Treasury ordered to open its books
Tuesday 20 May 1997
Gordon Brown, the Chancellor of the Exchequer, will announce the unprecedented, independent audit of his predecessor's accounts in the Commons today, and MPs will receive a direct report from Sir John Bourn, the Comptroller and Auditor-General, in good time for the summer Budget.
The National Audit Office, Parliament's independent financial watchdog, replaced the Exchequer and Audit Department in 1983, with beefed-up powers under a Comptroller whose independence was reinforced by statute. In 1995 his office audited public funds of more than pounds 500bn, with a standing order to monitor the efficiency and effectiveness, and the propriety, of public spending.
But the new role to be picked up by Sir John today marks an historic first - the ability to question the Treasury's most sensitive political assumptions on issues like economic growth.
A Treasury source told The Independent last night that Sir John had been asked to question a number of the "rosy" assumptions made by officials working under the instructions of Kenneth Clarke, the former Conservative chancellor.
In particular, Sir John's officials would be examining the forecast for the underlying trend rate of economic growth, put at 2.5 per cent "over the rest of the 1990s" in Mr Clarke's last Red Book Budget Report. That estimate compares with an average growth rate of 1.7 per cent for the 18 years of Tory rule.
Another assumption being questioned by the Treasury's new management related to the assumption that a "spend to save" investment of pounds 800m in fighting fraud and revenue evasion would reap savings of pounds 6.7bn over the next three years. That assumption could have led to an artificial lowering of the Public Sector Borrowing Requirement.
Mr Brown will tell MPs today that he wants to restore trust, honesty and openness to public finances.
In a speech to the Confederation of British Industry tonight, Mr Brown will reinforce his pledge to be tough on government spending and borrowing and that the Budget next month will look to the long-term needs of the economy. "I will set tough rules for government borrowing and for spending. I will publish a plan for deficit reduction over the medium term.
"Under this Government there will be no dashes for growth, no unsustainable booms, no risk-taking with inflation, no quick fixes and no short-term manipulation of the economy for political ends. Our commitment is to the long term," Mr Brown will say.
The Chancellor will also make a point of emphasising the importance of partnership with business to the Government. Further appointments of top business people are due to follow yesterday's announcement that Martin Taylor, chief executive of Barclays Bank, is to chair a Whitehall task- force on tax and benefits.
In addition, representatives from the CBI are to join a new working party on the completion of the European single market.
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