Sunday, 18 January 2015

Time for SOBR Reflection

In today's Scotland on Sunday Jackie Baillie has called for the establishment of a Scottish Office for Budget Responsibility (SOBR) (Jackie Baillie: Weed out parties’ financial fantasy)

Back in December I wrote a blog post highlighting the cavalier approach the Scottish Government had taken towards oil & gas forecasting (Oil & Gas: will we ever learn?) and at the time I suggested:

  • This [...] is surely a compelling illustration of the need for an OBR equivalent independent fiscal watchdog in Scotland. Maybe we could call it the Scottish Office for Budget and Economic responsibility and task it with providing SOBER assessments to inform policy makers and voters?

It will therefore come as no surprise to readers of this blog that I support the idea of a Scottish OBR - even if I think including the word "Economic" so we could call it "SOBER" would be slightly funnier.

There have been numerous examples during recent political debate in Scotland where politicians have appeared to purposely mislead voters:  use of outdated and dubiously interpreted GERS figures on the economy, White Paper promises that simply didn't add up and the use of forecasts on oil & gas revenues that chose to ignore the OBR figures that existed at the time are just three obvious examples.

Respected think tanks (the IFS and NIESR deserve special mention), enthusiastic bloggers like me and (all too infrequently) the Main Stream Media have attempted to highlight some of these issues - but are routinely dismissed with accusations of bias or drowned out by the noise of campaign rhetoric.

I whole-heartedly supporting this call for an impartial, respected and trusted body to hold our politicians to account - in fact I would suggest it's remit should include fact-checking of assertions made during political speeches and debates, thereby helping voters make informed choices confident in the knowledge that they haven’t been misled on points of fact.  It would also save me a lot of work.

Maybe then we wouldn't have had some people voting based on economic forecasts in the White Paper that were based on scenarios of oil & gas revenue that could be generously described at the time as "optimistic" and "hopelessly optimistic" (A point I hope I illustrate simply and clearly here).

Maybe then a large proportion of the electorate would not still believe Alex Salmond's oft repeated and frankly ridiculous assertion that "we'd have been £8bn better off" over the last 5 years if we'd have been independent (I explain why that's simply untrue here).

Maybe then we wouldn't have elected MSP's such as Stewart Stevenson Tweeting such nonsense as this as recently as last night:

As I patiently point out to him in that thread

  • The most recent GERS figures (published almost a year ago) cover 2012-13 and show Scotland running a worse per capita deficit than the rest of the UK - £512 per person worse to be precise (and yes that's assuming we get to keep "our oil").  
  • Given these published figures are for the period before the oil slump, the deficit gap between Scotland and the rest of the UK is likely to have widened in 2013-14
  • It's hard to imagine 2014-15 showing anything other than further deterioration.

If we had a SOBER (oh alright then SOBR) in place, hopefully elected representatives would be a little less fast and loose with simple facts.

Surely - whatever political party you favour - that can only be seen as a good thing?

Apparently not.  According to STV News John Swinney has responded by claiming the Scottish Fiscal Commission (SFC) will fulfill this role.  The SFC was established in July 2014 and their first report was published in October - just too late to cover any indyref promises. Their website states they are meant to provide "impartial and expert public scrutiny of the Scottish Government’s tax forecasts" - but limited to cover only existing devolved taxes.  As demonstrated during the indyref, that leaves politicians free to make incredible claims about the value to our economy of further tax devolution without scrutiny.  That's not good enough.

He also defends the oil & gas forecasts used by the Scottish Government in their White Paper by saying their predictions "were indeed lower than those predicted by UK Department of Energy and Climate Change (DECC)"

  • As I never tire of pointing out: the lowest scenario they used assumed oil tax receipts 60% higher than the OBR forecast that existed at the time. If you show two scenarios they should surely show a realistic range of possible outcomes - ignoring the OBR forecasts that existed at the time is simply indefensible.
  • When he says their predictions were lower than DECC I presume he is referring to the price projections.  As I covered in detail here it's true that the Scottish Government's price projections were consistent with the DECC price forecast range (and indeed the futures market) at the time of publication - but you need to predict volumes and taxation levels to get to actual tax take and DECC don't (as far as I've seen) do that.  The OBR do of course, but the Scottish Government ignored them.  Its disingenuous to suggest that the only assumption required to forecast North Sea oil tax revenues is the future oil price.
  • By the end of the indyref debate - in the months before votes were cast - it was clear that the White Paper forecasts were hopelessly optimistic.  Independent scrutiny of campaign rhetoric used during that period would have surely highlighted this fact.
With the SNP apparently hell-bent on pushing for full fiscal autonomy, the need for a wide ranging SOBR body is clear. It would make a refreshing change if we could eliminate the political game-playing around known numbers and actually have a well-informed debate about the issues.


