COMMENT : Time to pension off Treasury panel of wisdom

'Seven economists, some notorious for strongly personal views, would be bound to produce at least 10 opinions covering the gamut of economic forecasts. Whatever the mandarins said would be bound to fall somewhere within that range'

Between now and the spring the Chancellor is supposed to choose four new wise men or women to fill the vacancies in the Treasury's panel of independent economists. The candidates will be lingering hopefully by their telephones, waiting for the summons. Mr Clarke should brace himself to disappoint them all. The time has come to abolish the panel of outside experts, whose twice-yearly meetings, far from being an exercise in open government, have become a cosmetic exercise we could do without.

The panel was, in fact, a wheeze dreamt up by Norman Lamont to cover his and the Treasury's embarrassment at getting forecasts of the economy so badly wrong. It is easy to understand why Mr Lamont felt two and a half years ago that something needed to be done. In the Treasury entrance lobby in Whitehall visitors can see, proudly displayed in a glass-fronted cabinet, an award for the best economic forecast. The date is 1986, a vintage year for the in-house team, which has not been repeated since.

It looked likely from the start that the Treasury would exploit the wise men for its own ends rather than use them to provide real help in setting policy. Seven economists, some of them notorious for their strongly personal views, would be bound to produce at least 10 opinions, covering the whole gamut of economic forecasts. Whatever the mandarins said would be bound to fall somewhere within that range.

So, indeed, it has proved for the past three years. The Treasury chaps regularly produce a forecast near the consensus, partly because they are moderate people, partly because if they do not they will be accused of political bias, massaging inflation or growth projections to suit their masters. A cautious consensus forecast is something they can manage to provide for the Chancellor without the window dressing of the independent panel.

If Mr Clarke believes that independent opinions really do help keep him better informed, he should opt for a radical alternative. That would be to contract-out economic forecasting. There is a choice of several well- respected forecasting groups, many staffed by former Treasury economists. It would be cheaper than having to pay the overheads for a full team of official economists, and could help with the department's programme of staff cuts. The Treasury only needs economists to work on policy matters, not the nuts and bolts of number crunching.

More muscle-flexing by the grocery giants

One by one the handful of cosy cartels that survived into the era of free-market competition are coming under assault from the supermarkets. We have had the battle of the books, followed by Asda's challenge to non- prescription medicines. Now Tesco is having a tilt at the distribution of newspapers and magazines. Add to this a supermarket-inspired petrol price war, as well as the shake-up in the milk supply market, and it is clear that Britain's grocery giants are ready to take a pop at anything that smacks of resale price maintenance or restrictive practice.

There is no mystery about why the likes of Sainsbury and Tesco are flexing their muscles. With their expansion plans cramped by government restrictions on out-of-town development, they are looking for new ways to expand. They now have strong enough brands and efficient enough distribution systems to move beyond a rapidly maturing food market. With bank balances bulging with the cash once earmarked for new store openings, they have the clout to cut prices and win the reductions back in higher sales.

For the most part, consumers should be cheering. With magazines, for example, it is hard to defend a system that limits superstores' ability to cut prices or carry as much stock as they would like. Should we really be supporting the price of Woman's Own to protect the local corner shop? Britain hardly has a shortage of newsagents.

The possible exception is non-prescription drugs. It is not easy, in principle, to justify forcing customers to pay a premium for these as a hidden subsidy to prescription drug outlets. But the government policy of pushing more drugs off prescription makes it important that there continues to be a large number of high street pharmacies, rather than a long drive to Asda for Lemsip. This is an area where political sensitivities could set a limit to the ambitions of the supermarkets.

Indeed, the biggest cloud on their horizon is the potential for intervention if they over-reach themselves in any area affecting small business. The Government's brake on superstore development to protect the high street led to the supermarkets' aggressive behaviour in the first place. While competition policy is currently more sympathetic to the needs of big, efficient companies than embattled little ones, the power of the small business lobby should not be underestimated as the election approaches.

It is too soon to rule out government action, possibly through a monopolies referral, if the supermarkets push too hard. Still more likely, though it would be wrongheaded, is a backlash from a Labour government. Perhaps the supermarkets are launching their offensives now to grab new markets while they can.

TV auctions unequal to digital free-for-all

The ragged end-game now being played out by the Independent Television Commission and bidders for Channel 5 is surely final proof that the auction process laid out under the Broadcasting Act is an utter nonsense. Pitched akwardly between "market forces" and an archly old-fashioned view of regulating television as a "public service", the Act calls for the award of the Channel 5 and the Channel 3 licences to the highest bid. But this is subject to complex rules and regulations on programming, ownership and technical questions.

That hybrid approach throws up ridiculous ranges of bidding: in the case of Channel 5, from pounds 2m to a princely pounds 36m a year. At the same time, the complexity of rules, and the degree to which the ITC can make its own judgements about programme quality, leave the process open to question. Worse, it encourages sneaky bids with fanciful ownership structure and wild promises of public-spiritedness that won't survive.

British television is being opened up to real competition. Soon, digital TV will add another 20 or so terrestrial channels to the menu. The cosy approach that worked wonders in the age of the duopoly (BBC, ITV) is unequal to the free-for-all of the digital age. The Government needs to rethink how it auctions off "scarce capacity" such as terrestrial analogue (Channel 3 and 5) and digital frequencies. Why not set a minimum figure for the auction, making it impossible for low-ball bids to triumph; publish all application material from bidders; and make rules on ownership and content far more transparent, and unbreakable.

Most important, perhaps, is to change the culture at the ITC, injecting more creativity and global thinking. Bureaucrats armed with dusty rule books are not the people to foment competitive, high-quality television.