Rachel Reeves can't outsource decision-making to unelected quangocrats

Yahoo

28-03-2025

In ancient Rome, the state services of haruspices were much in demand. By inspecting the entrails of birds and animals (the sheep's liver was a favourite), these priestly officials divined whether the gods would look favourably on any important future action, such as a war.
Even our secular modern world likes this mixture of forecasting, prophecy, and hieratic hocus-pocus. Twenty-first century British governments have the Office for Budget Responsibility (OBR).
It is not wrong, of course, to convene experts to test and project the figures which governments come up with, but it is wrong for political leaders to outsource their decisions to them. This may not have been the intention, but it is the effect. When he created the OBR on becoming Chancellor of the Exchequer in 2010, George Osborne emphasised its independence. Its endorsement, he thought, would lend financial respectability to his policies.
But such 'independence' is problematic. First, it is somewhat notional: the OBR is fully funded from the Treasury budget, so its officials will almost certainly share the establishment groupthink of the era, rather than the views of elected politicians, let alone the attitudes of the public.
Worse, political power shifts, over time, to these 'independent' bodies. The public is encouraged to think they are more honest than politicians. The politicians therefore seek their approval. In response, the bodies tend to behave more politically (though not usually party-politically). They get too big for their boots.
The eternal Climate Change Committee, for example, tries to lay down the law about how we should get to net zero. The Supreme Court, which Tony Blair invented, decided, with the Remainer Lady Hale wearing her spider brooch for the occasion, that it could tell prime ministers not to prorogue Parliament. In Parliament itself, the conduct of MPs, for which they should answer to one another and the electorate, is now policed by an 'independent' commissioner who can ruin careers without due process.
There are dozens of such bodies nowadays. Their cumulative effect is to make Britain governed more by a permanent bureaucracy than by a parliamentary democracy. Bad politicians quite like this trend, because the buck no longer stops clearly with them. They can wriggle out of the doctrine that 'Advisers advise: ministers decide.'
In a properly run government, the departments themselves, and ultimately the Cabinet, should be responsible. That very name – Office for Budget Responsibility – implies that the Treasury, which creates the budget, does not do so responsibly. What is the Treasury for, then?
Towards the OBR, Labour is even more slavish than were the Conservatives in Mr Osborne's time. When Liz Truss was briefly prime minister, Labour professed absolute horror that she and her Chancellor had launched their tax-cutting mini-Budget without seeking the OBR's forecast. She did, indeed, behave in a politically inept way, which caused the 'Blob' to spread panic in the markets, but she had not committed a constitutional outrage.
Caught by its own rhetoric, Labour must now beg approval from the OBR to bolster the confidence so shaken by the recession-inducing decisions of Rachel Reeves's first Budget last October. This dependence simultaneously confines her room for manoeuvre and puts pressure on the OBR to concede, un-independently, something she wants. It decided, with the bogus precision which its methods demand, to state that the Government's planning reforms, not yet implemented, could produce 0.2 per cent growth by 2029.
A further problem with the OBR's dominance is that where its remit does not run, not enough work seems to have been done. It has not had the chance to forecast the costs of the Employment Rights Bill currently going through Parliament. Yet they will be big. The Bill culminates the Government's relentless campaign, which began with NI employers' increases and attacks on farmers and small businesses, to dissuade any private-sector business from giving anyone a job ever again.
Hence the Spring Statement's peculiar mixture of 'everything has changed' rhetoric and nothing-very-much measures. Almost the main aim of the Chancellor seems to be to recapture the 'headroom' which her own choices have lost over the past six months. Most of the dramatic things she said were not true. 'We are building a third runway at Heathrow,' she announced. I hereby invite her to take me along and show me the diggers at work. The mostly undramatic things she is actually offering fall below the level of events.
I am not saying the Government is wilfully ignoring all the evil economic omens of a world in turmoil. It is clearly very worried about them. Some of its reactions – seeing the need to increase defence spending, improve defence procurement and alliances, cut and improve the Civil Service, prevent welfare being the great destroyer of work – are the right ones.
But what I do question is whether it is prepared to 'kitchen-sink' the problems. If it did so, would it put quite so much emphasis on the absolute primacy of financial and fiscal 'rules'? Rules usually do lend credibility to economic policy and increase business confidence, but if it is true, as Ms Reeves also says, that everything has changed, might not the old rules prove as irrelevant as the Maginot Line? Remember Gordon Brown's 'golden rule' – and remember that he had to break it.
In her Budget speech last autumn, the Chancellor mentioned spending to help Ukraine, but offered no estimation of the vast effect of the war on global economic stability. So obsessed was she by the '£22 billion black hole' left by the Tories, that she could not look further to that much bigger, blacker and more expensive hole further afield – the spread of European war. Only now, in her Spring Statement, does she speak of 'a world that is changing before our eyes' because 'the threat facing our Continent was transformed when Putin invaded Ukraine', almost as if that were new.
If the Chancellor and Prime Minister really do believe that the defence of Britain is profoundly insecure because of the Putin-Trump combination (which it is), then this becomes the first-order question, threatening both our security and prosperity. It will therefore need to be funded in a way quite out of the ordinary.
As I recently argued in these pages (March 11), it would need to be something like the War Loan (though its effect would make it a Peace Loan) which began in 1915 and took a century to pay off. Such a 'perpetual' loan is normally pre-agreed with the backing of big national business institutions, such as banks and pension funds. Its size and patriotic motive, rather than frightening people off, tend to make them want to buy. It convinces them that both the crisis and the Government are serious. At present, people are unconvinced.
Other things should be thrown into the kitchen sink, if not in a single speech and coming from the Prime Minister as well as the Chancellor. One would be net zero which, interestingly, was not mentioned at all in the Spring Statement. We have now reached the right moment for Sir Keir Starmer to say, at the very least, that the current timetable is unaffordable.
Another topic not dealt with by the Chancellor is mass immigration, especially its economic effects, which the Treasury always, and wrongly, asserts are wholly beneficial. And yet another, already under scrutiny, but not nearly enough to make a difference, is welfare.
The current phrase 'luxury beliefs' could have been invented for the attitudes of Sir Keir before he became Prime Minister. They have to go. There are no political or economic luxuries left.
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