Lies, damned lies and economics

This General Election, like any election, will come down to numbers.

This General Election, like any election, will come down to numbers. Not just seats and votes, but the number of immigrants, the number of houses and the number of hours waiting on the NHS. But the big numbers are about public spending: how to generate the money and how to spend it. The Conservative party continue to bang the ‘long term economic plan’ drum and insist that they are the (only) party that can keep the British economy on an even keel. Enter Mr Balls stage left, who is so confident that his economic plan is the one, that he has (repeatedly) asked that the Office for Budget Responsibility (OBR) check his homework for him, sure that he will be given a gold star for his efforts.

This raises two issues – firstly if there is merit in the parties’ manifestos being independently audited, and secondly whether or not the OBR is the best body to do it. The matter was debated at some length in the media and parliament over the summer of 2014 with Mr Balls’ motion being defeated by 71 votes in Parliament. There was generally support for the idea that some independent analysis of spending plans would be useful, although who should foot the bill for such an endeavour remained unresolved.

As to whether it should be the OBR, the chair, Robert Chote, sat on the fence, heralding the idea of an audit as positive, but also raising concerns about the logistics: manifestos tend to be published late and the manpower required to audit the policies would put a real strain on the OBR. On a more ideological level, Philip Booth and Ryan Bourne wrote one ConservativeHome that ‘There’s also an institutional reason why this [using the OBR to audit manifestos] would not be a sensible move. The head of the OBR is appointed by a Government. We should keep the functions of government separate from the operations of political parties as far as is possible.’

It is now, realistically, too late for the OBR to check the as-yet-unpublished manifestos for solvency but thankfully for the three main parties the Institute for Fiscal Studies (IFS) has handily compared the money behind the policies already.

The IFS report is an analytical document, designed to compare the policies for spending public money that have been announced so far. Labour have already built on this favourable remark in the document, ‘Of the main parties, Labour has perhaps been the most cautious of the three in that, at least on the basis of its own costings, it appears to have managed not to announce an overall net giveaway.’ However there is also a warning about the increased public spending plans that have been announced by both the Lib Dems and Labour, ‘The spending cuts required by Labour and the Liberal Democrats to achieve their stated borrowing targets would… obviously come at the cost of government debt remaining higher for longer. This would have two costs: more public spending would have to be devoted to making interest payments on debt, and the UK would be less well placed to absorb any future large shocks that pushed up public debt, as the financial crisis did in 2008.’ No doubt the Tories will be picking up this point in the near future.

In addition to the analysis from the IFS, the parties have each had a go at analysing one another’s figures. The Tories have published an 86-page tome on the flaws in Labour’s plans, concluding that the first year of a Labour Government would see spending increase by £27.1bn. The document was unveiled by Tory heavyweights on Monday, a mere hour after Ed Miliband ‘began’ his election campaign with a speech in Manchester. The document itself is clearly biased but, more than that, it is also operating on very loose information, as Rowena Mason shows, ‘A further spending item of £63m to bring back some abolished cycling initiatives appeared to be based merely on a Labour commitment to “take steps to promote cycling by making it safer and more accessible”.

In response to this dossier the Labour party published an 8-page response in which Ed Balls slammed the ‘dodgy Tory dossier riddled with errors on every page.’ This was then followed up later in the day with a 37-page rebuttal strongly titled The Tories’ Smear analysis of Labour Party Policy. At this stage, there is little to be gained from comparing the style of the documents – the Tories clearly having invested significant time and resource in analysing every policy nugget from Labour, whereas Mr Balls was forced to offer a short, sharp rebuttal to the report. But what is clear is that both parties will be making real efforts over the coming months to fact-check every economic claim made by one another.

Why this squabbling over maths? Well, in addition to the fact that economics drive most political decisions, this election will be about persuading the public to trust politicians, not just with the economy, but more broadly as well. A recent poll by IpsosMori shows that politicians are still trusted less than estate agents, so perhaps using thorough, albeit partisan, economic analysis of policy will inspire the electorate more than calling Ed Miliband weird. Or perhaps the discrepancies in the numbers will just further erode public confidence. We will see over the next 117 days