Tories accuse Brown of 'brazen cheating' to meet his golden rule

A furious political row broke out yesterday after it emerged the Government is pushing through a shake-up of the public finances that should improve Gordon Brown's chances of hitting his fiscal rules.

The Conservatives accused the Treasury of "brazen cheating" after it emerged that road maintenance spending would be reclassified as capital rather than current spending from next month.

The move would take it out of the current budget - used to measure Mr Brown's cherished "golden rule" that he must only borrow to invest over an economic cycle.

The change was announced by the Office for National Statistics, a Treasury department, in a footnote to the latest public finances, which gave a separate boost to the Chancellor in the form of the largest cash surplus for five years last month.

Oliver Letwin, the shadow Chancellor, said: "This is a classic case of fiddled figures. The Chancellor has a problem with his forecasts of public borrowing."

Vince Cable, the Liberal Democrat economics spokesman, said: "Gordon Brown must open up his books to genuine independent evaluation by a body accountable to Parliament to restore credibility in fiscal policy."

The ONS refused to discuss details of the changes, saying the magnitude and the implications for Budget finances would be published on 28 February. With a Budget expected on 16 March, the Treasury would be able to incorporate the new figures into its public finance forecasts through to 2010.

A survey by The Independent of the Department for Transport, Highways Agency, Scottish Executive, Welsh Assembly and Transport for London showed they spent almost £2bn, or 0.2 per cent of GDP, on road maintenance.

Over a seven-year economic cycle that would total some £14bn, filling the £11bn "black hole" that experts such as the Institute for Fiscal Studies have found in the public finances.

There was concern among City banks that lend money to the Government. Ben Broadbent, a senior economist at Goldman Sachs, said: "This reclassification will improve the public sector's measured current finances used for the Golden Rule [but] the ONS will not say until 28 February what order of magnitude the revisions are likely to be."

An analyst at a City bank, who asked not be named for fear of souring relations with the Treasury, said: "The Government is addicted to doing these things in an underhand way and it reminds one of the possibility that there may be more of these things."

The ONS strongly denied allegations of fiddling the statistics. "There was absolutely no improper influence," a spokesman said. "There was a joint study with Treasury statisticians but the decision to make the revision was made by the National Statistician alone, and its implementation fully accords with code of practice."

A Treasury spokesman denied it had put any pressure on the ONS to produce the work before the Budget. "This is nothing to do with the Treasury and is a decision taken by the ONS."

The row diverted some attention from the figures, which showed the Government had a much higher surplus than expected in January. A surge in tax revenues left the Treasury with a cash surplus of £16.9bn in January, £2.5bn higher than a year ago and the largest since January 2000.

The Government's preferred measure, the net borrowing requirement that smoothes out monthly volatility, posted a three-year high surplus of £6.6bn. This cut the deficit for the first 10 months of the fiscal year to £30.9bn, compared with the Chancellor's target for the full year of £34.2bn.

Asked about the figures yesterday, Mr Brown said: "Today's figures show that Britain, as I promised, is meeting our fiscal rules."

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