Ron Sturrock said...

The acronym "SOBR" has other affiliations.
Like the Russian Special Rapid Response Unit. After translation obviously.

Ron Sturrock said...

I am OK with a Scottish version of the OBR.

However, I have msigivings as to the extent of its function as mooted by Labour.

1) It is meant to be an independent body scrutinising and reporting on the fiscal policy and performance of the government of the day.
2) With Labour proposing to include opposition parties (does this mean all parties represented in Holyrood or those parties with candidiates standing for Hoyrood elections) being able to use their services. This has the strong possibility of a supposedly independent body becoming a political football.
3) In effect, I see it as a possible party policy forming agenda, meaning the OBR spending time and effort in giving a "seal of approval". Don't the parties have a myriad of bright young things doing this anyway?
4) It would, in all probability require significant extra resource to function with (2).
5) All governments, usually, try and deny or at least minimize their opponents leverage.

David Clater said...

Another terrific piece of comment and evidenced research from Kevin, whose entire Blog is something of a manual for unity and sanity. Only downsides are that not nearly enough of the people who accepted the SNP's skewed figures at face value pre-IndyRef will read this, and that too many of the few who do will close their minds and dismiss it as BritNat propaganda or whatever. But hang in there Kev, your country needs you to keep doing that thing you do.

Niall Murray said...

The call for a Scottish OBR is understandable given the level of debate we have seen over the last year. As you have highlighted in this and other blogs, there has been systematic distortions of the data that is available, as with Stewart Stevenson’s pitiful contributions. Why not then try and get an independent set of data that would allow us to accurately judge?

I think because the distortion of budget data is just one part of a far bigger problem. When politicians lie with the data, or present obviously partial data to make their case, it is the job of a free press to pick up on this and report the facts. This however is no longer happening.

Over the last decade or so, we have seen newspaper budgets cut and their output reduced in large part to “churnalism” or opinion pieces. It is a lot cheaper that way, as properly researched journalism is very time consuming. The number of journalists who have the time and freedom to go through the data has been reduced to a handful. On UK budget data, we have the FT’s Chris Giles or David Smith in the Sunday Times as examples of this. Other areas such as benefits or immigration have lone voices such as Jonathan Portes. But they are noticeable as exceptions in an otherwise dire output. Scottish newspapers, with their much lower circulations face even tougher constraints and the quality of their output is really fairly dreadful.

What we are doing then with the SOBR proposal is asking the state to come in and set up a body that will do the work (or a decent chunk of it) that we should reasonably expect from a responsible press. Maybe this is the only way forward, but for me it is not getting to the heart of the solution. How we get a press with the time to cover Holyrood effectively is a problem I don’t have an answer to unfortunately. Perhaps finding a way to promote and aggregate blogs such as this is our only hope.

Terry Summers said...

Excellent job as usual.
I believe that until the SNP grip on all the organs of power in Holyrood is ended, we will not see an effective scrutiny of their policies by the press or the parliamentary Committee system. They will not agree to an OBR as this would constrain their ability to 'control' the press and propagandise the electorate.
The only recourse is to 'clean the stables' at the 2016 Holyrood elections.

Brandyin said...

A "SOBR" would be a good idea, but the problem is whether those on the nationalist side would afford it any credibility. I've had countless arguments about the country's fiscal position over the last year or so and I always quote the GERS figures directly - believing somewhat naively that because they're officially coming from the Scottish Government the figures will at least be accepted.

What actually tends to happen is the figures just become obscured/ignored. Someone will claim they don't include a geographic share of oil, or that there's no estimate of non-identifiable spending, or any number of random and completely inaccurate excuses to avoid acknowledging they exist.

So I have a feeling a Scottish OBR would suffer much the same fate. The independence movement is driven largely by the belief that everyone outside of it is corrupt and should be ignored. Any evidence that contradicts the dogma is just written off as biased, flawed, or irrelevant by default.

I imagine within a few weeks of this Scottish OBR publishing neutral/objective evidence we'd have it written off as a unionist propaganda outlet (which if you read nationalist blogs you'll quickly notice is the description applied to literally everything that isn't outwardly pro-independence).