Magazine article Public Finance

Osborne Moves to Stop the 'Fiddling' of Fiscal Forecasts

Magazine article Public Finance

Osborne Moves to Stop the 'Fiddling' of Fiscal Forecasts

Article excerpt

Labour's economic record took a battering this week amid allegations of reckless spending decisions and inaccurate growth and borrowing forecasts.

The claims came as the new government prepared to announce £6bn of Whitehall cuts and Chancellor George Osborne established an independent body to produce public finance estimates.

David Laws, the chief secretary to the Treasury, revealed that the previous government had pressed ahead with spending decisions against the advice of its own accounting officers, fuelling arguments that it was profligate in its final months of power. Osborne also suggested that the forecasts produced by the Treasury could have been subject to political interference.

But Rick Muir, a senior research fellow at the Institute for Public Policy Research, said he didn't expect such revelations to tarnish Labour's record in the long run because 'people expect an incoming government to say there are all these skeletons in the cupboard and they left things in a mess'.

He defended most of Labour's economic performance, backing the fiscal stimulus and bail-out of the banks. 'That led to government having to borrow a lot of money but things would have been worse if we had let the recession takes its course,' he told Public Finance.

'I don't support the view that the reason we have so much debt is because they were spending public money willy-nilly.'

But he added that Labour should have raised taxes in its third term to keep pace with public spending. …

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