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The number cruncher-in-chief: OBR head Robert Chote on the costs of Brexit

The chair of the Office for Budget Responsibility explains why the UK economy is "weak and stable, rather than strong and stable". 

On the top floor of the Ministry of Justice – an imposing brutalist structure just off St James’s Park, Westminster – lies one of the UK’s most powerful economic institutions. Since its creation by the former chancellor George Osborne in 2010, the Office for Budget Responsibility (OBR) has been charged with producing economic forecasts and forensically scrutinising government policy. In the polarised era of austerity and Brexit, its judgements have profound political implications.

The man who has chaired the OBR since its inception is Robert Chote. One recent morning I met Chote, 50 – tall, lean, dark-haired (with a marked resemblance to Serbian tennis star Novak Djokovic) – to discuss his work and the state of the British economy.

“It’s been great fun, there’s a good esprit de corps,” Chote said of his 30-strong team. Until the OBR’s establishment, the Treasury had sole responsibility for producing forecasts, which led to the justified suspicion that the forecasts were made to fit the policy, rather than the policy to fit the forecasts.

Chote spoke with gratitude of how the OBR had been accepted as a “permanent part” of the economic architecture. “Opposition parties tend to want us to do more, rather than less” (Labour has proposed that the body should audit party manifestos).

The politically independent OBR, Chote noted, is part of a “global phenomenon”. “I was in Cape Town in the summer and had an opportunity to meet my Zimbabwean counterpart. If ever I wake up in the morning and think it’s a tough job, that’s a salient reminder that it could be a lot more difficult.”

For eight years until 2010, Chote was director of the much-revered (and feared) Institute for Fiscal Studies. When Gordon Brown was presented by aides with the body’s painful post-Budget findings, he would exclaim with anger: “Chote!”

Before this, as economics editor of the Financial Times and a reporter at the Independent, Chote similarly tormented chancellors (a framed front page from 1992’s Black Wednesday – “Pound goes into freefall” – hangs above his OBR desk). It was while working for the International Monetary Fund in Washington, DC that Chote met his wife, Sharon White, a former Treasury permanent secretary, who is now chief executive of the media regulator Ofcom (the first woman and the first black person to hold the post).

Chote, the son of an Olympic javelin-thrower, studied economics at Cambridge University, where he was also chairman of the Social Democratic Party association (he stood as a county council candidate in 1989 following the Liberal Party merger). “I’m very lucky – I managed to get it all out of my system at the time,” he said of his past activism.

As a former journalist, Chote, unlike some technocrats, has an ear for an arresting phrase. The British economy, he told me, was “weak and stable, rather than strong and stable” (in reference to the Conservatives’ ill-fated 2017 election slogan). He warned: “There’s an evens chance of a recession in any five-year period if you look back at the historical experience. We’ve not abolished boom and bust.”

In its most recent set of forecasts (November 2017), the OBR dramatically revised down anticipated productivity growth. And though the latter has since increased at its fastest rate for six years, Chote cautioned: “These are noisy numbers, they go up and down, and we’ve had false dawns before”.

Chote, who lives in Corbyn’s Islington North constituency (in Tufnell Park), would not tell me how he voted in the EU referendum (“We have a secret ballot and I shall respect it”), he did not refrain from charting Brexit’s harmful economic effects: “In terms of the net effect on GDP, the hits to demand have outweighed the boosts”. (Following the referendum, the OBR forecast that the Leave vote would cost the UK £15.2bn, or nearly £300m a week, by 2020/21.)

Chote cited “most of the work that trade economists have done” as showing that the costs of leaving the single market and the customs union are greater than the benefits. “The reduction in openness likely with the EU is likely to outweigh any increase elsewhere.”

A permanent reduction in immigration, he warned, would increase the national debt. “Net inward migration tends to be a net positive for the public finances because inward migrants are generally more likely to be of working age than the native population.”

The OBR’s dull-sounding fiscal multipliers (which estimate the effects of tax and spending policies on growth) also show that austerity harms growth, while state investment aids it.

“Infrastructure spending has the largest direct effect,” Chote confirmed. “That’s basically because less of the spending leaks out into savings or imports.” He warned that growth would be “weaker” over the next few years as public spending cuts were still “intensifying”.

Even under the government’s fiscal rules, Chote noted, “there is room for spending more, there is some room for fiscal giveaway that would still be consistent with those targets”.

I ended by asking Chote the most important question of all: has he ever actually been mistaken for Djokovic? “No!” Chote insisted. “I think if you ever saw us physically next to each other there would be no doubt who was who, even if the headshots occasionally look slightly discombobulating.” 

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 January 2018 issue of the New Statesman, How women took power

Photo: Getty
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I'm not going to be General Secretary, but the real fight to change Labour is only just beginning

If Labour gets serious about a new politics, imagine the possibilities.

