The OBR's fiscal outlook in five charts

The OBR looked at fiscal sustainability today. Here's what they found.

Forecasting is hard

Page 106, thanks to Ed Conway

I'll admit, I have an idiosyncratic sense of humour. But still, I laughed out loud at this tangle of lines, which shows the OBR's best attempts to forecast oil and gas revenues. It's reminiscent of the woefully optimistic IMF forecasts for Greek GDP, excel that instead of being consistently wrong in the same direction, it's more like a child just scribbled a lot of lines on the chart.

Unfortunately, the oil and gas revenues remain important. Thanks to the long-standing decline in productivity in the sector, a function of the drying-up of North Sea oil fields, it usually imparts a massive downward pressure on the quarterly GDP figures, which means that getting the predictions accurate is crucial for getting the overall figure accurate.

Migration saves us money

Page 147, thanks to Jonathan Portes

If you care about public sector debt, really the absolute best thing you can do is remove restrictions on migration. Migrants are educated by their home country, and frequently retire there too; in the meantime, they work hard, pay their taxes, and have a lower-than-average crime rate.

The "high migration" scenario is of the average net migration being slightly more than double what the ONS uses as its baseline assumption, with 260,000 people coming in on net compared to 140,000. That's a lot more than normal, but it's not outside the realm of political possibility. Just think what a fully open-borders policy could do for the national accounts…

At the other end, the ONS looks at what "zero net migration" would do. Remember that zero net migration is actually the government's explicit policy, so it's already a bit damning that the ONS instead works on the assumption that they will fail to hit it by 140,000 people. But when we look at the stats, it's clear that we should be glad of that. Zero net migration would push the debt:GDP ratio over 100 per cent by 2050.

Young people and old people cost money

Page 78, thanks to Chris Giles

Again, nothing which will blow your mind: the state spends money educating young people, caring for old people, and providing health services to both, while the people in the middle pay the bills. What's interesting are the two crossover points – roughly 23 and 67 years old – where people go from being, on average, a contributor to a benefactor or vice versa, as well as the curious level of the peak of tax contributions, at just under 50.

You are never going to retire

Page 117

The thick line is the OBR's best guess of what changes to the pension age are going to do to the proportion of people between 65 and 74 working: around a 66 per cent increase, to just over a quarter of those people working by 2045. That already comes after a doubling of the rate in the last twenty years:

We are never ever ever getting time off work.

This is all just guesswork

Page 11

Finally, an important reminder that the long-term projections are as vague as can be. In fact, discussing them in terms of fiscal policy is almost nonsensical. What they are instead is predictions of demographic change mapped on to current policy. So if the nation continues ageing as it looks like it will be, and if we fail to do reform the state pension in that time, then the national debt will start rising on current policies in 2037.

Obviously, it's nonsense to act as though all our policies will be the same in 2017, let alone 20 years after that, but it's the only way talk about the future at all.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Why Theresa May can't end speculation of an early general election

Both Conservative and Labour MPs regard a contest next year as the solution to their problems. 

One of Theresa May’s first acts as a Conservative leadership candidate was to rule out an early general election. After a tumultuous 2015 contest and the EU referendum, her view was that the country required a period of stability (a view shared by voters). Many newly-elected Tory MPs, fearful of a Brexit-inspired Ukip or Liberal Democrat surge, supported her on this condition.

After entering Downing Street, May reaffirmed her stance. “The Prime Minister could not have been clearer,” a senior source told me. “There won’t be an early election.” Maintaining this pledge is an important part of May’s straight-talking image.

But though No.10 has wisely avoided publicly contemplating an election (unlike Gordon Brown), the question refuses to die. The Conservatives have a majority of just 12 - the smallest of any single-party government since 1974 - and, as David Cameron found, legislative defeats almost inevitably follow. May’s vow to lift the ban on new grammar schools looks to many like an unachievable task. Former education secretary Nicky Morgan and former business minister Anna Soubry are among the Tories leading the charge against the measure (which did not feature in the 2015 Conservative manifesto).  

To this problem, an early election appears to be the solution. The Tories retain a substantial opinion poll lead over Labour, the most divided opposition in recent history. An election victory would give May the mandate for new policies that she presently lacks.

“I don’t believe Theresa May wishes to hold an early election which there is evidence that the country doesn’t want and which, given the current state of the Labour Party, might be seen as opportunistic,” Nigel Lawson told today’s Times“If, however, the government were to find that it couldn’t get its legislation through the House of Commons, then a wholly new situation would arise.”

It is not only Conservatives who are keeping the possibility of an early election alive. Many Labour MPs are pleading for one in the belief that it would end Jeremy Corbyn’s leadership. An early contest would also pre-empt the boundary changes planned in 2018, which are forecast to cost the party 23 seats.

For Corbyn, the possibility of an election is a vital means of disciplining MPs. Allies also hope that the failed revolt against his leadership, which Labour members blame for the party’s unpopularity, would allow him to remain leader even if defeated.

Unlike her predecessors, May faces the obstacle of the Fixed-Term Parliaments Act (under which the next election will be on 7 May 2020). Yet it is not an insurmountable one. The legislation can be suspended with the backing of two-thirds of MPs, or through a vote of no confidence in the government. Alternatively, the act could simply be repealed or amended. Labour and the Liberal Democrats, who have demanded an early election, would struggle to resist May if she called their bluff.

To many, it simply looks like an offer too good to refuse. Which is why, however hard May swats this fly, it will keep coming back. 

George Eaton is political editor of the New Statesman.