Budget Responsibility and National Audit Bill [HL]

I apologise to the noble Lord to the extent that I misinterpreted his words. I certainly agreed with two important points that I think he made—he may have to correct me again. I apologise; my note taking may not be very good. I think that he strongly made the point about publishing assumptions. That is an important point, which we should have clear either in the MoU or in the Bill. I think that he raised at least a question mark as to whether the charter will be helpful or—I cannot think of a better word—sinister as a way in which to control the OBR. That needs to be clarified. Finally, the noble Lord made an important point about the OBR looking at the CSR and describing its outcomes. At least in those areas, we enjoyed some common ground. The noble Lord, Lord Barnett, has his way of looking at these things and asked some questions of the noble Lord, Lord Sassoon, the answers to which I await with interest. He, too, asked about the word ““sustainability””, which is in the Bill as if it has a clear meaning. That is a point that we will really have to mine. We like the idea of the creation of an independent and credible OBR. It would be an important step forward in transparency and open government and an important addition to the democratic institutions. On this side of the House, we think that it is a good idea and we are prepared to co-operate to the full with the Government to achieve it. We are not prepared, however, to co-operate in the production of a seriously flawed institution. To do so would both ruin a good idea and potentially bring the whole project into disrepute. ““Disrepute”” is a strong term but that at least in part happened during the unfortunate events before the Summer Recess. It has become clear in the debate that the Bill fails on this objective. We do not criticise the Government’s objective but we are critical of its execution. Perhaps Ministers were diverted from their laudable goal by their advisers; perhaps Sir Humphrey was meddling. What seems to come through is that the Treasury needs to hang on to its tools of control. Have the Government considered alternatives? Across the road, in Dean Trench Street, there is an internationally respected economic forecasting organisation, the National Institute of Economic and Social Research, a body that is already substantially publicly funded. The institute is recognised as being totally impartial and one of the best forecasting organisations in the world. A suitable contract could have handled all the confidentiality issues and much public money would have been saved. Instead of setting up a new quango, why did the Government not simply contract out the OBR to the institute? Are there good reasons for not doing that or is it because the Treasury would lose control? Why did the Government not consider going to the other end of the spectrum and placing the OBR under the control of Parliament, just as the Congressional Budget Office in the United States is under the control of Congress? The OBR would then be able to perform the range of services to Parliament and the Executive that the CBO provides in the US. It is important to understand that the OBR is not and will not be a policy-making institution. It is therefore not part of the political process. The OBR is in the assessment business, not the making-policy business. Why, therefore, are so many control mechanisms built into the Bill? My noble friend Lord Eatwell compared the powers of the Comptroller and Auditor General set out in the Bill with those of the OBR. I compare the role of the two and their independence. Independence depends—as I said, I once worked in the public sector—on how one is appointed and how long for, how one is paid and how secure one is in that role. The Bill strongly brings out the difference between the C&AG and the chairman of the OBR. With regard to status, one is appointed by the Prime Minister, while the other is appointed by the Chancellor. One is agreed to by the chair of the Public Accounts Commission; in the case of the OBR, it is just a matter of consent. The C&AG will serve for 10 years, while chair of the OBR serves for two times five. Two times five is not 10, because a lot happens between those two fives. Termination is difficult in the case of the C&AG but, while it is quite difficult for the chairman of the OBR, it will not be difficult between those terms of office. At that point, the Chancellor and his concerns will come very much to the forefront of the individual’s mind when contemplating his further five years of employment. The individuals there now will be above these influences, because we know them as individuals, but we have to think in the longer term. In matters such as pay, the pay of the C&AG can be indexed, whereas the pay for the OBR will be determined by the Treasury. The money for paying the C&AG comes from the consolidated fund; the money for the OBR comes through the Treasury. The terms and conditions of staff in the National Audit Office are determined by the NAO; in the OBR, they are determined by the Minister for the Civil Service. The finance in relation to the NAO and the C&AG comes from the public accounts commissioners—finance is pretty well independent when it comes to the National Audit Office. In the case of the OBR, it comes from the Treasury, which will have an influence on resources. Finally, we have the staff of the OBR. I think that the Minister said that he saw them as civil servants coming in and out of the office. It is important to bottom out just who these people are going to be. Will they be an independent group, as, very clearly, the staff of the NAO are, or will they be people who, while doing their best to be totally independent, are influenced by their prior career and by where their career will be in future? All this needs to be questioned. We are not convinced that this organisation has sufficient independence. We have looked at the work of the Treasury Select Committee and have suggested that the three tests are independence, credibility and robustness. The committee asked similar questions in paragraphs 126, 128 and 132 of its report on the OBR. Independence and credibility are crucial. We believe that the Bill as drafted fails these three crucial tests. However, we see the potential of this good idea, which is why we are prepared to work with the Government to create an OBR that passes the three tests. At the end of his speech, my noble friend Lord Eatwell advanced a concrete proposal on behalf of the Official Opposition. It would be a major step forward if the Minister could accept that proposal. The proposal remains on the table. We are ready to consult as to the particular all-party forum that is used to design the new OBR. It need not take time. It could well be done before Christmas. We are ready to accept that the OBR’s interim structure is satisfactory for the time being.