George Osborne tried to deflect intense criticism about the way the Office for Budget Responsibility (OBR) has operated by announcing yesterday that the Treasury select committee would have power of veto over the chairman of the new body.
The Chancellor said he was advertising for a new permanent head of the OBR after it emerged recently that the interim its leader, Sir Alan Budd, is to retire this summer. Mr Osborne said the new appointment would be made by "mid-August".
The Chancellor came under sustained questioning from the select committee chairman, Andrew Tyrie, who asked who knew what before the OBR released fresh data about the labour market shortly before Prime Minister's Questions two weeks ago.
The figures in effect rebutted media claims that a Treasury leak showed some 600,000 public-sector workers would lose their jobs. Mr Osborne said he wanted to dispel the "conspiracy theories", adding: "To my recollection [the Prime Minister] did not have the information that was published until it was published. He was aware once the OBR said it was releasing the data that it was releasing it. Of course, it's a matter of regret to me that anyone questions the independence of the OBR. If one takes a step back, and asks, is it likely that the Government will want this kind of information to be produced for its benefit, the answer is no.
"For me, the whole purpose of creating the OBR is to give confidence in the statistics produced by the Government, and for the OBR to have complete independence about the numbers it publishes and when it publishes them. And we're going to put that on a statutory basis."
Nor were some members of the committee content to accept the Chancellor's assurances that his Budget was "fair" or "progressive". Mr Osborne has undertaken to "consider" writing to the committee to explain further the effects his measures will have on poorer families in particular.
In an extraordinary aside, the permanent secretary to the Treasury, one of the most senior civil servants in Whitehall, appeared to accuse Gordon Brown of being deluded about Britain's long-term growth rate. He told Jesse Norman, a newly elected Conservative MP for Hereford: "There's always a danger that you can delude yourself around trend growth. I saw that in the late Eighties and I've seen it happening again quite recently. I think caution and transparency should ideally inform economic policy formulation."
Though sometimes powerful and influential, the modern departmental select committee system, which was started in 1979, has never before been offered a statutory power of veto over an executive appointment. It moves the Commons committees closer in powers and status to the US congressional committees.
In response to a suggestion that the committee might also have the power to sack the chairman of the OBR, Mr Osborne said he wanted to ensure that, as with the Governor of the Bank of England, the chairman could not be removed by a political decision, either by himself or a parliamentary committee.
The Treasury may wish to use the 1998 Bank of England Act as a template. This says that the Bank, with the consent of the Chancellor, may remove a person from office if it is satisfied that he has been absent from meetings of Court (the Bank's governing body) for more than three months without its consent; or that he has become bankrupt; or that he is unable or unfit to discharge his functions as a member. Such rules would make the OBR chairman virtually immune from interference.Reuse content