a bit more about the background to the charter. Its purpose is to improve the transparency of the fiscal policy framework and, within that, to include the guidance on the role of the OBR within the broader framework. The charter is concerned with fiscal policy and includes the Treasury mandate for fiscal policy. It was important to have that document for people to see ahead of this discussion. The fiscal policy framework is part of the Government’s overall approach to economic policy. Indeed, given the fiscal situation that the Government inherited, the coalition made it clear on its formation that reducing the budget deficit and setting public finances on a sustainable path to build confidence and to create the conditions for economic recovery were the overriding priority.

The noble Lord’s first amendment would require that the charter be expanded to relate to overall economic policy. Amendments 2 and 3 concern the addition of economic policy objectives, which means that we need to be clear about them. They are set out in the paper The Path to Strong, Sustainable and Balanced Growth, which was published today. To achieve the objective of delivering growth that is consistent with values of freedom, fairness and responsibility and to improve the well-being of the British people, the Government must employ all their macroeconomic and microeconomic policy tools and frameworks. I mentioned that monetary policy is operated by the independent Monetary Policy Committee of the Bank of England. That provides one set of tools that play a role in meeting the Government’s economic policy objectives.

It may be helpful to remind the Committee that the Bank of England Act 1998 provides:

“In relation to monetary policy, the objectives of the Bank of England shall be … to maintain price stability, and … subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment”.

I know that comments have been made about that, but it is probably not right this afternoon to go into the question of how all this works. The point is that the Bank of England Act does not set out the Government’s economic policy objectives. That is not what we are trying to inject—nor should we—into the legislation that governs the operation of the Office for Budget Responsibility.

Financial stability policies are similarly crucial to delivering the overall economic policy objective. The Government have taken steps to reform the financial stability framework, providing the Bank of England with control of macroprudential regulation and oversight of microprudential regulation. Also, microeconomic policies create the conditions for growth and they, too, are essential. Fiscal policy represents another crucial set of tools that the Government use to achieve the overall policy objectives. The charter is the place where, for the first time, we have a transparent exposition of the framework. However, the charter is not itself the framework. It replaces the code for fiscal stability, which was part of the previous fiscal framework. Replacing that code was recommended by the Treasury Select Committee. The code did not contain economic objectives. Therefore, the charter remains a document relating to fiscal policy and should not be expanded to contain overall economic objectives.

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[Lord Sassoon]

We should not prolong this for too long—although I am happy to. If I feel, having heard the arguments, that I should take the amendments away or that I should accept them, I will say that. I will try to tell noble Lords what I believe, but I do not believe that these amendments have any merit. If there are amendments that I believe have merit, I will endeavour to make that abundantly clear.

[Lord Eatwell]

My Lords, I realise that this is the first time that the Minister has had to face a Grand Committee and perhaps he will be better prepared next time we meet. However, as to these amendments, I have just four points to make in response to our debate.

The first is purely technical, in that the Bill as drafted is inconsistent. Clause 6(1)(a) states that the charter for budget responsibility may include guidance about the,

“assessment or analysis required to be prepared under subsection (3) or (4) of”,

Clause 4. However, subsection (3) of that clause refers to “fiscal and economic forecasts”. The charter is therefore required by Clause 6 to provide guidance on economic forecasts. The Bill is inconsistent if “economic” is not included in Clause 1. It is not at all clear what the Government really intend to do. It is only clarity that I seek here. As noble Lords have said, there is no great economic or political point behind all this. Actually, there is a good economic point, but there is no great political point. The amendment aims purely at making the Bill consistent.

My second point is that, in its consideration of fiscal policy, the OBR has to have some guidance as to the Government’s overall economic policy. Otherwise, it is not possible for the OBR to make a coherent assessment. If you do not believe me, just look at this document, the OBR’s Economic and Fiscal Outlook, which is exactly that. It is a very fine document, if I may say so. For example, the delayed rebalancing scenario and the weakening demand scenario are discussed in the document. Why is that? It is because the OBR is linking different economic performance to the consequences for fiscal performance. That is exactly what this document does.

I accept the point made by the noble Lord, Lord Turnbull, that we are not trying to set out some broad economic assessment committee, but, as another gloomy Cambridge economist, he should recognise that there is a clear interrelationship between economic and fiscal policy. The intention of these amendments was simply to capture that relationship. If this could be done in a better way and could make the Bill consistent, I would be very happy. If the Minister says, “We’ll think about this and see if we can achieve that in a better way”, so that this document does not trespass beyond the mandate given by the Bill to the OBR, I would be very happy.

