Budget Responsibility and National Audit Bill [HL]

Lord Newby Excerpts

Monday 29th November 2010 Grand Committee

[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.

--- Later in debate ---

[Lord Barnett]

My Lords, I hope this group will last only a very few minutes and that the Minister will accept the amendments. As we debated this afternoon on the Floor of the House, this is not a money Bill. I do not think the Speaker in any way thought about certifying it as a money Bill. Every Bill costs a few bob, but in no way could this be described as a money Bill. I assume that the Minister is going to say that he will accept the amendments. It is quite straightforward: there is no reason whatever why the House of Lords and its Economic Affairs Committee should not be involved in looking at what the OBR is saying. When I was on the Economic Affairs Committee and the Select Committee on the Monetary Policy Committee, my noble friend Lord Peston was in the chair, and we had the Governor of the Bank of England, the Chancellor and almost everybody else there. I can think of no good reason for the Minister having the word “resist”. I hope he will not use it because there is no reason to refuse these amendments. I hope he will support them.

[Lord Newby]

I rise to support the noble Lord, Lord Barnett, and possibly to bring to the Minister’s attention the fact that when the Monetary Policy Committee was established, a specific committee of your Lordships’ House was established for the sole purpose of reviewing the way in which that committee worked. There can be no issue of propriety about whether the House of Lords should have a role here. This raises a broader question about the coalition’s view of the role of the House of Lords on financial and economic matters. The previous Government and the former Prime Minister were almost implacably opposed to this House having anything to do with economic affairs, which I thought was a pity because there is clearly expertise here. Last week, we discussed ways in which the House of Lords might play a part in tax policy-making. That would be very sensible as well and it would form part of the piece, along with these amendments, under which the House of Lords would have an enhanced role.

[Baroness Noakes]

My Lords, if this document is really about fiscal policy and the fiscal mandate only, it is entirely logical that the approval of the charter and the other matters referred to in the other amendments in this group should be for the other place. If it were widened to include economic policy, which most of us here, with the exception of my noble friend, favour, then it would be entirely logical for it to be widened to include the House of Lords, but I believe that, as currently drafted, it is entirely logical to confine it to the other place.

--- Later in debate ---

[Lord Newby]

I almost agree with the noble Lord, Lord Turnbull, but it would strike me as slightly odd if at this stage, when the office is being established as the definitive independent forecaster on which the Government are going to base their actions, the Government retained the right the disagree with the OBR and carry on as though it did not exist. In terms of the central forecast, it would be a bit like having a dog and barking yourself. Perhaps the Minister can give us an example of a circumstance in which the Government envisage they might invoke that right.

[Baroness Noakes]

I do not quite agree with my noble friend Lord Higgins on this. In particular, the prohibition in Amendment 7 on the Treasury making economic forecasts does not appear realistic. I know that we are concerned that there will be a recreation of the functionality that has now been transferred from the Treasury to the OBR, but the plain fact is that the Treasury has to consider whether to accept the forecasts. It may wish to disagree and, if it cannot do its own forecasts, how is it going to deal with that position? This is a very difficult area but I do not think that it would be right to legislate in this way.

My noble friend’s Amendment 38 made me look at Clause 8. This is a small point but I should be grateful for my noble friend’s comments. He suggested that the OBR need not send a copy of its report to the Treasury. Can he explain how this quango lays a document before Parliament? Does it not normally go through a government department to Parliament? It was always my understanding that documents were laid via Ministers, although I may be wrong.