Budget Responsibility and National Audit Bill [HL]

Lord Peston Excerpts

Monday 29th November 2010 Grand Committee

[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.

--- Later in debate ---

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

My Lords, since one or two noble Lords have joined us since the beginning of our sitting, perhaps I should repeat in essence what the noble Lord, Lord Eatwell, said about why we started rather later than anticipated. As he said, a request from the Opposition that Grand Committee should begin after the Statement in the Chamber to allow them to prepare a response was agreed to through the usual channels. I apologise if not all noble Lords were aware of the change of plan. I think that the Chief Whip announced it to the whole House following Oral Questions, but perhaps not everybody was there.

Perhaps I should go back to the Government’s overall approach to the charter as background to Amendments 1 to 4, because they all touch on the addition of economic objectives.

[Lord Peston]

I may implicitly be criticising my noble friend Lord Eatwell in saying that I was not under the impression that the charter was part of what we are dealing with here. There is no specific amendment at this point about it. I want to talk about the charter, but I do not want to be forced to do it now just because it has been mentioned. Apart from the fact that the economics of intergenerational fairness, as my noble friend will know as well as I do, are so complex that I doubt that we would make much progress with the matter here, I am a little disturbed that we are suddenly going off in a direction that does not relate to the three amendments before us.

--- Later in debate ---

[Baroness Noakes]

I have been listening to what my noble friend has been saying. He seems to be saying that we cannot have the words relating to economic policy because we want this to relate to fiscal policy only. If we step back, it seems to me that the economic policy of the Government ought to be as capable as the fiscal policy of being subjected to the transparency objectives that the Government have set out. Indeed, one of the things that the Government are to be genuinely lauded on is their approach to transparency, not only in relation to the Office for Budget Responsibility but also, for example, in relation to the publication of expenditure amounts over £25,000.

Transparency has been one of the watchwords of our Government, but we come to the Bill and, for some reason, we are saying that the Office for Budget Responsibility will be required to look at our fiscal policy mandate only, not at our economic policy objectives. It seems to me that there is a transparency deficit if we are saying that we have to exclude economic policy, as it seems directly related to what the OBR will be doing. The only reason that my noble friend has given is that the Government have decided not to include it. Like other noble Lords, I am struggling for the rationale for excluding the Government’s economic policy.

[Lord Peston]

Before the Minister rises, I shall raise a point of order. I was under the impression that, when we meet in Grand Committee, we do not divide the Committee at all, so withdrawing amendments is totally irrelevant. I have no intention of withdrawing my amendments, but I am not going to divide on them. Rather like the noble Baroness, Lady Noakes, I want to hear the Minister give some reasoned answers including that he would like to think about it a bit more. He does not have to agree with us, but I thought that the whole point of meeting in Grand Committee was to behave non-politically, if I may say so, and co-operatively to clarify the Bill in order to make progress when we go back into the Chamber, when, no doubt, we will divide the House. I am beginning to get very irritated with the repetition of “withdraw the amendment” because I do not think that we are here for that purpose. We may withdraw it formally, but that is not the point.

[Lord Myners]

I quite recently sat in the chair in which the Minister is sitting and my experience is that the favoured word that comes from officials at Committee stage is “resist”. As my noble friend Lord Peston has pointed out, there is no need to resist. The purpose of this session is for the Minister to listen in a considered way to points made from the coalition Benches and the opposition Benches and to do us the courtesy of giving us a fair and reasoned explanation. The Minister has not done that. In fact, he has fallen back into the trap of the way in which he handles Written Questions, which is, on the whole, by completely ignoring the Question in the Answer that he gives. I plead that he seeks to answer the questions that are reflected in the amendments and, in particular, the observation from the noble Lord, Lord Oakeshott, that intergenerational is a specified fairness as opposed to a general commitment to fairness that I understood the coalition to support.

--- Later in debate ---

[Lord Sassoon]

Yes, I am rejecting it. I am nervous of getting another lecture of the formalities of how we operate in Grand Committee. I had understood that we went through the formality of my doing the proposers of amendments the courtesy of formally asking them whether they will withdraw. If that is not the process, somebody will no doubt advise me. While the amendment has led to some interesting observations about the precise wording of the fiscal policy mandate and other aspects of the charter, in relation to the basic question of whether the Bill—and, by implication, the OBR’s work—should be opened up to a much wider commentary on the Government’s wider economic policy, I think absolutely not.

[Lord Peston]

There is no problem on the formalities. I am someone who has become a great advocate of Grand Committees as a way in which to deal with almost all our Bills, because I interpreted these Committees as a place where there could be a meeting of minds and where the Minister thought about things rather than writing down, as my noble friend Lord Myners said, “Reject, reject, reject”. If that is really what we are going to get, I do not know whether I personally will bother to waste my time with him. I regard it as outrageous if we are going to get rejection after rejection on the next amendment and the one after it. If that is going to be his style, because essentially that is what he has been told to do, why are we here?

