Osborne slurs Treasury’s integrity


George Osborne uses an interview in today’s Financial Times to continue his attack on the Treasury’s growth and fiscal forecasts. As outlined by Left Foot Forward before the election, the estimates are made by civil servant, based on cautious assumptions, and in line with Bank of England forecasts.

In an interview in today’s Financial Times, the new Chancellor says:

“But the decision on the growth forecast and the fiscal forecast in previous Budgets was a decision for the chancellor of the exchequer and not for Treasury officials and so I think you need to ask the previous chancellor and the prime minister about the growth forecasts in the March Budget.”

At his press conference this morning, George Osborne said:

“Frankly what previous Chancellors have done is move [the fiscal and growth forecasts] around a bit to try and fit their Budget measures”.

Prior to the election, Mr Osborne made a similar remark when he told the Financial Times, “The [Budget] Red Book is largely a work of fiction”. At the time, a Treasury spokesman directed Left Foot Forward this morning to Boxes C1 and C2 of the Budget. The former is a list assumptions audited by the National Audit Office. The latter outlines how “caution” is worked into the fiscal forecast. In making its predictions about the deficit, the Treasury assumes that growth will come in lower than expected; that the gap between VAT receipts and the theoretical tax liability will rise; and that the unemployment claimant count will stay at 1.74 million and not fall back to 1 million by 2014 as projected.

A similar attack was attempted and dispatched at the time of the March Budget when David Cameron claimed the growth forecasts were “rubbish” and were not the same as the Bank of England forecasts. Giles Wilkes of the Freethinking Economist blog wrote:

“This is a terrible exageration. Go to the Bank’s projections from Feb.   You will see all sorts of ranges.  Cameron has picked the very lowest one – that which depends on market expectations of rates rising, and using the mean, not the median … We have a great deal of economic slack to absorb – which we can absorb, so long as we invest.”

A Labour party spokesman told Left Foot Forward:

“We have always been entirely clear about public spending decisions. We’re required in law to set out forecasts that take account of all decisions taken and we’ve published these in Budgets and Pre-Budgets. The suggestion that Treasury civil servants have colluded in publishing anything other than accurate figures is just plain wrong. Every new Government tries blaming the last one. This just shows the old politics is alive and well with the Lib-Con coalition.”

It is unclear whether “previous Chancellors” includes his colleague Ken Clarke.

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  • http://twitter.com/houseoftwits/status/14150361583 House Of Twits

    RT @leftfootfwd Osborne slurs Treasury's integrity http://bit.ly/bBPBZe

  • http://twitter.com/andy_s_64/status/14150538539 Andy Sutherland

    RT @leftfootfwd: Osborne slurs Treasury's integrity http://bit.ly/bBPBZe

  • Grumpy Old Man

    “Osborne slurs Treasury’s integrity”. This sounds like a rerun of the “Hewitt Defence”. When Ms Hewitt was under pressure for her mismanagement of the NHS,she was being interviewed on “Today”. When it was put to her that she was less than successful as minister, she came out with the immortal line, “How dare you smear the dedicated and hard-working doctore and nurses” or words to that effect. The dedicated and hard-working Treasury civil servants will have done what their political masters wanted of them, Indeed, the late unlamented PM was known for eliminating any dissident voice in “his” Treasury. It is clear from Mr. Osbourne’s statement who he is after, and it is not the Permanent Secretary.

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  • Fat Bloke on Tour

    WS

    This is only the start and it needs to be adressed now.
    The Tories are trying to get their retaliation in first so that they can set the tone and the agenda. They are working on the basis that as they are new and fresh, people will listen to what they have to say and that the Labour leadership election will mean that the opposition will not be fully focused on day to day politics.

    Consequently the navel gazing needs to stop and the fightback needs to start.

    Less than 7 days in and they are tying to blame their cuts on Labour waste. Add in a little mood music about forecasts and they will justify their “Fire up the chainsaw, lets slash and burn” attitude on the state of the public finances and the way they choose to describe them.

    They are dog boilers, they want to do this to lower their tax rates in the future, but they will explain it as something they had to do now for the sake of the deficit. Shroud waving at its best.

    Consequently, we / you / I need to fight over every issue.
    The threads hang low in ever greater numbers.

    55% Dissolution threshold — Naked politicing
    Spelman, Cormack … — Beyond belief, kitchen table deals for Agri-Business.
    Waste — Scraping the barrel more like.
    Sniffy does Economics — He just gets worse and worse.
    Sniffy does Forecasting — Slandering civil servants, is that allowed if you went to the right school?
    £6bill savings — Is the figure net or gross, does it relate top 2010/2011 or is it an annual figure? What will the money be used for, deficit reduction of political sweeties?

  • Joe Brown

    JB@leftfootfwd
    Liam Byrnes note ” sorry the moneys run out” will be used time and time again
    as proof of labours mishandling of the treasury.

  • http://twitter.com/holtfasner/status/14158224338 Holt Fasner

    RT @leftfootfwd: Osborne slurs Treasury's integrity http://bit.ly/bBPBZe

  • http://www.tdsays.blogspot.com Tyler

    Sorry you guys, but if any of you think that Labour didn’t totally mishandle the public finances you are in la-la land.

