Wah! Wah! Change the rules!
We’re not huge fans of the Office for Budget Responsibility, it has to be said. That there should be some responsibility in the budget is a good idea, obviously, and wouldn’t we all like to see some glimmers of it starting to arrive? But we’re not wholly keen on the whole macroeconomic planning idea in the first place - our view is more generally get the microeconomics right and she’ll be fine. We’re also really very certain that we already have a responsibility check on the budget - prices.
But, OK, perhaps those are minority views. This is still silly:
Rachel Reeves must reform the Office for Budget Responsibility (OBR) to open the way to more public investment, an alliance of thinktanks has argued ahead of the chancellor’s spring forecast on Tuesday.
With Keir Starmer’s government under intense pressure after Labour’s defeat by the Greens in Thursday’s Gorton and Denton byelection, the thinktanks called on Reeves to review the watchdog’s remit.
The coalition includes the Labour group Progress, usually considered on the right of the party, the leftwing thinktanks the New Economics Foundation (NEF) and Common Wealth, and the feminist Women’s Budget Group.
They said: “It has become increasingly clear that our current framework is contributing to instability, short-termist underinvestment and a lack of focus on long-term risks and opportunities.”
The demand is that said responsibility measure must be altered to include the wild claims about the effectiveness of government “investment”. No, really:
Adam Langleben, the executive director of Progress, said: “The OBR was created for an era defined by austerity, and while it can clearly count the upfront cost of investment, it too often misses the long-term value, whether that’s a healthier workforce, better housing or modern transport.
“Its judgments should guide decisions, not shut down ambition. The real risk isn’t investing in Britain’s future, it’s leaving things exactly as they are.”
Cranking up doctors pay is an “investment “ in the NHS, as is increasing the size of the Lanyard Class within it, so therefore this shouldn’t be counted as actual spending at all. We can all see where that leads.
As with Goodhart’s Law, the Lucas Critique and so on. As soon as there is a measure, a rule, a plan, immediately everyone starts to game it. As here - the insistence is that spending they like, these lefty groupuscules, should be classified as investment and so not constrained. That way lies the test of that contention that it’s wheelbarrows that cause hyperinflation.
Tim Worstall