When Ed Balls announced at the Labour conference that he wanted the OBR to audit every tax and spending pledge in the party's election manifesto, the idea was immediately torpedoed by the Tories. With Osborne and Cameron determined to run a 1992-style election campaign that targets Labour's "black hole", they were never likely to approve a move that would enhance the opposition's fiscal credibility. And since Balls's proposal would require an extension of the OBR's remit, he could not proceed without their agreement.
But that has not deterred the shadow chancellor from returning for another try. Labour has published a draft amendment to allow the OBR to "provide independent scrutiny and certification of the policy costings of any political party which has at least 5 per cent of seats represented in the House of Commons at the request of that political party." In addition, Balls has written to Osborne urging him to support the proposal, so that the change can be made "well in advance of the 2015 general election".
He also has written to Conservative MP Andrew Tyrie, the chair of the Treasury select committee, who responded tonight by saying that "OBR involvement has merit if it can enhance the quality of public debate on tax and spend."
"In 2010, the Treasury Committee recommended that the OBR should have absolute discretion over the work it undertakes. I made clear in the Commons that this should include examining, at their request, the fiscal policies of opposition parties at election time. Both the Government and the Opposition rejected this approach at that time.
"If the OBR were to undertake this work, it would be essential to obtain a measure of cross-party support about the terms under which it would be conducted."
In a striking exchange with Tyrie in the Commons in October 2010, George Osborne said that "There is a question of whether we want the OBR to be able to cost Opposition policies at the time of a general election. I propose to have discussions with Opposition party leaders about whether that is the appropriate thing to do, and it would be a legitimate matter for the House to debate and decide."
The discovery of that quote will make it a lot harder for Chancellor to now dismiss the proposal out of hand.
You can read Balls's letter and Labour's amendment in full below.
As you know, I recently proposed that the role of the Office for Budget Responsibility be enhanced by enabling it to provide independent scrutiny and certification of costings of political parties’ manifesto commitments on spending and tax, while ensuring the OBR is not drawn into party politics by commenting on the merits of individual policies or examining alternative policy scenarios.
While the Chair of the Treasury select committee has previously said he is not absolutely sure the current legislation necessarily rules out such a role, the Chairman of the OBR has told me that the legal advice he has received from the Treasury Solicitor’s Department is that a change in the law is necessary for the OBR to carry out this role and to develop a political consensus on this change and protect the OBR’s independence.
As I said in Brighton, we would support any changes needed to the OBR’s Charter and primary legislation and would seek to build cross-party consensus to achieve it.
In order to achieve that consensus, I am today publishing a draft amendment to the law which would enable the OBR to carry out the role I have proposed. The Clerks of the House of Commons inform us that, with your support, one option available to us is to table this amendment to next year’s Finance Bill so that the change could be made well in advance of the 2015 general election.
I hope you will support this important reform, which I believe will enhance the role of the OBR while maintaining its impartiality and independence and ensure a more informed debate in Britain at the next election.
I am also writing to the Chair of the Treasury Committee to seek his support for this change.
I would be happy to discuss my proposal with you further and look forward to hearing from you.
Ed Balls MP
Office for Budget Responsibility
The Budget Responsibility and National Audit Act 2011 is amended as follows:
(a) after subsection 4(4) of the Budget Responsibility and National Audit Act 2011 insert –
“(4A) It shall also, before a General Election,
(a) provide independent scrutiny and certification of the policy costings of any political party which has at least 5 per cent of seats in the House of Commons at the request of that political party, subject to receiving sufficient information from that political party,
(b) state whether it agrees or disagrees with the policy costings of the political party making a request, or whether it has been given insufficient time or information to reach a judgement, and
(c) publish details of the independent scrutiny and certification of policy costings conducted under subsection (a) on the Office website, and place a copy in the Library of the House of Commons.”
(b) omit subsection 5(3)(b) and insert –
“(b) may not consider what the effect of any alternative policies would be, except in the performance of the duty contained in subsection 4(4A) above.”