I turn to Amendment 4. The Minister asked why the fiscal mandate should require an economic dimension. Here, there is a bit of economics involved, because there is a view among some economists that the economy has a normal rate of activity and a normal rate of employment to which it persistently returns having moved away from them because of some economic shock. It is clear that that is not the view of the economists who wrote this document, otherwise they would not have written such scenarios. It recalls the remark of the Nobel Prize-winning economist, Professor Robert Solow, that this view of policy was a vision in a dream. The fiscal mandate requires some economic dimension, because you could have different results depending on the nature of your economic policy—they are interlinked. That is all that I am trying to capture in my amendments—nothing more and nothing less.

I say in response to the noble Lord, Lord Oakeshott, that I do not think that the drafters of the charter know what “intergenerational fairness” means or what the economics of intergenerational transfers consist of. The noble Lord, Lord Higgins, got it exactly right: it is about changing the rate of investment in the economy. It has nothing to do with fiscal policy as such and it should not be in the charter. The suggestion of the noble Lord, Lord Oakeshott, that the word “intergenerational” be removed would provide some validity to a sentence that currently has none.

I am afraid that I must reflect the general opinion around the Grand Committee that these points have not been answered; indeed, I am not clear that they have been understood. Accordingly, I shall need to return to them on Report, by which time some more careful thinking about them will hopefully have been done.

[Lord Sassoon]

We have gone into territory in this discussion that is well beyond the consistency of the Bill. Consistency is important and we of course want to get it right. I see no difficulty in having consideration of an economic forecast, as provided for by Clause 4(3)(a), without there being a government statement in the charter on broader economic policy. I accept that there is a critical need for the OBR to make an economic forecast to underpin its assessment of the fiscal mandate, but I am still struggling to grasp the point on consistency.

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[Lord Eatwell]

Perhaps I could help the Minister. Clause 6(1)(a) requires the charter for budget responsibility to give guidance on how to pair subsections (3) or (4) of Clause 4. Subsection (3)(a) of that clause refers to “fiscal and economic”. The charter must therefore include guidance on “economic”. At the moment, it does not.

[Lord Sassoon]

We are possibly getting this a little confused. Of course, in order to make an economic forecast, it may be appropriate for the charter to give, as it does in paragraph 4.10, guidance on economic forecasts, but that is very different from setting out in the charter the Government’s broad economic policy objectives. It is unnecessary, distracting and inappropriate for the charter to go into the broad economic policy objectives of the Government. However, I quite see that it is appropriate for the charter to go into questions that touch on economic forecasting. Indeed, it already does that, which is completely compatible with the terms of the Bill.

I will of course look again if it is a narrow consistency point. However, in trying to make a consistency point on what does not, from my reading of the Bill, need to be tidied up, the amendment opens up a much bigger swathe of territory, as I am sure the noble Lord is well aware, by including in Clause 1 broad questions of economic policy objectives. Yes, it is appropriate to talk about economic forecasting guidance in the charter—indeed, it is there—but its being there is much more specific and appropriate than opening up the charter to economic policy which, I would suggest, is simply not relevant. We will have a look again at the consistency question. My reading of it is that we do not have an issue there, but I will look at it again.

On the intergenerational question, I made the point that I am listening to what people say. I do not pretend for one minute to be an expert on the different interpretations and consequences of intergenerational fairness, but I will take back the suggestions that we have had on that from both sides of the Committee. Again, that is not something which, if there was any merit in changing the charter’s wording, needs any amendment to Clause 1 of the sort that we are discussing.

[Lord Eatwell]

My Lords, I am grateful to the noble Lord but there is a consistency point here, because the issue of timing the forecast is qualified by, “in particular”. The general role of Clause 6(1) is to provide,

“guidance … about how it should perform its duty under section 4”.

Those duties under Clause 4 include economic forecasts. I repeat that I have no intention of trying to create some general economic assessment. My main point is: economic and fiscal policy are intimately and necessarily linked. I was trying to capture that linkage in my amendment. I am quite willing to believe that my amendments do not capture it successfully, but it is capturing that point that I am looking for. I hope that, when we return to this on Report, that point will be appreciated and that the Government will be able to reply in some positive way about their response to this particular argument. In the mean time, I formally beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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[Lord Oakeshott of Seagrove Bay]

I rise briefly strongly to support the amendment. The noble Lord, Lord Sassoon, might be pleased to know that I had the pleasure of serving under the noble Lord, Lord Peston, for several years on the Economic Affairs Committee and sub-committee and he was as peppery then as he is now, so it is nothing personal. It was a worthwhile committee. You need only look round this Room to see the range of expertise and economic distinction available in this House. I remember that there was a former Chancellor of the Exchequer and very distinguished economists of all sorts. I endorse the remarks of the noble Lord, Lord Myners, and thank him for engaging more seriously with this House as a Treasury Minister than we have had in the past. That committee was excellent, and it could do nothing but add to the quality of debate and economic governance in this country to pass this amendment.

