FT story raises more questions about “independent” OBR

Office for Budget Responsibility made late changes that helped Osborne and co score political points

This week's New Statesman leader -- "This government must strive to make its cuts accountable" -- expresses concerns over the independence of the newly created Office for Budget Responsibility (OBR). In it, we suggest that the OBR's decision to "rush out" a positive statement on job losses, a day after leaked Treasury data pointed to 1.3 million job losses across the private and public sectors, was worrying at best.

Now we learn, thanks to the Financial Times front-page lead this morning, that the OBR made "last-minute changes to its Budget forecasts that had the effect of reducing the impact of the emergency Budget on public-sector job losses".

According to the paper, the government has acknowledged this late change, which allowed George Osborne and David Cameron to claim that the coalition Budget would result in fewer job losses than an equivalent, albeit hypothetical, Labour Budget.

Blogging on the story, the FT's Alex Barker writes:

The reasons for the revisions are even more surprising than the end result. Without telling anyone about the changes, the OBR assumed that George Osborne would:

1) Cut state contributions for public-sector pensions (an assumption that pre-empts the conclusions of John Hutton's pension commission)

2) Put the brakes on promotions in the public sector (even though the Chancellor has never announced such a policy)

There are three possible explanations: the independent OBR is taking orders from the Chancellor; practising economic telepathy; or inserting random policy into its forecasts.

One solution to this apparent lack of autonomy and threat of political interference, we suggest in our leader, "is to have the Treasury select committee appoint the OBR's chair, which would make the body accountable to parliament, rather than the executive".

Either way, the OBR is fast losing credibility. Peter Hoskin notes over on the Spectator's Coffee House blog:

Forget the hubbub about Gove's schools list, the most damaging story for the government this week could well be on the cover of today's FT.

UPDATE: A PoliticsHome poll has found that just 16 per cent of voters believe that the OBR is genuinely independent: 69 per cent subscribe to the view that "in practice it is part of the government".

Subscription offer: Get 12 issues for just £12 PLUS a free copy of "The Idea of Justice" by Amartya Sen.

Jon Bernstein, former deputy editor of New Statesman, is a digital strategist and editor. He tweets @Jon_Bernstein. 

Getty
Show Hide image

The Land Registry sale puts a quick buck before common sense

Without a publicly-owned Land Registry, property scandals would be much harder to uncover.

Britain’s family silver is all but gone. Sale after sale since the 1970s has stripped the cupboards bare: our only assets remaining are those either deemed to be worth next to nothing, or significantly contribute to the Treasury’s coffers.

A perfect example of the latter is the Land Registry, which ensures we’re able to seamlessly buy and sell property.

This week we learned that London’s St Georges Wharf tower is both underoccupied and largely owned offshore  - an embodiment of the UK’s current housing crisis. Without a publicly-owned Land Registry, this sort of scandal would be much harder to uncover.

On top of its vital public function, it makes the Treasury money: a not-insignificant £36.7m profit in 2014/15.

And yet the government is trying to push through the sale of this valuable asset, closing a consultation on its proposal this week.

As recently as 2014 its sale was blocked by then business secretary Vince Cable. But this time Sajid Javid’s support for private markets means any opposition must come from elsewhere.

And luckily it has: a petition has gathered over 300,000 signatures online and a number of organisations have come out publically against the sale. Voices from the Competition and Markets Authority to the Law Society, as well as unions, We Own It, and my organisation the New Economics Foundation are all united.

What’s united us? A strong and clear case that the sale of the Land Registry makes no sense.

It makes a steady profit and has large cash reserves. It has a dedicated workforce that are modernising the organisation and becoming more efficient, cutting fees by 50 per cent while still delivering a healthy profit. It’s already made efforts to make more data publically available and digitize the physical titles.

Selling it would make a quick buck. But our latest report for We Own It showed that the government would be losing money in just 25 years, based on professional valuations and analysis of past profitability.

And this privatisation is different to past ones, such as British Airways or Telecoms giants BT and Cable and Wireless. Using the Land Registry is not like using a normal service: you can’t choose which Land Registry to use, you use the one and only and pay the list price every time that any title to a property is transacted.

So the Land Registry is a natural monopoly and, as goes the Competition and Market Authority’s main argument, these kinds of services should be publically owned. Handing a monopoly over to a private company in search of profit risks harming consumers – the new owners may simply charge a higher price for the service, or in this case put the data, the Land Registry’s most valuable asset, behind a paywall.

The Law Society says that the Land Registry plays a central role in ensuring property rights in England and Wales, and so we need to ensure that it maintains its integrity and is free from any conflict of interest.

Recent surveys have shown that levels of satisfaction with the service are extremely high. But many of the professional bodies representing those who rely on it, such as the Law Society and estate agents, are extremely sceptical as to whether this trust could be maintained if the institution is sold off.

A sale would be symbolic of the ideological nature of the proposal. Looked at from every angle the sale makes no sense – unless you believe that the state shouldn’t own anything. Seen through this prism and the eyes of those in the Treasury, all the Land Registry amounts to is £1bn that could be used to help close the £72bn deficit before the next election.

In reality it’s worth so much more. It should stay free, open and publically owned.

Duncan McCann is a researcher at the New Economics Foundation