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Intro: [00:00:00] You are listening to Parliament Matters, a Hansard Society production, supported by the Joseph Rowntree Charitable Trust. Learn more at hansardsociety.org.uk.

Ruth Fox: Welcome to Parliament Matters, the podcast about the institution at the heart of our democracy, Parliament itself. I'm Ruth Fox

Mark D'Arcy: and I'm Mark D'Arcy. Coming up this week

Ruth Fox: Is it a bird? Is it a plane? Is it a spring statement or is it an emergency budget? What exactly might Rachel Reeves' big statement next week be and what might it mean?

Mark D'Arcy: Will MP's scrutiny of whatever the Chancellor announces make any difference or is that just all an empty ritual?

Ruth Fox: And is Parliament getting serious about how the laws it has already passed are working out?

Mark D'Arcy: But first Ruth, let's talk about Rachel Reeves [00:01:00] Spring Statement next week. It's actually the Spring Economic Announcement, or the Spring Forecast.

Ruth Fox: Spring forecast, yes.

Mark D'Arcy: Or something like that. It's supposed to be quite a low key event. It's supposed to be a kind of update based on the latest projections that have emerged from the Treasury and the Office for Budget Responsibility.

Slight course correction, nothing very big, just keeping you informed, guys, kind of deal. Not so much this time. Kemi Badenoch caused a bit of a furore at Prime Minister's Question Time this week when she referred to it quite deliberately as an emergency budget, implying that the government's being forced into making really serious changes because things have gone awry and their strategy isn't working, there was a roar of derision from Labour MPs.

But there is, I think, a bit of a graduation here that we've got to talk about. What's the difference between a statement, first of all, and a budget, or a mini budget, or an emergency budget, or any of the other possible identities that might be pinned on to the event that's due to happen next Wednesday?

Ruth Fox: Yeah, well, you've got to [00:02:00] go back, Mark, nearly 10 years, goodness, to sort of explain the history of this. So, in 2016, the then Chancellor of the Exchequer decided we should have just one fiscal event, as it's called, per year. So, one major event where they announced tax and spending changes. And that was going to be the budget

Mark D'Arcy: The then chancellor of the Exchequer was

Ruth Fox: Philip Hammond, I think. I wouldn't, I wouldn't swear by that, but I'm pretty sure it was Philip Hammond. He basically wanted one fiscal event, so there'd be autumn budget, and then in the spring there would be this forecast, this statement by the Chancellor, which would be solely a response to the second forecast in the year by the Office for Budget Responsibility, which is the independent body that was established under the coalition years to provide independent authoritative analysis on the state of the public finances, the government's tax and spend plans and so on.

And it's proved a bit of a straitjacket around chancellors because it forecasts whether the government is going to meet its fiscal rules, which we'll come onto in a minute. But, for context, most countries only have one fiscal event. We were unusual in having two in a year.

Mark D'Arcy: And [00:03:00] fiscal event is where you announce, as the government's finance minister, tax changes, economic policy, how much the government's going to spend, all bundled up into one big economy package.

This is the tax and spend announcement for the year.

Ruth Fox: Yeah, and the idea was that if you had one, it prevented you from tinkering at sort of the midway point in the financial year.

Mark D'Arcy: Stability, business compliant.

Ruth Fox: Yeah, and the idea was that you can consult on the proposals that you've announced in the autumn budget in the winter and the spring.

You can then draft the legislation for it and it can go in the next finance budget. So the idea is that you'd have a more coherent, better planned approach to things like introduction of new taxes. It would enable everybody outside that has to deal with implementation of these businesses, public sector services and so on.

You could plan for it. It would just be more organized. And the markets, of course, would know what was coming up as well. But the problem that they have got is that when the OBR [00:04:00] makes its spring forecast, it's forecasting whether the Chancellor's going to meet her fiscal rules. Now, if she doesn't, then what does she do?

Mark D'Arcy: Yeah, because the Chancellor's credibility is incredibly bound up in those fiscal rules. If you announce, I am always going to obey this rule, I will change policy to make sure I meet this target.

