Telling Truth to Power

Sometimes a good idea turns round and bites you on the ankle.

The Chancellor might be thinking this about the Office for Budget Responsibility which he set up in 2010 to provide an independent overview of the public finances .

After the 2008 financial disaster these financial councils became all the rage. Lots of countries set them up to produce forecasts for economies and public finances, scrutinise Government costings, check on governments’ fiscal forecasts and so on.

So far so judicious. Another, less complimentary way of looking at such councils might be to think that they are yet another example of outsourced democracy; the taking away of decision making from Governments and their elected members, into the hands of the experts, the economists and financiers who might profess allegiance more comfortably to a global finance system rather than to local economies of their own countries.

However the irritation that George Osborne may feel when he sees the initials OBR will be based on the Office’s unfortunate habit of looking at uncontested figures- rather than the predictions the Office also makes- and telling the truth about they mean.

Recently the TUC held a seminar on welfare spending and unemployment. Andy King, a civil servant who heads up the OBR staff of 17 was the main speaker. Now Mr King is extremely impressive but doesn’t garnish his public speaking with useful crowd pleasers. Like smiling. Or jokes.

He clearly doesn’t do partisanship either. Instead, using statistics and analysis, he took aim and fired at two of the major arguments that this Government uses to justify austerity. He left his audience open mouthed.

The first argument the Coalition uses is that Labour left UK finances in a mess(and probably caused the crisis). The second is that our ‘welfare’ bill is unsustainable and  out of control.

The OBR analysis is as follows. Current  annual cost of welfare in the UK is around £210billion. This is 13 percent of GDP( gross domestic product). Total welfare spending has more than doubled in 30 years. Gosh! Doubled! No wonder the Coalition wants to cut back!

Hold on though. Mr King pointed out that as a proportion of GDP the spending on welfare has stayed pretty static for those 30 years. In 2007( when the last Government was ‘recklessly destroying our economy’ as the Daily Mail regularly puts it) the proportion on welfare spending at 11 percent was the same as 25 years earlier.

Between 2007/8  and 2012/13 welfare costs rose by 2.5% . In other words both Governments had to attend to the human needs of those most affected by both the banking crisis- and now the austerity programme of the Coalition.

For Mr King pointed out that drivers of the rise in welfare spending under this Government include pensions- up to 45 percent of welfare spending by 2020- and housing costs. The OBR notes that the increase in rental cost per claimant has risen because of the move from council housing to private rental housing.

In other words, one of the prime Coalition policies- that people should rent privately and that the State should retreat from housing its people- is responsible for the increased welfare spending about which the Government ( step forward Iain Duncan Smith) keeps bleating is out of control.

You couldn’t make it up. And thanks be to the OBR. Which doesn’t.


























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