[Lord Eatwell]

I have a couple of comments to make on the amendments. With respect to the engagement of my noble friend Lord Myners in the House, that was increased by the noble Baroness, Lady Noakes, from the other side, who kept him working hard.

On the remarks with respect to the charter, there is a good point. The Economic Affairs Committee of your Lordships’ House takes a long-run view on fiscal affairs, which is what you want to get into this charter. It is about the whole philosophy that the Government have talked about. In the examination of the Finance Bill by the sub-committee of the Economic Affairs Committee, there is tremendous expertise considering technical aspects of fiscal policy. To quote another example of involvement by your Lordships’ House, I had the privilege of serving on the pre-legislative committee on the Financial Services and Markets Bill, which was a committee of both Houses. It enormously improved the Bill before it got to the legislative stage and saved a lot of time in the House.

With respect to the charter, my noble friends and the noble Lord, Lord Higgins, have hit on an absolutely central and valid point. On the amendment referring to appointments, it might be a little cumbersome unless we put the two committees together. What if the two committees disagreed? It would all become rather messy, so I am rather agnostic on that. The key amendment is Amendment 35. My noble friends have spotted an obvious oversight in the drafting of Schedule 1. Of course, the OBR should provide evidence to the relevant committees of both Houses. I am referring to evidence that is within the terms of its remit as defined in the Bill. If it is independent, it should be shown to be such by providing evidence in that way. We ought to have the word “reasonable” here so that reasonable requests for attendance can be made. After all, the OBR is rather small, and it cannot be attending things all the time. Whether the drafting is appropriate, I am not sure, but it is an entirely sensible point that when necessary the OBR should appear before committees in your Lordships’ House.

[Lord Brooke of Sutton Mandeville]

My Lords, I apologise to the Committee if I have acted improperly by rising after the noble Lord, Lord Eatwell. I tried before.

The noble Lord, Lord Higgins, and I at different stages in our lives were Treasury Ministers in different Administrations under different Prime Ministers. Both of us served for several years. Before that time, I had the privilege of serving as a Back-Bench Member on the Finance Bill when the noble Lord, Lord Barnett, was Chief Secretary. There is symmetry here with my first experience of the noble Lord as a tutor on the Finance Bill because he was extremely scathing about the first group of amendments that I tabled. My noble friend Lord Lawson of Blaby had to rescue me and explain that there was more to my amendments than the noble Lord, Lord Barnett, was suggesting. However, the reason why there is symmetry with this moment in the Grand Committee’s affairs is that the second time I moved amendments, which was the very next group, the noble Lord accepted them with enthusiasm, which was extremely good for a young pupil. We have just experienced everyone being mildly upset with my noble friend the Minister, but it is just possible that everything will be set right by what he has to say.

Two of my noble friends on this Grand Committee, as Conservative Peers, have taken opposite views of these amendments. Obviously there are things to be said on either side. I am going to extend the Minister the courtesy of listening to him, not least because that also seems to me one of the purposes of Grand Committee.

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[Lord Barnett]

I do not agree with the noble Lord, Lord Higgins, on Amendment 21 because I do not see why the Treasury and the Bank of England should necessarily agree. Perhaps I may make one or two points about the previous replies that we have heard from the noble Lord, Lord Sassoon. He said that amendments are unnecessary because the powers are already in the Bill. Although they are unnecessary, equally one could say that accepting the amendments would do no harm to the Bill, as they would only be repeating what is in the Bill. He also made the case for reserving the power for the Commons—at least he has given us a reason for rejecting an amendment. I disagree with him. I reserve the right to consider the matter on Report because I see no reason why the House of Lords should not consider these matters.

[Lord Eatwell]

The amendments raise in different ways an important issue in relation to the draft charter. The noble Lord, Lord Turnbull, drew attention to paragraph 3.7, which states:

“The Treasury will continue to maintain the necessary analytical and macroeconomic expertise to provide on-going advice to the Government”.

That sounds perfectly sensible. However, it goes to the heart of the rather grey area of what OBR independence means that the same paragraph should declare:

“The Government intends to adopt the OBR’s fiscal and economic forecasts as the official forecast for the Budget Report”.

Indeed, according to the draft charter:

“The OBR’s forecasts are essential inputs to the Government’s ongoing policy-making”.