[Baroness Noakes]

If the noble Lord does not ask for the amendment to be withdrawn, it will be agreed.

[Lord Peston]

It is not the formalities that I am talking about but the style.

[Lord Sassoon]

I am only a new boy to this process, but I cannot believe that the noble Lord, Lord Peston, is beginning to suggest that because a Bill comes into Grand Committee we have to accept everything that is proposed in amendments. Yes, there may be a run of amendments that I and the Government see little merit in but, if I see merit in them, I shall respond accordingly. There does not seem any point in my saying in a wishy-washy way that it is all rather splendid and that I shall go away and think about it when I think that the amendments do not have merit.

[Lord Peston]

The noble Lord misses my point, which is to ask whether this is how he is going to treat all the amendments. He knows how he is going to treat them because the documentation is sitting behind him at this very minute. If that is what is going to happen, except on trivial amendments, I repeat my question: why are we here? We expect the Government to say, as a minimum, on some of the substantive amendments, “The arguments have been good and we must go away and think about them”. If we are not going to get that on anything substantive, I repeat: why are we here?

[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.

--- Later in debate ---

[Lord Barnett]

When I was Chief Secretary to the Treasury, I could not care at all what the House of Lords was doing about Finance Bills, because it could not amend them. The noble Lord is quite right. My noble friend Lord Davies was my PPS for much of that time, and he knows that one place we did not care about was the House of Lords, because it could not amend our Bills.

[Lord Peston]

My Lords, perhaps I could take us back into the history of some of this. When what became the Bank of England Act 1998 appeared before us as a Bill, it had exactly the same fault that this Bill has in referring to the House of Commons as the House that would look at the Monetary Policy Committee of the Bank of England. My noble friend Lord Barnett and I moved an amendment in a slightly different form from this one. It said, “delete House of Commons and insert Parliament”, and it was accepted. I did not know it at the time but that happened over the dead body of my right honourable friend the former Prime Minister and Chancellor. However, that went in. At the same time, we set up the sub-committee of the Economic Affairs Committee to look at the Finance Bills. As my noble friend Lord Barnett pointed out, we cannot amend Finance Bills, but the Clerk of the Parliaments wrote a definitive statement, which I hope the Minister has read, saying that there was nothing in Erskine May to prevent the House of Lords looking at Finance Bills. The House cannot amend them, so we set up the sub-committee of the Economic Affairs Committee to look at them. The House of Lords can look at the substance of Finance Bills—it can look at any bit of them, according to the Clerk of the Parliaments. That is the definitive view. However, it can only draw attention to certain considerations; it cannot amend. So that is the history.

The amendment in this context would do exactly the same thing. It would enable the House of Lords, in various ways, to involve itself in scrutinising the Office for Budget Responsibility, as my noble friend Lord Myners pointed out, but we would have no powers to order it to do anything at all. That is essentially the position of the House of Lords in making a contribution.

I think I may be speaking only for myself when I say that I have a certain amour propre for your Lordships’ House. I have been here a long time. In my younger days when I was an LSE student, I would have abolished it like a shot. When I got here, one of my noble friends said, “You were hardly here a day when you sold out, and you just love the place”. That has been my position for 23 years. I take a certain offence from the fact that the Bill does not include the House of Lords.

--- Later in debate ---

[Lord Sassoon]

I had not intended to go down this interesting byway, but there has been a singlehanded contribution by the noble Lord, Lord Myners, to a considerable increase in the number of Written Questions. I am very happy to give him the figures, although I do not have them to hand. The number of Questions for Written Answer that the Treasury has had to deal with in the past six months has been significantly above the figure that previous Ministers in the Treasury—principally the noble Lord himself—have had to face. Nevertheless, our record on answering Questions on time has improved dramatically, and I am very happy to supply the noble Lord with the data. I am conscious that we are scheduled to go on for only another 35 minutes, so perhaps we should go back to the Bill. However, with regard to answering Treasury Questions, I am happy to discuss the relative performance of this Parliament compared with the previous one if it would interest the noble Lord, although I shall do so on another occasion.

We want plenty of scrutiny in this House. Clauses 1(4), 1(6), 2(3) and 8(2)(b) all confirm that the OBR’s reports will be presented to the whole of Parliament, not just to another place. I will return specifically to the question of committee scrutiny, but it is important that the Economic Affairs Committee of your Lordships’ House should have, and will have, responsibility for whatever it thinks appropriate in considering economic and fiscal issues, including those that relate to the OBR. However, I do not believe that any of the amendments in this group are necessary to achieve that.

When it comes to the relatively narrow but important point on formal approval of the charter, perhaps this will not surprise noble Lords, but I very much lean towards the argument of my noble friend Lady Noakes, because, critically, the charter contains the fiscal mandate, which I believe should be properly considered in another place, rather than here.

[Lord Peston]

Is the noble Lord actually saying that the definitive view of the Clerk of the Parliaments is mistaken? The Clerk of the Parliaments states categorically that this House can look at fiscal matters; end of story. Why is the Minister taking the view that he is taking?

