27 September 2013

Ed Balls wants the Office for Budget Responsibility’s imprimatur on his fiscal plans. The OBR chief himself has suggested that the possibility of looking at opposition plans should be considered when the OBR comes up for review in autumn 2015. One model for this is what happens in the Netherlands – as discussed at the IfG last year.

The Chancellor can make great play of the fact that his forecasts are no longer made by the Treasury but by the independent Office for Budget Responsibility (OBR), established shortly after the 2010 election. The Opposition instead has to see its proposals “costed” by government officials, on the basis not of their assumptions, but those made by government special advisers. Not surprisingly, the shadow Chancellor, Ed Balls, would like his sums, based on his interpretation, vetted by the OBR to give them equality of credibility.

Is it feasible?

Not without some changes to the OBR. Last year, as part of our series on evidence and evaluation in policy making, OBR Chairman Robert Chote made clear he thought this option could be “good for politics” but noted that the OBR was currently specifically excluded from looking at alternative policies. He thought it was worth considering when Parliament reviews the OBR after its first five years – in autumn 2015, just after the May 2015 election.

But he also noted that the OBR with just 17 staff – was not currently equipped to do a serious job on opposition manifestos. It would require either a big boost to its staff – or it would have to be able to call on civil servants to work for it on manifesto checking.

Dutch example

The lead speaker at our event was someone whose job has just that responsibility – the Director of the Netherlands Bureau for Economic Analysis (CPB) Dr Coen Teulings. His presentation explained not only what the CPB does for the government – with a much wider remit than the OBR – but also the consequences of their role in manifesto checking. First, the CPB has almost ten times the staff of the OBR – 150-160 rather than 17.

Second, the need to check manifestos of all parties (only a couple of fringe parties don’t submit their platforms to the CPB) dictates the long gap between governments falling and elections happening. That underlines the fact that it would be impossible to confine manifesto checking to a single opposition party.

Third, what the Dutch do goes a long way beyond what we would regard as  “costing”, because they are also verifying the feasibility of the policy positions of the parties. Dr Teulings gave examples of the CPB saying how far it would accept cuts in civil servants as realistic on the basis that all parties wanted to reduce civil service numbers, but clearly there was a limit on this. So the CPB would make an assumption of what size of cut was deliverable – and that then became the number  parties would use.

Fourth, the CPB also advises parties privately not just on the costs but on the workability of policy options. If the party takes that advice and revises the policy to take account of those comments, the exchanges remain private. But if the party decides to go ahead anyway, the CPB makes its reservations public.

Fifth, Dr Teulings admitted that the sort of policies proposed by Dutch parties was itself a product of the need for a CPB stamp of approval. There was a bias against structural reforms whose longer-term effects were harder to model.

More than costing

One thing that the Dutch case highlights is that knowing whether or not the Opposition’s sums add up is only part of what voters might want to know in advance of an election. They are also interested in whether policies are likely to work and  have the benefits claimed for them. The Dutch have found a way of pre-proofing policies before elections – and providing a robust basis for the inevitable coalition negotiations that follow. But to do so they have vested very considerable power to shape political debate in group of a unelected officials.


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