Ruth Fox: Which they have, because they've said they're non negotiable, both Keir Starmer and Rachel Reeves.

Mark D'Arcy: And then somehow, oops, I'm missing those targets.

The most deadly thing you can do is say, well, they didn't really matter anyway. Where's your credibility if you do that? The markets both have to believe a Chancellor means what they say, and is intending to meet the targets they've set. Now, if you're blown off course by COVID or the energy crisis that followed the Russian invasion of Ukraine.

Which they have.

Ruth Fox: I mean, we've had mini budgets, emergency budgets.

Mark D'Arcy: That's a different matter. The markets understand events, dear boy, events, blowing you off course. If it's just a case of your policy not working and you then try to explain it away and deal with it by [00:05:00] changing your rules rather than changing your policy.

And that's another case.

Ruth Fox: Yeah, and the whole plan dating back to 2016 was that you have in the response to the OBR forecast in the spring and you would only make course corrections, if you like, on tax and spend if the economic circumstances required it. So by definition, in the spring statement, if you are making changes to tax and spend, by definition there is something going wrong with the economy.

Now, the other factor here, and goes to this straitjacket that Rachel Reeves has put herself in, is that the OBR forecast is not about what's happening now or in the next financial year. It's actually what's going to happen five years hence, in 2029 the end of the Parliament. And this goes to this issue of her fiscal rules.

So, she's said that the forecast from the OBR must say that her policies will deliver a current budget surplus in the financial year 2029 2030. And yet here we are, [00:06:00] 2025, considering possibly tax rises or more likely spending cuts, in order to reach this arbitrary figure, five years hence.

Mark D'Arcy: In order to reach not even the actual figure the forecast figure

Ruth Fox: which could change by the autumn

Mark D'Arcy: and we all know that economic forecasts are not laser accurate to put it at its gentlest so this is becoming a bit of a weird ritual where government policy is bent to meet the dictates of a set of arbitrary rules that are defined by a forecast of the future, which everybody knows the dogs in the street now is not going to be anything like totally accurate.

So it's a very, very strange way to do business, but it's, it's what we've now been locked into.

Ruth Fox: So basically. If the OBR says you're not going to reach your forecast on your fiscal rules, you're not going to have this budget surplus in 2029 2030, she's got to make a decision. What does she announce next week?

Does she respond, tax or spend, in which case it's not really a spring statement. It's [00:07:00] either it's some form of mini budget or maybe a more significant budget. Or she doesn't respond and she pumps things into the longer term through the comprehensive spending review and through to the autumn budget.

Mark D'Arcy: Let's talk our way through the options here. It's a budget if at the end of proceedings you have a provisional collection of taxes motion going in front of Parliament that basically means something kicks into effect fairly rapidly.

Ruth Fox: That I think is the critical point. It's only would she need that.

if there was collection of taxes that were happening, as you say, pretty quickly.

Mark D'Arcy: That's what happens on a normal budget day.

Ruth Fox: So if you're collecting duties, for example, taxes on alcohol duty or petrol or whatever, you need those kinds of provisions.

Mark D'Arcy: Those of us who are old enough to remember Dennis Healey in the mid 1970s, who seemed to have a mini budget on alternate Tuesdays in which he would tweak tax and spending rules and they would change that day.

So the price of petrol or the duty on cigarettes or whatever it was would go up that day. That's a full on mini [00:08:00] budget.

Ruth Fox: And the idea of that is to carry you over until you can enshrine them in legislation in the finance bill.

Mark D'Arcy: Yeah, yeah.

Ruth Fox: But all the mood music is, that there won't be tax rises, because of course, if you remember back to the autumn and subsequent statements by both the Chancellor and the Prime Minister, they've said, after the national insurance rises, we will not be coming back for more taxes, so again, that's another red line.

