Select committee inquiry
Review of scope and performance of Office for Budget Responsibility
Closed
What the inquiry looked at
“After initial reluctance from the Budget Responsibility Committee's Chairman, Lord Burns, to provide it, Treasury Committee staff have now reviewed the e-mail exchange between the Treasury and the OBR in the 'pre-release access period' leading up to the publication of the OBR's December 2014 Economic and Fiscal Outlook. The correspondence shows that, during this period, a number of non-factual requests for changes to the OBR's Economic and Fiscal Outlook were made by Treasury officials. Some were taken on board by the OBR. While these changes made no material difference to the content of the publication, they raise concerns about the terms of engagement between the OBR and Government officials. These should now be clarified.”
The committee's words, from the inquiry page on parliament.uk ↗.
What the government said
The government responded on 13 October 2016.
Summary written by Accountability Index from the government's response.
The government says it has accepted all of the review's recommendations, welcomes the committee's recommendations consistent with them, and disagrees that the current framework prevents the OBR from holding governments to account.
- On succession, the government agrees that securing high quality BRC members is key, and states that BRC roles "will be offered with flexible working patterns".
- The recruitment timetable for Sir Steve Nickell's successor is stated to be designed so the Chancellor's announcement comes four and a half months before the intended start date, in line with the committee's recommendation.
- On the Memorandum of Understanding, the government states that the OBR and forecasting departments "will refresh the MoU this summer", and that the committee's points on pre-release arrangements "will be taken into consideration".
- On opposition policy costings, the government is "confident" that the review's recommendation against expanding the OBR's remit "is correct for this Parliament".
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 10 September 2015 to its close on 13 October 2016.
- Oral evidence 14 Oct 2015
- Report 22 Feb 2016
- Government response 13 Oct 2016
What it recommended 0 recommendations · 14 conclusions
1Sir David is a reliable, highly competent and loyal Treasury official, bound by the Civil...
Concluded (the committee's words)
Sir David is a reliable, highly competent and loyal Treasury official, bound by the Civil Service code, reporting to the Chancellor, and with a duty to support Government policy of the day, whatever that happens to be. He is therefore manifestly professionally incapable of conducting an independent review of the OBR. It would have been difficult for Sir David to have reached conclusions that differed substantially from those of Ministers. The fact that the Government accepted his recommendations on the day his review was published, in full and without comment, suggests that he may not have attempted to do so. The conclusions reached by Sir David are consequently of little relevance for assessing the independence and effectiveness of the OBR’s work.
2Sir David recommended in his Report that prospective BRC members be offered part-time working arrangements.
Concluded (the committee's words)
Sir David recommended in his Report that prospective BRC members be offered part-time working arrangements. In evidence he said that this flexibility could not apply to the fiscal expert on the BRC. Given the difficulties of replacing Graham Parker, it would seem particularly important to offer flexible working arrangements for this post in order to broaden the potential base of candidates.
3The current Parliament will see the first changes to the OBR’s senior leadership since it...
Concluded (the committee's words)
The current Parliament will see the first changes to the OBR’s senior leadership since it was put on a statutory footing. It has been widely argued – not least by the independent review conducted by Kevin Page – that the OBR’s early success has been closely linked to the quality of its current leadership. Arguably, the OBR does not yet have an institutional reputation distinct from that leadership, making the succession process a risk to its credibility. The Committee agrees with the findings of both OBR reviews about the importance of long-term succession planning and welcomes Sir David’s assurances that work to find replacements for Professor Nickell and Graham Parker is already underway.
4The importance attached to succession planning by both OBR reviews is at odds with the...
Concluded (the committee's words)
The importance attached to succession planning by both OBR reviews is at odds with the Chancellor’s late announcement of his preference for Robert Chote to be reappointed as Chairman of the OBR. The Committee has recently recommended that, in the absence of exceptional circumstances, nominations to the BRC should be made by the Chancellor at least four and a half months before the postholder plans to leave office. The Committee expects the Treasury to adhere to this timetable. ‘Exceptional circumstances’ do not include general elections taking place under Section 1 of the Fixed Term Parliaments Act 2011 or regular fiscal events such as the Budget and Autumn Statement.
5Exceptional pre-release access is intended to improve the accuracy or usefulness of the Budget or...
Concluded (the committee's words)
Exceptional pre-release access is intended to improve the accuracy or usefulness of the Budget or Autumn Statement. The current Memorandum of Understanding Reviewing the Office for Budget Responsibility 15 does not sanction any changes, factual or otherwise, to the OBR’s publications as a consequence of their availability under these arrangements. It is clear that the Economic and Fiscal Outlook benefits from a fact-checking and quality assurance process involving officials in other Government departments. Provision for officials to request factual changes during the exceptional pre-release access period should be more clearly set out in the Memorandum of Understanding, as should the scope and limits of acceptable requests.
6Some of the requests made by the Treasury for changes to the December 2014 Economic...
