Budget Responsibility and National Audit Bill [HL]

My Lords, the speakers list today includes a number of the usual suspects involved in Treasury and economic affairs. I suppose I also have something of a record as chairman of the Treasury Select Committee in another place for something like a decade and a half. I therefore begin by welcoming the fact that the Treasury Select Committee is to be given an operational role in approving or consenting to the appointment of the members to the OBR. This is quite possibly the first occasion a departmentally related Select Committee has actually had such a role embodied in legislation. First, I want to say a word or two on the matters raised by the noble Lords, Lord Myners and Lord Burns, as far as forecasts are concerned. I am also not at all sure that we will gain much by having yet another forecasting body with all the staff that involves. The Treasury already publishes an almost comprehensive list of forecasts, prepared by various government and non-government bodies, and it may be that the data in those would provide a more impartial view than those produced by the Office for Budget Responsibility. I certainly welcome the point in the Bill which repeals the proposal of the previous Government to have the National Audit Office auditing the assumptions on which the forecasts are made. It always seemed very odd that one could audit such things as assumptions. However, it is important that the OBR, if it produces its own forecasts, should also publish its assumptions. We all know that forecasts depend crucially on what the assumptions are, and that, unless they are published, we have no basis on which to appraise the situation. I am sad that the forecast established by the Industry Act 1975 is to go. The previous Government built, on what used to be called the Red Book, a huge paraphernalia of propaganda. Now that the forecast has gone, I presume that the present Government will have some difficulty in finding a similar opportunity. However, the forecasting situation needs to be appraised very carefully, and no doubt we will have an opportunity to do that in Committee. The OBR will have responsibility not only for forecasts but also for appraising, on the basis of a fiscal mandate, the extent to which the Government are achieving their objectives. I find the concept of a charter, set out in Clause 1 of the Bill, a little devoid of content. The charter must set out objectives in relation to fiscal policy on the one hand, and secondly, the means by which they are to be achieved—the fiscal mandate. It would be immensely helpful in Committee if we could be given some idea, or perhaps a draft, of what such documents—namely, the fiscal mandate and the charter—are likely to comprise. In that context, I worry about the fact that the Treasury is to have almost complete discretion, first in creating the charter and the fiscal mandate, and then, if need be, in modifying it. There is a case for Parliament having an opportunity to debate this in some form, and, if necessary and appropriate, to amend it. This, too, is something that we can reasonably pursue in Committee. We are also involved here in creating significant changes with regard to the Comptroller and Auditor-General. Part 1 of the Bill makes preparation for looking forward in economic policy, and Part 2 for auditing what has actually happened, and in particular for considering the important issue of value for money, in which the National Audit Office has played an important role for some considerable time. However, I am puzzled by exactly what role the new National Audit Office board will fulfil; and by its relationship to the Public Accounts Commission—not the Public Accounts Committee, but the Public Accounts Commission, which I chaired until I left the Commons in 1997. It seems that, although the commission has subsequently recommended that an independent board should be set up, the relationship between the commission and the board is a little obscure. Perhaps the Minister will clarify the matter. Overall, this is a forward step. We will have a more impartial approach to these matters than has hitherto been the case. However, I urge my noble friend to ensure that the present, albeit provisional, set-up for the OBR does, as soon as possible, get on with producing an accurate appraisal of what the situation is. I come now to an entirely topical point with regard to the implications of the comprehensive spending review. We are currently in uncharted waters, and it is a very complex thing to try to work out the review’s effect on aggregate demand in the economy. Until we know that, we have no reason to say that further stimulating measures, particularly QE, are appropriate. I hope that the OBR will not delay until it becomes a statutory body in getting on with this extremely urgent task. The committee of the OBR is to have three members, and I am not sure whether it will publish minutes in the same way as the MPC does. It increasingly appears from press reports that there is considerable division of opinion among the MPC members. We ought to consider to what extent the OBR will also publish minutes and to what extent it is appropriate for those to be in the public domain. Having said that, I look forward very much to the Committee stage, and I hope we can clarify some of the points that I have raised.