My letter to Sir Nicholas Macpherson, Permanent Secretary to HM Treasury, on the manifesto costing process

Dear Nick,

As you know, we have been proposing for some time that the Office for Budget Responsibility (OBR) should be allowed to independently audit every spending and tax commitment in the manifestos of the main political parties.

The failure of this Government to meet its fiscal plans, the fact that borrowing has again been revised upwards in the Autumn Statement, and recent unfunded tax promises made by the Conservatives, all make it more important than ever that the policies of all the parties are properly costed and funded.

The Chancellor of the Exchequer has not yet agreed to my proposal, despite past support from the Conservative Chair of the Treasury select committee and the Chief Secretary to the Treasury himself saying that it is well worth further consideration. However, I still believe that HM Treasury can play a vital role in bringing accuracy and transparency to the public debate in its costing of the policies of all parties.

Unfortunately, the current process set out in the Ministerial Code, where officials carry out costings based on assumptions provided by Special Advisers, is now putting HM Treasury officials in an impossible position owing to Conservative advisers consistently providing blatantly false and politically motivated assumptions. Just this weekend, they have used figures based on false assumptions about Labour’s fiscal plans.

The current process also fails to specify the scale of unfunded commitments made by the Conservatives and Liberal Democrats. As the Institute for Fiscal Studies (IFS) said in their recent briefing note ‘Fiscal aims and austerity: the parties’ plans compared’, the Conservatives and Liberal Democrats have made unfunded commitments, while Labour has been the most cautious of the three and has not announced an overall net giveaway in its policy announcements – in other words, we have not made unfunded commitments.

HM Treasury’s process for carrying out party policy costings therefore now needs to be urgently reformed so that the public are not misled. I am therefore proposing that:

- HM Treasury officials should cost every spending and tax manifesto proposal of the main parties. The cost of the unfunded proposals made by the Conservatives and Liberal Democrats could then be accurately assessed;

- This process should involve the parties themselves clarifying their policies, and I would like to offer my help in ensuring that up-to-date and correct assumptions about Labour policies are used when HM Treasury officials are requested to cost them.

In this way we can ensure that HM Treasury officials are not put in an impossible position of having to use blatantly false assumptions provided by Conservative advisers in their work, we can avoid further false claims about Labour policies entering the public domain, and we can ensure that the public can accurately assess the proposals of all the main political parties.

If the Chancellor of the Exchequer were to agree to our proposal to allow the OBR to independently audit measures, this would not be necessary. But in the meantime, I am sure that you are as keen as I am that there is an accurate basis for comparing the commitments made by the parties, and that HM Treasury officials are not misled by Conservative advisers in their costing work. I therefore look forward to hearing from you as soon as possible.

Yours sincerely,

Ed Balls MP

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Posted January 4th, 2015 by Ed