Back in May, we blogged on the role of the Office for Budget Responsibility as part of a Coalition media strategy to create a sense of crisis and legitimise a radical cuts budget. We pointed out that it was significantly less independent than the usual Treasury forecasting team and predicted that it would be asked to produce policy-based evidence for George Osborne.
The Financial Times reports that the OBR secretly altered its forecasting assumptions so that 175,000 job losses in the public sector wouldn’t appear in the bottom-line forecast for unemployment. Not only that, but it decided to quietly ignore Coalition policy announcements that tended to reduce economic growth under its original modelling assumptions.
As the TUC Blog points out, about 550,000 jobs in the wider public sector simply weren’t counted.
And, of course, there was the pay’n’display incident, when the OBR rushed out a set of employment forecasts in order that David Cameron could beat a hostile story in the Guardian. These were, of course, the forecasts that turned out to be rubbish.
There’s more, though; Building magazine’s Brickonomics blog has a scoop - did you know that OBR’s figures require the Treasury’s income from stamp duty to exceed that at the height of the property bubble as soon as 2013? That’s two-and-a-half years away - which would require a faster recovery in property transactions than ever recorded before. Further, property is still about two-and-a-half times more expensive in terms of wages as it was before the bubble hit in 2000. This may leave the Government as much as £4bn out of pocket.
So, the Government is betting on a renewed and even bigger property binge - hardly surprising, when you recall Philip Hammond’s ability to forget to declare £3m in profits from his portfolio of real estate investments. This is hardly realistic, but the wider picture of economic unreality is borne out by the OBR forecast’s breakdown of jobs by sector. As the TUC Blog points out, the bulk of the growth is expected to come from retail and hospitality - which implies a renewed consumer boom. It really is as if punk never ‘appened.
Sir Alan Budd has now hit the silk - but the damage is done. Advanced students of British politics would have predicted this from the word go.