Concluded (the committee's words)
Some of the requests made by the Treasury for changes to the December 2014 Economic and Fiscal Outlook strayed beyond the factual. It is concerning that Treasury officials did not recognise that these requests were inappropriate. They appear to have been made routinely at previous fiscal events. Sir David’s comment that “we did not think that it was a big issue at all” does little to assuage the Committee’s concerns about a lack of understanding in the Treasury about the importance of the OBR’s independence. The OBR’s independence — and public confidence in its independence — is a precious asset that is hard-earned and easily squandered.
7Evidence received by the Committee of requests for changes to the Economic and Fiscal Outlook...
Concluded (the committee's words)
Evidence received by the Committee of requests for changes to the Economic and Fiscal Outlook originating from the then Chief Secretary is particularly concerning. It is far from clear why Ministers should have the opportunity to offer views to the OBR during the exceptional pre-release access period when, given the level of technicality, it is highly unlikely that they could make constructive contributions to any fact-checking and quality assurance process. Pre-release access should be limited to the minimum number of people necessary for this purpose. If Ministers require early sight of the OBR’s draft publications for other purposes, this should separately be made clear in the Memorandum of Understanding.
8A number of Treasury requests for non-factual changes appear to have been taken on board...
Concluded (the committee's words)
A number of Treasury requests for non-factual changes appear to have been taken on board by the OBR. This is unacceptable. The removal of words such as ‘topslice’ to describe spending cuts, and ‘complicated’ to describe the then Government’s fiscal assumption, cannot be held to have improved the clarity of the Economic and Fiscal Outlook, nor did they make it more factually accurate. Nonetheless, the Committee is satisfied that, on this occasion, the changes the OBR made in response to Treasury requests made no material difference to the analysis contained in the final document.
9The Committee has confidence in Robert Chote’s personal resilience to pressure from Ministers and officials,...
Concluded (the committee's words)
The Committee has confidence in Robert Chote’s personal resilience to pressure from Ministers and officials, and his willingness to speak his mind. It is also encouraged by evidence from the email exchanges of the assertiveness of OBR staff in dealing with the Treasury. However, if the OBR is to remain demonstrably institutionally independent, the terms of engagement with Government departments must be clarified. At a minimum, a revised Memorandum of Understanding should explain the purpose of exceptional pre-release access, which Ministers and officials are granted access and why, and the sort of changes to OBR documents that are envisaged during this period.
10The OBR requires a close working relationship with Government departments, based on free and frank...
Concluded (the committee's words)
The OBR requires a close working relationship with Government departments, based on free and frank exchange at official level. The subjection of all communications between OBR staff and Government officials to routine public scrutiny could 16 Reviewing the Office for Budget Responsibility prejudice this relationship. However, the Committee considers the exceptional pre release access period to be a particularly sensitive time, not least because it is the Treasury’s first opportunity to see the OBR’s conclusions and judgements in full. The Committee may, from time to time, repeat the exercise it has carried out on this occasion, to ensure that Ministers, special advisers or officials have not sought to influence the OBR’s judgements and conclusions.
11The terms of reference of the Treasury-led review required Sir David to “assess the effectiveness...
Concluded (the committee's words)
The terms of reference of the Treasury-led review required Sir David to “assess the effectiveness of the OBR in enhancing UK fiscal credibility”. Sir David told us that he took “UK fiscal credibility” to mean the credibility of the existing government’s fiscal programme, rather than the credibility of parties that might imminently form a government. By interpreting the terms of reference in this narrow way, Sir David was logically bound to reach the conclusion on the costing of party policies that he did.
12The benefits to fiscal credibility of the OBR carrying out party policy costings before general...
Concluded (the committee's words)
The benefits to fiscal credibility of the OBR carrying out party policy costings before general elections are now becoming clear. Had it been able to do so at the last election, the public would now have to hand a more rigorous assessment of the costs of the present Government’s manifesto pledges. As it stands, the OBR — even now — has not assessed the implications of these commitments because the Government has chosen not to identify them as ‘formal policy’ measures. The current arrangements permit prospective Governments to make fiscally incredible pledges in their manifestoes, but avoid full and timely accountability for them once in office.
13The Committee is unconvinced by the discussion and conclusion on opposition policy costings in Sir...
Concluded (the committee's words)
The Committee is unconvinced by the discussion and conclusion on opposition policy costings in Sir David’s review. First, the review’s independence from the Chancellor, whose opinion on this question it reflects in every respect, is highly questionable. Second, Sir David did not consult the other political parties about it. Third, even among those whom it did consult, it is far from clear where the balance of opinion lies, or that the views they expressed are accurately represented in the report.
14Sir David’s evidence to the Committee on opposition policy costings did nothing to assuage our...
Concluded (the committee's words)
Sir David’s evidence to the Committee on opposition policy costings did nothing to assuage our concerns that he had interpreted and selected evidence to confirm the prior view of the Chancellor. The Review’s discussion and conclusions on opposition policy costings add nothing. The matter is an open question for further consideration by this Committee and Parliament as a whole.
Evidence
Oral evidence sessions 1
- 14 Oct 2015No witnesses recordedparliament.uk ↗