Written evidence submitted by the Hansard
Society
SUMMARY OF
RECOMMENDATIONS
— The Treasury Committee should hold pre-appointment
hearings and possess a veto power for the appointment of all members
of the Budget Responsibility Committee, not just for the appointment
of the Chair of the Office for Budget Responsibility. —
Consideration should be given to whether there is scope for broadening
the OBR remit to enable Parliament itself (through perhaps the
Treasury Committee or the Liaison Committee) to request/commission
independent evaluations of government policy, within carefully
agreed parameters, in respect of economic and public finance forecasting.
— Mechanisms should be established to ensure that OBR reports
are debated annually in the House of Commons, in either government
or backbench time.
BACKGROUND AND
CONTEXT
1. Parliament has a unique and historic
constitutional role in the authorisation and scrutiny of government
expenditure. As such, financial scrutiny is a fundamental pillar
of our political system and goes to the heart of the relationship
between Parliament, government and the public. It ought to be
considered one of the most important tasks facing MPs, but in
reality Parliament has often been an acquiescent bystander: the
Budget and legislation enacting taxation proposals receive limited
debate; and on Estimate Days billions of pounds of public spending
are authorised with only limited scrutiny.
2. In 2001 the Hansard Society's Commission on
Parliamentary Scrutiny (the Newton Commission) noted that Parliament
needed additional analytical capacity, enhanced research facilities
and access to financial expertise if select committees were to
adequately scrutinise financial matters.[1]
Since 2002 the expertise available to committees has been significantly
augmented by the work of the Scrutiny Unit. However, in 2005-06
the Hansard Society concluded that resources available in this
area should be expanded either through augmentation of the Scrutiny
Unit or the establishment of an independent Parliamentary Finance
Office.[2]
This would provide both committees and individual MPs with access
to technical expertise and support to study financial data provided
by the government, and check and evaluate the assumptions on which
it is based.
3. In the intervening years there have been
a few, albeit modest, improvements in financial scrutiny (for
example, the Treasury Alignment Project) and Parliament has more
opportunities and greater resources than previously to undertake
its scrutiny role. However, there remains considerable scope for
MPs to foster a greater culture of detailed financial scrutiny
in order to hold the government to account in this crucial area
of work.
4. More broadly the Hansard Society's work
on legislative and procedural reform has led us to regularly call
for improvements in the role and function of select committees,
including revisions to the scope, purpose and impact of public
appointment hearings.
5. It is in the context of these areas of
our work that we comment on the proposals regarding the future
arrangements for and accountability of the new Office for Budget
Responsibility (OBR).
APPOINTMENT HEARINGS
6. The Chancellor has proposed that the
Treasury Select Committee should hold a pre-appointment hearing
and possess a veto over the appointment of the Chair of the OBR.
We welcome this important development. It will serve to enhance
the independent reputation of the OBR and set an important precedent
with regard to future parliamentary scrutiny of the appointment
of chairs of similar independent bodies in the future.
7. However, the Chancellor has suggested that
the Treasury Select Committee hold only pre-commencement hearings
with regard to the other two members of the Budget Responsibility
Committee (BRC). We contend that the same arrangements for the
appointment of the Chair should be applied to the appointment
of the other members of the BRC. The Chair is of course the most
important post, particularly as the public, ambassadorial face
of the OBR. However, the other members of the BRC will have critical
roles to play in delivering different aspects of the work of the
OBR and members of the Treasury Select Committee should therefore
be able to reflect on the broad skill set required of the BRC
as a collective body.
ACCOUNTABILITY TO
PARLIAMENT
8. If Members were so minded, the OBR legislation
might present Parliament with an opportunity to enhance its financial
scrutiny work by broadening the remit of the OBR to include areas
where Parliament itself has an interest in securing/commissioning
an independent evaluation of government policy in respect of economic
and public finance forecasting. This would have the additional
advantage of underscoring the independence of the OBR, reinforcing
its role as acting independently in the public interest. Any broadening
of its remit to allow Parliament (eg through the Treasury Select
Committee or the Liaison Committee) to request forecast information
must be achieved within clearly defined parameters. The OBR is
not and should not be seen as an alternative to a fully functioning
Parliamentary Finance Office serving Members and committees direct.
And any broadening of the OBR's remit in this way would only be
justified, and be effective in practice, if such work requests
were properly resourced and the OBR were asked to provide Parliament
with an independent assessment of an issue within a reasonable
timeframe for the work required.
9. There are also important lessons in relation
to parliamentary accountability to be learnt from the experience
with the Bank of England since its independence was enshrined
in the 1998 legislation. In setting out the advantages of independence,
the then Chancellor of the Exchequer made clear that not only
would the Treasury Committee be able to scrutinise appointments
to the Monetary Policy Committee but that Parliament should have
the opportunity to debate the Bank's annual report. This was endorsed
by the members of the Treasury Committee who made clear in their
first report on the subject that they expected a debate on the
Bank of England to take place each year in government time within
a month of the Committee having taken evidence on the Bank's annual
report.[3]
The Modernisation Committee was asked to consider how to facilitate
this. In practice, a yearly debate on the Bank of England annual
report has not happened with any regularity; the idea fell by
the wayside. Publication of the OBR forecasts will similarly provide
an important opportunity for all members of the House of Commons
to debate its work and thus to augment current scrutiny of aspects
of the government's economic policy and approach to public finances.
The Committee might thus give some thought to how it will ensure
that such regular debates take place, and whether that should
be in government or backbench time, liaising with the new House
Backbench Business Committee, the Liaison Committee and the Usual
Channels as required.
August 2010
1 Hansard Society (2001), The Challenge for Parliament:
Making Government Accountable: The Report of the Hansard Society
Commission on Parliamentary Scrutiny (London: Hansard Society),
pp 60-69. Back
2
A Brazier and V Ram (2006), The Fiscal Maze: Parliament, Government
and Public Money (London: Hansard Society), pp 69-71. Back
3
House of Commons Treasury Committee (1997-98), First Report:
Accountability of the Bank of England, HC 282, section IV;
See also the House of Commons Treasury Committee (1997-98), Accountability
of the Bank of England: The Response of the Government and the
Bank of England to the First Report from the Committee in Session
1997-98, HC 502. Back
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