Budget Responsibility and National Audit Bill [HL]

My Lords, I am grateful to the noble Lord, Lord Eatwell, and his noble friends for their amendment and to the noble Lord, Lord Burns, for his contribution. The Government recognise the importance of external expert challenge, which is the issue that the noble Lords have raised. Indeed, the fact that the OBR analysis is publicly available means that it is open to scrutiny. On a previous occasion, we debated whether the OBR should produce an assessment of forecast accuracy. This process needs expertise in forecasting, which the OBR clearly has. The Government argue that this expertise will be difficult, although not impossible, to find elsewhere. It also requires a full understanding of the data underpinning the forecasts. Again, the OBR has this, and a similar level of knowledge is scarce elsewhere, although, I acknowledge, not unobtainable. Assessing previous performance provides a very valuable opportunity for the OBR to learn and understand what has driven diversions from accuracy. It is clear that it is the OBR’s intention to use the report in this way and that it has the right skill set to do so. The noble Lord, Lord Eatwell, mentioned the Congressional Budget Office. I understand that, although it does indeed have a panel of external advisers who meet twice a year, the CBO carries out its own analysis of previous forecasts. I think that our proposed design is in line with discussions with international organisations. The proposals in the amendment raise a number of issues that we need to consider. The Government, for example, believe it is difficult to envisage that the committee could get into the detail needed to produce a comprehensive and meaningful assessment. Like the noble Lord, Lord Burns, we share the concerns about a body of five people being needed to scrutinise this work. We are not sure whether the noble Lord envisages that they would be paid and, if so, how much. We also feel that there is an issue of focus and that it might be appropriate to look at a larger section of the OBR’s work, because perhaps all parts of its work could benefit from external expertise. In general, in a broader context there is nothing to stop any person or organisation assessing the OBR’s forecast accuracy by looking at its forecasts and comparing them with the actual outturn data. Where value can be added is in making sure that the OBR uses all the best information. That is why we put an emphasis on transparency across the piece. None the less, we accept that bringing in external expertise could be very useful. We believe that it is consistent with the Bill as drafted but that it is important to take a more proportionate approach. Of course, the OBR already has the power to convene advisory panels to provide external perspectives if it sees fit, and Robert Chote indicated his interest in that in his evidence to the Treasury Select Committee. The OBR is already drawing on external expertise, as noted in its autumn forecast statement. In conclusion, the Government will reflect on whether additional steps are needed in the light of this very helpful debate and suggestion. In particular, I am interested in the suggestion of the noble Lord, Lord Burns, which I should like to take away and think about.