And yet, the Government retain the right to disagree. I can see that the Government can maintain the right to disagree with anybody, especially with an independent body—which the OBR is supposed to be—but I do not then see how they can adopt the OBR’s fiscal and economic forecasts as the official forecast for the Budget report. They cannot adopt something with which they disagree as the official forecast; it just does not work. They cannot have it both ways; it is nonsensical.

It is obvious that the OBR will need to work closely with staff at the Treasury and other government departments in developing costings. That is why we should expect consistency between the OBR’s forecasts and those used by the Treasury—after all, they have worked together to bring them to fruition. They are the crucial decision variables. In his foreword to the forecast document that we discussed in the Chamber today, Robert Chote thanks government departments for providing the decision variables which have gone into it. The OBR is in essence a rather peculiar body. It is not really a non-departmental public body; it is a Treasury non-departmental public body which plays a crucial role in the development of policy. As paragraph 3.7 of the charter precisely states, it is the “official forecast”. I do not understand how the Government can disagree with the official forecast. They can disagree with the OBR, for example, when it takes a punt in describing some scenarios, as it does in the charter, but how can they disagree with the official forecast?

I cannot see why there is a need to require consistency between forecasts put forward by the Treasury and those put forward by the Bank of England. The noble Lord, Lord Turnbull, referred to competition between forecasts. I would take a rather different view and say that to require consistency would endow forecasts with spurious precision, whereas there are number of judgments in forecasts which are worth discussing in the context of the formation of economic policy.

The underlying point is that the OBR is distanced from official policy-making to a degree that was not possible in the past. That is an achievement of which this Government should be proud. But to describe the OBR as “independent” is an exaggeration. It is useful for propaganda purposes, but it is not credible to grown-ups, because it has to be involved in policy-making. There is a degree of independent methodology but not really of judgment, which is a different dimension. The Minister has to answer the following question: how can there be an official forecast with which the Government then disagree?

[Lord Sassoon]

Let me start with the easy end of this. Some important points were raised, not least the crucial point raised by the noble Lord, Lord Eatwell. I am very grateful to the noble Lord, Lord Higgins, for trying to save postage—we do look at every bit of possible wastage around government. However, on the point that my noble friend Lady Noakes raised, the construct here is that in Clause 8(2) the OBR is required to lay its reports before Parliament, and that means directly. So it is probably worth the price of a postage stamp or somebody pressing an electronic button, or whatever one does these days, to ensure that, given that this is an independent body, it does not forget to send a courier round to the Treasury as well. That is probably a failsafe that we should have in there.

On the nub of the questions around the linkage of the forecast to the Treasury and the linkage between the forecasts of the OBR and the MPC, the noble Lord, Lord Turnbull, kindly drew our attention to paragraph 3.7 of the charter. That is the critical one. In the first sentence it says:

“The Government intends to adopt the OBR’s fiscal and economic forecasts as the official forecast for the Budget Report”.

That is the Government’s intention, but the charter continues by saying that the Government,

“retains the right to disagree with the OBR's forecasts”.

[Lord Eatwell]

Will the Minister clarify this for me? Is he saying that while the Government intend to accept the OBR’s forecast, they may actually reject it? Is that what he is saying here?

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[Lord Eatwell]

Just to clarify, the point that I was trying to make was that the charter states that the OBR plays an important role in policy-making by providing forecasts and other estimates. In other words, those forecasts and estimates are part of the toolkit for making policy, but the OBR does not itself make policy decisions. That is what I meant to say.

[Lord Sassoon]

I am grateful that we have got that clearer. I should move on briefly to the question of whether it would be appropriate to align the forecasts of the OBR with those of the Monetary Policy Committee. Again, I am very much with the analysis of the noble Lord, Lord Turnbull, on this. It is worth mentioning what Robert Chote, the OBR chair, said on this subject. He made it clear during the hearings of the Treasury Select Committee that, as he sees it, the OBR and the Bank of England are independent bodies and each needs to make its own judgments for its own reasons. I completely agree, but he went on to say that he recognised that it would be valuable for the Bank of England and the OBR to have regular exchanges of views about areas of common interest. I expect that the OBR will exchange views with a range of organisations and individuals and, when introducing its document today, the OBR made it clear that in this first document it had met a range of organisations and individuals. In that context, of course, I would expect the OBR regularly to talk to the Bank of England, and each would be very interested in the other’s approach to these matters. However, it is critical that at the end of the day the OBR acts independently of the Monetary Policy Committee, of the Treasury and of all these other fine forecasting bodies.

These are important matters, and I hope that I have clarified the intention of the legislation in these areas. However, I believe, as do the majority of noble Lords who have spoken, that the OBR’s forecasts must ultimately be independent. Therefore, I ask my noble friend to withdraw his amendment.