Queen’s Speech: Fiscal? Or responsible?
One major Bill included in this morning’s Queen’s Speech was the Office of Budget Responsibility Bill. The principle behind this is simple enough. An Office of Budget Responsibility will become the official forecaster for growth and borrowing. After assessing government liabilities, the OBR will make recommendations for fiscal loosening or tightening in order to have a better than 50% chance of achieving the Government’s targets for the public finances.
The OBR will be at arms-length to the Government and will be designed in such a way as to minimise political interference with the overall objective of keeping the public finances in order.
So far, so straightforward. The problem with this idea is that it gives the public finances – “budget responsibility”, in the parlance of the Bill – primacy over other objectives.
We all want to keep the public finances in order. That can be taken as read. But had the previous Government made the public finances its top priority in the last two years, it would not have introduced the fiscal stimulus and in all likelihood we would now be living through something akin to the Great Depression.
Yet had it followed that path, leading to economic depression, in the logic of this Bill it would somehow have been “responsible”. Or to turn this argument around, by introducing the stimulus, the last Government was “irrresponsible”.
Critics will say that the recent downturn is a special case. In such circumstances, priorities can justifiably change. If I were to hazard a guess at private thoughts, I’d imagine that this is what Lib Dems believe, if not Conservatives. The Tories did, after all, oppose the fiscal stimulus at the time.
But if that is true, when is a case special? A special case, when the public finances are less important than, say avoiding recession, is a matter of opinion. It is those opinions that we elect our politicians for. We expect them to use their judgement. Not tie their hands in advance, preventing them from acting.
Refusing to exercise that judgement could be described as, yes, that’s the word, irresponsible!