Tuesday 6 July 2010

Let Parliament, not Osborne, choose the independent OBR's next chair

So farewell, Sir Alan Budd, head of the independent Office of Budget Responsibility.

The Telegraph reports his "shock departure", ahead of the Comprehensive Spending Review.

"The Government will seek to ensure continuity for the OBR in recruiting Sir Alan's successor," said a Treasury spokesman.

If they truly want an independent body, it would be time for less continuity and more change.

Is the aim of the robust independence of the ORB served by George Osborne alone again hand-picking the next Chair, as a political appointment?

Why not let the Treasury Select Committee make the appointment, or hold public hearings with the leading candidates? When the (currently interim) OBR is placed on a statutory basis, surely it should be made accountable to Parliament and not the Executive?

Osborne's public argument as to why the OBR is needed gives him no obvious grounds to refuse such calls without undermining its credibility or purpose.

While Budd's professional credentials were not in doubt, the process of creating the "independent" budget watchdog left much to be desired.

As Craig Berry wrote on Next Left:

Osborne has promoted his reform as another example of a minister removing his own right to interfere in decisions that should be based on independent expertise, as a signal to the markets that he is serious about tackling the deficit.

The reality is less flattering. To be precise, the OBR wasn’t created this week. It was set up in 2009 as a Conservative Party body, chaired by Sir Alan Budd. The motives behind its creation were sound. Alistair Darling’s borrowing forecast in 2008 was woefully ambitious, and there was clear justification in examining the extent to which the forecast was designed for the government’s political convenience.

But if Osborne meant to remove the politics from economic forecasting, this seems a strange way to do it.In what may be a constitutional first, he has simply transposed a Conservative Party body into Whitehall officialdom.

Its chair – Budd has been retained, it is not surprising to hear – is a political appointee, the only difference being that he is now paid by the taxpayer rather than the party.

Political Scrapbook produced an amusing post on how the "redeployment" of staff from the Treasury to the OBR involved it being "staffed by the same economists located in exactly the same room – all within Osborne’s department".

In many ways, an independent OBR is a good idea. Perhaps Budd's departure offers an opportunity to begin to act upon it.

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