19 November 2019

While opposition parties would like the Office for Budget Responsibility be cost all parties’ manifestos, Dr Gemma Tetlow says that such a decision should not be taken lightly.

On the eve of the general election campaign, Sir Mark Sedwill, the cabinet secretary, refused the chancellor’s request to publish estimates of the cost of Labour’s policies – produced by the Treasury but based on ministerial assumptions. His decision has thrown into the spotlight the question of whether, and by whom, manifesto commitments should be costed.

Civil servants produce estimates of the cost of opposition policies at ministers’ behest, but they are based on assumptions chosen by ministers and their special advisers. The Labour Party has for a long time pushed for the Office for Budget Responsibility (OBR) – the independent fiscal watchdog – to be allowed to produce and publish costings of all parties’ manifesto promises. Shadow Chancellor John McDonnell has said it is one of several changes to the watchdog’s remit that he would implement if Labour forms the next government.

Liberal Democrat candidate Sam Gyimah said last week that his party would also like to see this change – as did former chancellor George Osborne, who set up the OBR but did not, when in office, make this part of the OBR’s remit.

Full costings of all parties’ proposals would inform the electorate

General election campaigns in the UK have long been dominated by the cost of parties’ spending promises and debates about whether their plans “add up”. Prior to the election period, the party in power currently enjoys a huge advantage over rivals: it can make use of civil servants and the information held in government to understand, in detail, the costs of opposition spending promises and the costs or revenue raised from their tax proposals. Opposition parties, on the other hand, must rely on think tanks and their own researchers to try to estimate the relevant figures, leaving them open to greater challenge.

Allowing the OBR to cost all parties’ proposals would ensure all had equal credibility and could improve the quality of policies developed by opposition parties. It would also mean voters would go to the polls better informed. Robert Chote, chair of the OBR, has said in the past that this could be “good for politics”.

Costing all party manifestos would require changes to how the OBR and civil servants operate

Adding this activity to the OBR’s remit would require a radically different staffing model. The OBR has around 30 members of staff at the moment. Costings of government policies are currently carried out by civil servants – mainly in HM Revenue and Customs and the Department for Work and Pensions – with OBR staff reviewing and challenging the figures to ensure their robustness and quality.

The OBR would require far more staff and greater direct access to government data to be able to produce its own costings of opposition parties’ manifesto policies. For example, the Netherlands Bureau of Economic Analysis (CPB), which performs this function among others, has around 125 members of staff.  

An alternative model would be for the OBR to call on civil servants to do the leg work on the policy costings, with OBR staff checking the figures – just as they currently do for government policies. This would be more similar to the model in Ireland, where political parties are able to ask officials in the Department of Finance to cost their policies. The number of extra OBR staff required for this model would be smaller, but it would require a big shift from the current duty of civil servants in the UK to serve the government of the day. Ministers – some of whom are already sceptical about the time taken up with access talks – may question how much time civil servants would need to devote to this task.  A further issue is whether, and to what extent, this would extend into advice on the practicability of some of their policy ideas. In the Netherlands, the CPB advises parties not just on what their policies cost but also on whether they are workable.

Costing party manifestos would require a change to election timetables

Either way, adopting a Dutch-style model of opposition policy costing would require an overhaul of political timetables in the run-up to an election. We are currently four weeks from polling day and the main political parties have yet to publish their manifestos. For manifestos to be costed by the OBR, they would need to be developed much further in advance. In the Netherlands, the time required for the CPB to cost manifestos effectively dictates the timing of elections.

Allowing the OBR to cost all parties’ manifestos would provide the public with valuable information and may help opposition parties to develop more robust policies. But it would require the OBR to have more resources and – if input from civil servants was also required – would need agreement between the political parties about how the processes would operate to avoid the civil service being dragged into partisan politics.

There are obvious potential benefits to expanding the OBR’s remit in this way, but it would not be a simple task. Any changes should be carefully considered to ensure the OBR continues to be – and is seen to be – politically independent and trusted by all political parties, and that civil servants’ lines of accountability are clear.