Labour left us with hugely over-priced public services
Contrary to what the BBC and Labour would have you believe, the mainstream economic consensus strongly supports George's assault on the fiscal deficit. They support his plans to squeeze public spending and cut welfare benefits, and moreover they urge him to get on with cutting business and income taxes.
The latest OECD commentary is a striking addition to this support. The OECD says:
"The comprehensive budget announced by the government on 22 June was courageous and appropriate. It was an essential starting point... OECD shares the UK government’s position that fiscal consolidation is a policy for growth...So the OECD agrees that cutting the deficit is the way to boost sustainable growth - not undermine it as the left claim. They also agree that our public services have grown inefficient and costly under Labour, and require serious surgery.
UK productivity is hampered by slow or partially implemented structural reforms to public services and low levels of resource utilisation. Healthcare and education services are relatively inefficient... The cost of producing public services in the UK is well above the OECD average and has risen significantly over the past decade..."
On taxes, they support George's move to cut the Corporation Tax rate, but urge him to go further. In particular, they want him to reverse Labour's crackpot increase in the top rate of income tax to 50% (as we've blogged previously, it will damage incentives and may well end up reducing tax revenue).
The only question now is WTF the OECD - who we pay £15m pa for BTW - didn't say any of this while Labour were still at the controls? It might have saved a lot of grief if they'd told us then, before we'd mortgaged the grandchildren.
It all comes back to that independence thing. The OECD is an excellent organisation in many ways, and employs a lot of very talented people. But unfortunately, any organisation directly funded by politicos is always going to have problems speaking the unvarnished truth unto power - especially in public. And doubtless Labour could argue that very point applies equally well to this latest report.
Which brings us back to the unfortunate events surrounding Alan Budd and the Office for Budget Responsibility. Here was a genuine attempt to establish some independence from government, headed by a man of apparently unimpeachable integrity with absolutely no ambition to do the job long-term. But it's still come horribly unstuck. Yes, it's cock-up rather than conspiracy, but the damage has been done.
As we've always said, the OBR must be put on the same footing as the National Audit Office. It must be accountable to Parliament and funded by Parliament, not the Treasury. Of course, there could be problems with Budget secrecy, but the NAO (whose staff sign the Official Secrets Act*) has managed to be a fairly leak-free zone, and there's no reason to think the OBR couldn't be the same.
Somebody needs to be to cracking on with this right now. So let's just hope they are.
*Footnote - Just for interest, here's Alan Budd's appointment letter, setting out the various secrecy conditions applying to the role. Along with his pay of £2885 per week.