Ministers publish report saying UK is on course to meet fiscal mandate but does not mention failure on debt-to-GDP ratio vow
The coalition has declared that it is on course to meet its central economic pledge after omitting a “supplementary” element of the government’s fiscal mandate from an audit of its achievements.
Labour said the government was guilty of an “astonishing” omission after failing to mention George Osborne’s pledge in his emergency budget of 2010 to ensure debt is falling as a share of GDP by 2015-16.
The lengthy audit – described by David Cameron as full, frank and “completely unvarnished” – was panned by Peter Riddell, the director of the non-party Institute for Government, who called the section on university tuition fees “completely misleading”.
In an interview with Channel 4 News, Riddell said the audit had not mentioned that university tuition fees had been trebled to £9,000. The audit said a “new funding regime” had been agreed and institutions wishing to charge more than £6,000 in fees would have to sign an annual access agreement to ensure that students from modest backgrounds are helped.
“There is no reference to what actually happened, which is the £9,000,” Riddell said. “So what is said there is defensible in the narrowest of narrow terms. But it is completely misleading about what happened.”
Downing Street dismissed the criticisms, on the grounds that the audit was simply marking the coalition agreement, which was published in May 2010. This said nothing about the £9,000 ceiling on university tuition fees, agreed in late 2010, and nothing about the fiscal mandate outlined in Osborne’s emergency budget.
But Labour was scathing about the coalition’s claim that it was meeting its fiscal mandate. A party source said: “It’s astonishing that this so-called audit refuses to acknowledge the government’s failures on the economy. The audit claims the government is meeting its fiscal mandate, but only last month George Osborne was forced to announce that he would break his pledge to start getting the debt down by 2015.
“And as for the broken promise to secure economic recovery, this audit does not mention any growth figures from the last two-and-a-half years let alone the double-dip recession. David Cameron and George Osborne are in denial that their failing policies have led to broken promises on the economy. And the price for this failure is being paid for by millions of working people who will be made worse off while millionaires get a tax cut.”
The audit makes its claim about the deficit on the basis of the judgment by the Office for Budget Responsibility last month that the government was “on course to meet our fiscal mandate”.
The OBR said last month’s autumn statement that the government was “more likely than not to meet the mandate” – the elimination of the structural budget deficit.
But in his autumn statement on 5 December the chancellor admitted that the OBR had also said in its assessment that he would fail to meet the “supplementary” element of the fiscal mandate – that debt should be falling as a proportion of GDP by 2015-16. This did not technically count as failing to meet the fiscal mandate because the debt target was defined as a “supplementary” element.
Osborne told MPs: “We will meet our fiscal mandate. But the OBR assess in their central forecast that we do not meet the supplementary objective that aims to have debt falling by 2015-16. The point at which debt starts to fall has been delayed by one year, to 2016-17.”
The 119-page audit published on the Cabinet Office website says Osborne is on course to meet his deficit reduction target – the elimination of the structural budget deficit through spending cuts and tax rises. This is because it is assessed on a rolling, forward-looking five-year basis in which no definitive judgment needs to be made.
But in his emergency budget in June 2010, the chancellor he said he would achieve this by 2015-16 and that he even hoped to do so a year earlier. He said: “The formal mandate we set is that the structural current deficit should be in balance in the final year of the five-year forecast period, which is 2015-16 in this budget … I can tell the house that because we have taken a cautious approach, we are set to meet them one year earlier – in 2014-15.”
The audit, which is broken down into 31 chapters ranging from banking to universities and higher education, was finally released on the Cabinet Office website after a photographer captured a shot of a briefing document in which a veteran No 10 special adviser explained why the audit was being delayed by a few days after the launch of the coalition’s mid-term review on Monday.
The No 10 document, photographed as the adviser Patrick Rock entered Downing Street, said the full version of the mid-term review would contain an annex with “problematic areas”.
The paper said the government could avoid appearing “overly self-congratulatory at a time of great national difficulty” – in light of the fact that most pledges have been met – by publishing the full document a few days after the mid-term review.
The document, published by the Daily Telegraph, says: “I think this danger can be avoided by simply publishing the document without any fanfare on the government’s website. We might be accused of slipping out the difficult points … a couple of days after we got more favourable [coverage].”
Ed Miliband taunted Cameron at prime minister’s questions. He said: “What do we know this week? He is a PR man who can’t even do a relaunch. Halfway through this parliament we know they’re incompetent, they break their promises and the nasty party is back.”
On the NHS, the government says that the controversial changes by Andrew Lansley met the pledge in the coalition agreement to “stop the top-down reorganisation of the NHS”. The document says: “The measures contained within the Health and Social Care Act 2012 will help deliver better health, better care and better value for money, encouraging greater focus on preventing ill health and empowering local communities to plan services according to local priorities.
“The modernisation will help the health service to develop from a system of management control to a system where power and decision-making is devolved to the most appropriate level, and has also enabled us to make substantial administrative savings.”