I don’t want to spend all my time talking about Gordon Brown but I think his announcement this weekend of a binding Fiscal Responsibility Act is very instructive about the problems he is facing.
His first problem is that no-one thinks he gets anything right. I’ve written before about how he cannot admit that he made mistakes on some things because that will just up the ante on others (even things he got right. Can’t think of many at the moment, but there are some).
His second problem is that few people actually trust him with their money any more. He was in charge in the run-up to the recession – indeed, his profligacy and failure to prepare during the boom exacerbated our problems.
His third is that every time he tries to move onto a Conservative policy he implements it badly – makes it more complicated, removes the accountability, fails to ensure it will achieve what it’s supposed to. So for example we’ve had Border Police, which turned out to be giving new shirts to existing staff. And they’ve been trying to privatise part of the Post Office but have been scared off.
His real problem (for today anyway) is that he’s too late. If only he had said a year ago, we’re going to borrow (and print) a shedload of money but because we know that that’s far from ideal, we’re going to enshrine in law a requirement for balanced budgets and deficit reduction, and show we’ve got a plan for coming out of the recession.
Instead it’s a panicky response – too little, too late. Does anyone seriously believe, after the shenanigans over the golden rule, what ‘the economic cycle’ actually is, and the non-independence of government statistics, that a law brought in by Brown to reduce debt by specified levels would actually achieve that in reality? They won’t even put PFI on the books.
What we actually need is a properly independent statistics office and a properly independent regulator which says ‘stop spending’ or ‘that’s not true’ or ‘stop trying to fiddle the figures’. That’s the only way anyone will trust it. Whether or not a Chancellor takes their advice is a different matter – I fully accept that sometimes there will be political imperatives and very occasionally you could argue that these outweigh the economic ones.
I think that would be rare indeed, especially if the regulator had already made its independent assessment known, and especially if any figures were published in a format that meant normal people could look through them and investigate what they meant.
And that is the whole point of the Office of Budget Responsibility, the pledge to publish all government spending over £25,000 and the pledge to publish government documents in accessible formats.
It’s not going to be perfect, and it will probably have some hiccups. But that’s what is needed to recover trust in how our money is being used.
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Interesting blog Fiona.
There are two things I don’t like about Brown’s idea. Firstly, it distorts what I regard to be a very important constitutional principle that no Parliament should bind its successor. Secondly, setting in stone how much we should be borrowing in the future takes away a lot of freedom from future Governments. Sometimes using deficits and borrowing is justified and necessary. The US during the Great Depression is a great example. Indeed, it is rather a shame that the British Government didn’t act in a more proactive manner in the 1920s and 1930s to tackle the misery of mass unemployment using some kind of borrowing.
Regarding the idea of an independent body who can say ‘stop spending’, I’m not convinced by this. Such bodies can never be truly independent. Would it be full of people who always abide by certain economic dogmas – free to place a veto on a Government who decide to use a neo Keynesian approach to tackle unemployment? Would it be staffed by the kind of economic ‘experts’ who helped get us into this mess in the first place. The level of spending and borrowing is a particularly important economic tool that the Government can use in times of crisis. People may not agree with this but I think it is only right that an unelected body cannot tell an elected body what to do. An elected Government should be held accountable for its economic policy – rather than having its hands tied by, or passing the buck to, an unelected body.
Disraeli: I think you’ve not picked up the essential of the Office for Budget Responsibility (which though is a DREADFUL name).
The point of it is not some big list of rules. The point is to have some kind of independent body that will say – no, that can’t be right – an institutional Governor’s Eyebrow, if you will.
And yes, I take your point about problems of independence and recruitment and group-think, but I do think there is a place for an independent body to say “This is the ‘economic’ answer” but then leave the political stuff to the politicians.
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