[Lord Sassoon]

I have made it completely clear that I think it is absolutely appropriate and important that this House considers fiscal and economic matters; and within the framework of the Bill there are opportunities to which I have specifically drawn attention, whether they are on the Floor of the House or in the Economic Affairs Committee. I am not for one minute challenging the ruling, but that is a different proposition from the specific proposition that this House should be responsible for voting on the adoption of the charter, which has within it a specific mandate that is in the province of another place. That does not cut across the absolute right that this House must have, whether in full session or in a committee, to consider fiscal matters, and I have drawn attention to four references in the Bill where that is made completely clear. That is different from the question of the approval of and voting on the charter, which contains the mandate. That would be straying into territory into which this House should not stray, as my noble friend Lady Noakes has said. The same principle held under the previous fiscal policy framework. I am not saying that just because something was held previously it should necessarily mean that it should always be right, but it is important in this context to remind ourselves that the code for fiscal stability, which the charter replaces, was approved and subject to amendment through a resolution in another place; and the fiscal targets set through the fiscal responsibility—

--- Later in debate ---

[Lord Sassoon]

I am grateful to my noble friend. Clearly, whether it is comments from the EAC or the comments that we have already had today—we will no doubt get more as we consider this Bill—as any comments come in on the charter, we will listen. We are very willing to take them in any form. I am not sure whether there is a way to accommodate another formal sequencing of comments, but we are absolutely open to comments and the charter has already been out there in public for a week.

It is also worth mentioning that the Delegated Powers Committee of your Lordships’ House has looked at all the delegated powers in the Bill, including the provisions for the charter to be approved in another place. It is perhaps worth reminding ourselves that that committee said:

“There is a very full memorandum for the Committee from H.M. Treasury which covers all of the delegated legislative powers and also some other powers of an administrative character. There is nothing in the Bill to which the Committee wishes to draw the attention of the House”.

That is an important and considered view from our guardians of delegated powers. I take the point from the noble Lord, Lord Turnbull, that we should not lose any opportunity to get comments on the draft. I hope that I have reassured noble Lords that we absolutely see the Economic Affairs Committee and the House itself continuing to take a broad interest and to play a part in holding the Government and the OBR to account on this framework but, on this precise point, we must be careful not to stray over the line of constitutional propriety in a way that was certainly enshrined in the previous fiscal arrangements.

I should say one or two things about Amendment 8. The noble Lord, Lord Eatwell, described it as “cumbersome”. I was not going to use anything quite so direct but he goes to the heart of the point. Clearly, Parliament plays an important role in scrutinising the appointment of the chair of the OBR and other members of the BRC. I think that we have gone further, in that respect, than in any other appointment processes. However, whether it is because it is cumbersome or simply goes a step further than is necessary or appropriate, we believe that the Treasury Select Committee is the most appropriate means to exercise that scrutiny, given the nature of the body.

I do not want to labour the point, but we must remember that the chair and other members of the BRC may appear before the Economic Affairs Committee to discuss the work of the office. From a government perspective, I would welcome the scrutiny of the EAC, but I think it is right to preserve the role of the Treasury Select Committee on, specifically, the appointment.

This links with Amendment 35, the final amendment in this group, which requires that OBR members must appear before or provide evidence to the Treasury Select Committee or the Economic Affairs Committee of your Lordships’ House when requested. To restate the point, I agree with the principle of the amendment, but my understanding is that the power to summon individuals to give evidence to parliamentary committees is already in the Standing Orders and that is the way that we customarily leave it. This amendment would place in statute arrangements relating essentially to the internal procedure in the House, and I believe they are not matters that it would be appropriate or necessary to put in the Bill.

This group of amendments helpfully draws attention to the important role of this House in scrutinising critical aspects right across the OBR’s remit. That is important in the context of, particularly, the EAC’s ongoing role in broader economic policy-making. There is nothing in the Bill that constrains that, but we should not stray over the line in the one rather narrow element that some of these amendments relate to. It is not necessary to enshrine in the Bill matters that are customarily dealt with through the Standing Orders. I hope that I have sufficiently answered noble Lords’ concerns on these issues and explained how we think that the proper role of the House is very much enshrined and that the amendment will be withdrawn.

[Lord Peston]

On Amendment 35, is the Minister saying that he is absolutely confident that, within our normal arrangements, this amendment is not needed because it would be inconceivable for the office to refuse to appear before the Economic Affairs Committee of your Lordships’ House on the grounds that it was none of its business? Is he saying categorically that he knows that it could not refuse—to use my noble friend Lord Eatwell’s word—a reasonable request from the Economic Affairs Committee to appear before it? Is he absolutely certain that is so, because the amendment went down to get a reply that said it is not needed?

[Lord Sassoon]

My clear understanding is that the Standing Orders absolutely give all the necessary authority to committees of this House to summon members of the OBR, just as they summon other people to appear before them. I see no let or hindrance particular to the OBR.