For a second time, I was longlisted for the role of General Secretary of the Labour Party this week. For a second time, just as in 2011, I was eliminated in the first round. The final shortlist now consists of two veteran trade unionist women leaders, Jennie Formby of the Unite union and Christine Blower - formerly of the National Union of Teachers and the Socialist Party. I met them both yesterday at the interviews; I congratulate them, and look forward to hearing more about their ideas for Labour party renewal.

Last week in both the New Statesman and LabourList, I explained why I thought we needed a General Secretary “for the many”. I set out a manifesto of ideas to turn Labour into a twenty-first century campaigning movement, building on my experience with the Bernie Sanders campaign, Momentum, Crowdpac, 38 Degrees and other networked movements and platforms.

I called for a million-member recruitment drive, and the adoption of the new “big organising” techniques which combine digital and face-to-face campaigns, and have been pioneered by the Sanders movement, Momentum, Macron and the National Nurses Union in America. I set out the case for opening up the party machine in a radical but even-handed way, and shared ideas for building a deeper party democracy.

I noted innovations like the Taiwanese government’s use of online deliberation systems for surfacing differences, building consensus and finding practical policy solutions. Finally, I emphasised the importance of keeping Labour as a broad church, fostering more constructive internal discussions, and turning to face outward to the country. I gladly offer these renewing ideas to the next General Secretary of the party, and would be more than happy to team up with them.

Today I am launching, a new digital democracy platform for the Labour movement. It is inspired by experience from Taiwan, from Barcelona and beyond. The platform invites anyone to respond to others’ views and to add their own; then it starts to paint a visual picture of the different groupings within the movement and the relationships between them.

We have begun by asking a couple of simple questions: “What do we feel about the Labour party and movement? What’s good, and what’s more difficult?” Try it for yourself: the process is swift, fun and fascinating. Within a few days, we should have identified which viewpoints command the greatest support in the movement. We will report back regularly on this to the media.

The Labour movement is over 570,000 members, thousands of elected representatives, a dozen affiliated unions and millions of Labour voters. We may disagree on some things; but hopefully, we agree on far more. Labour Democracy is a new, independent and trustworthy platform for all of us to explore our differences more constructively, build common ground, and share ideas for the future. I believe Labour should be the political wing of the British people, as close to the 99 per cent as possible – and it will ultimately only be what we make of it together.

Yesterday I spoke over Skype with Audrey Tang, the hacker and Sunflower Movement leader who is now Digital Minister of Taiwan. Audrey is a transparent politician, so she has since posted a video of our conversation on YouTube. I recommend watching it if you are at all interested in the future of politics. It concludes with her reflections on my favourite Daoist principle, that true leadership leaves the people knowing that they have made change themselves.  

This General Secretary recruitment process has been troubled by significant irregularities, which I hope the party learns from. The story is considerably more complex and difficult than is generally understood. I have spent considerable time in the last week trying to shine greater light on the process in the media and social media, and encouraging the national executive committee, unions and politicians to run a more open and transparent process. I even started a petition to the NEC Officers group, calling for live-streamed debates among the candidates for this crucial and controversial party management role. I very much hope that there is no legal challenge.

Most importantly, the last week has exposed a significant fault line in Labour between the new left and the old left. When Jon Lansman of Momentum entered the contest against the “coronation candidate” Jennie Formby, many people read this as a fight between two factions of the old left. But Jon’s intent was always to open up a more genuine contest, and to encourage other candidates – particularly women – to come forward. Having played the role only he could play, he eventually withdrew with dignity. His public statements through this process have been reflective of the best of the new politics. And despite our very different political journeys, he kindly agreed to be one of my referees.

There has been plenty of the old transactional machine politics going on behind closed doors in the last couple of weeks. But out in the open, the new left movements and platforms have shown their strength and relevance. Momentum emailed all its members encouraging them to apply for the role. On Facebook Live, YouTube and podcasts like All The Best, the Novara Media network has been thoughtfully anatomising the contest and what it means for the future of the left. Even the controversial Skwawkbox blog finally agreed to cover my candidacy, and we had a constructive row about the leaked memo I wrote for Corbyn’s office back in December about how to win the next election using data, organising and every new tool in the box.

I am worried about the old left, because I feel it is stuck in a bunker, trapped in a paradigm of hierarchical power and control. The new left by contrast understands the power of networks to transform conversations and win hearts and minds.

The old left yanks at levers, and brokers influence through a politics of fear and incentives. But this tired game is of decreasing relevance in this day and age. The new left has the energy, the reach, the culture and the ideas to build a new common sense in this country, and to win decisive victory for Labour and progressives in the next general election – if the old left will partner with it. 

I am keen to help. So are many others. I hope we can start to have a more constructive and equal conversation in Labour soon. Otherwise an exodus may begin before long; and no-one wants that.

Paul Hilder is an expert on new politics and social change. He is a co-founder of Crowdpac, 38 Degrees and openDemocracy. He has played leadership roles at, Avaaz and Oxfam, and was a candidate for general secretary of Labour in 2011.