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  • Anon E Mouse

    Fat Bloke on Tour – I notice you posted this before David Miliband’s speech… did you hear it? You may like to revise your post perhaps?

    The chancellor and the civil servants both agreed (in advance according to the treasury spokesman) exactly who was to blame – Brown the Darling.

    Listen to Milibands speech about the reasons for losing the election and you may realise your style of posting is fighting the last election and won’t help.

    Also I really don’t think the public want to give more of their money away in taxes, do you?

  • Anon E Mouse

    Will – Why do you not think opening up parts of government to independent scrutiny is a good thing?

    Much as it appears you’d like this to be North Korea Will I’m afraid it isn’t – and as for the smearing comments they aren’t true and it is a Hewitt defence.

    You are usually more balanced than this – the elephant in the room is the debt, remember what Byrne said: ”sorry the money’s run out” or is he wrong now?

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  • John77

    Will, have you compared the forecasts with the out-turn? In the first three years of New Labour when Brown was enjoying the benefits of Ken Clarke’s brilliant or lucky management, Treasury forecasts were always over-cautious so that he could report better-than-expected results and claim credit for them. Since 2000, Treasury forecasts have been consistently over-optimistic. If these have been prepared as a cautious view by dedicated civil servants with no directions from Brown, then one wonders whether they are competent to run a whelk stall.

  • Lady J

    The NASTY Tories are back. Do the lib-dems really believe that these are the people they shold be in a coalition with. They will foreever be tainted the right wings giants of the Tory party wakes up to force their will on the Labour Party.

  • Mr. Sensible

    Office of Budget Responsibility – what’s that? A quango! I thought Cameron was meant to be getting rid of those?

    Will, as someone who used to work in the treasury, perhaps it might be worth an article talking about how things work in there.

    Is there much you could say

  • Anon E Mouse

    Lady J – Did you not hear David Miliband’s speech earlier today?

    Try listening a bit when the leadership debates begin. May I suggest more receiving and a little less transmitting on your part.

    The style of attacks you make are exactly what (both) Miliband’s have commented on as being an unattractive way to make a point.

    Grow up please and be a little more constructive – you are not helping the Labour case when you reinforce the prejudices floating voters in this country have. Alternatively keep your remarks for the sixth form debating society – this is an adult blog.

  • http://a-freedom-writer.blogspot.com Simon Tinsley

    Well considering the treasury’s forecasts are above growth more than half the time, and consistently above those predicted by think tanks it is no unreasonable to suggest that they might be a touch optimistic. For further analysis, see this piece from the Adam Smith institute: http://www.adamsmith.org/publications/economy/treasury-forecasts:-the-tendencies-and-consequences-of-inaccuracy/

    Perhaps being a touch less optimistic than the Treasury regularly has been would have put Britain in a better fiscal position – rather than banking on growth that never materialises. There is clearly some systematic error in their forecasting, and considering it doesn’t often match with the forecasts from think tanks, it’s not an Economics forecasting problem, but a Treasury one.

  • Fat Bloke on Tour

    Anon E …

    The reasons for the Labour party’s electoral failure include:

    1) too middle class.
    2) too metropolitan.
    3) too rational
    4) too few ideas
    5) too scared of its own shadow / lack of confidence.

    The current crop of candidates suggest that we have a lot to do before all these issues are sorted,

  • Fat Bloke on Tour

    Simon T @ 8.37

    The AS report you highlight isn’t worth the fag packet it was written on.

    Treasury growth forecats have a better track record than any other forecsting organisation, the AS analysis only looks at the Treasury record in isolation and as such cannot be used to qualify its record.

    Where I do think the Treasury had issues was its forecasting of the tax revenue, it consistently was £10bill over in its forecasts, a case of it being 2 years behind the City in dealing with the tax avoidance / tax evasion demarcation line.

    Please remind the blog about the amount of business being done by Barclays SCM at this time and who benefitted and who lost out from its expertise.

    Tax rates — Currently the tax take is 36% of GDP.
    Low by the standards of the last 9 years.

    We should be looking to 40% to support the existing standards within the public sector and the need to keep the deficit under control in the medium term.

    When we look back, the AD support programme will have added 15% to the national debt, costing 0.6% of GBP to repay. Add in the support still to pay out and we will be looking at 1% of GDP to pay the interest on the debt. This is my guess of the extra resources that have been put into the economy over and above what we could have hoped for if Dave the Rave and Sniffy had been in charge in 2007.

    Pure speculation I know but if they had been in charge then they would have fired up the chainsaw for a bit of slash and burn the minute the Credit Crunch announced itself.

    Not brilliant regarding the extra interest but if Maggie had been in charge Bristol / Liverpool / London would be in flames at the moment and beggars would have been re-introduced onto the streets of the UK.

    Never mind the chance of a double dip it would have been Death Spiral UK!

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  • Fat Bloke on Tour

    LFF @ 10.17

    What are your thoughts on the stresses and strains in the Treasury if the Orange Book fiscal mentalist outshines Gideon aka “Sniffy”?

    Not difficult I know but would the Tories wear it if Mr Laws starts running the show?

    Standing on the outside looking in I have no real insight / opinion on the characters involved but Sniffy in action really does look like a numpty.

  • Anon E Mouse

    Fat Bloke on Tour – Why Gideon or Sniffy?

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