Mark D'Arcy: They've absolutely said in Rachel Reeves first budget that this was a kind of one off impost to deal with the financial crisis they were confronted with, and they wouldn't need to come back. So we've now got a series of potentially lesser options. So, Rachel Reeves could, for example, announce that she was going to, you know, make some changes to tax in the forthcoming budget in the autumn.

And so they're going to consult on exactly how to do that in the meantime.

Ruth Fox: Yeah. In which case, after the statement, we won't see any sort of immediate action. I think what we'll have probably next Wednesday is a statement, a couple of hours, responded to by the shadow chancellor, rather than the leader of the opposition that you'd normally have in a, in a budget statement.

Mark D'Arcy: So Mel Stride rather than Kemi Badenoch.

Ruth Fox: Yeah. And then you'll [00:09:00] have an hour or a couple of hours of debate on it and that will probably be it through to then the next major event which would be the Comprehensive Spending Review.

Mark D'Arcy: Yeah and that's the other side of the coin of course because you've got taxing to raise money to meet the deficit or you've got cutting spending to cut expenditure and were they to start announcing big cuts in expenditure that would kind of pre-empt the big comprehensive spending review, the all singing, all dancing review of where the government spends its money that's due in June.

So there might be, I suppose, hints of what's to come in that. And we all know that there are very big savings being proposed. We don't know exactly where they will strike, but it's one of those things that's causing already a certain amount of heat.

Ruth Fox: Yeah, I mean, we had in the autumn budget the setting out of what they call the spending envelope.

You know, what's the sort of totality of public spending over the period going to be through to the end of the parliament? What we don't know at the moment, and which is what's being looked at through the comprehensive spending review and the negotiations between the Treasury and individual government [00:10:00] departments, is how that money is then going to be allocated.

And of course the government has said this is a zero based review, we're looking at every pound, every line of expenditure, and the expenditure has got to be justified against the government's plan for change, the government's spending priorities, and as a consequence of that there'll be hard decisions to be made.

But we won't know exactly what that departmental slicing of the cake is until, as you say, in June.

Mark D'Arcy: And that comes before Parliament in departmental estimates. So any change in the balance of government expenditure, so one department gets a bit more, another department gets a bit less, would be reflected in the estimates that MPs get to vote on in due course.

Ruth Fox: Yeah. Exactly.

Mark D'Arcy: And we shouldn't underestimate the political theatre that's going to be involved in this. This is going to be a moment when a Chancellor under fire, besieged by unhelpful economic figures. The January growth figures were particularly depressing, I suspect, for Rachel Reeves, even if they're just one set of figures and it might all change in the next lot.

And you've also got a [00:11:00] Shadow Chancellor in the shape of Mel Stride, who's been somewhat struggling to make a mark. I think the problem he's got is that the Conservatives don't quite have permission to be heard on the economy at the moment, however hard they try. He's got to try and make a dent on Rachel Reeves at a moment when she is vulnerable.

It's not just about the economics, it's also about the political challenge that the Conservatives are trying to mount to a government that is in some difficulty.

Ruth Fox: Yeah, this is also if you bound up in the wider context of what we've seen in the last week where the focus has fallen back on domestic politics and the welfare cuts and the sort of wider debate about where the axe, if there is to be an axe, where it should fall.

Did you watch Mr Torsten Bell's Newsnight interview? Which was certainly a bit of a car crash for him, after we suggested not too many weeks ago that he was one of the rising stars.

Mark D'Arcy: Well, he's certainly one of the bright sparks of the Labour new intake, but the difficulty he's got is the change in status.

When he was the head of the Resolution [00:12:00] Foundation, turning up in front of the Treasury Committee to give his verdict on the doings of a Conservative government, he was an oracle. Now he's having to be an apologist. And that's quite a difficult switch for anybody to make.

Ruth Fox: And indeed he found it quite challenging.

Mark D'Arcy: And there's much, much more of that to come. I mean, Liz Kendall, as the Work and Pensions Secretary, is going to be putting forward detailed proposals of how she's going to try and save many, many billions of pounds from the welfare budget.

Ruth Fox: And that's what I, I found this, this statement this week, quite interesting because, um, first of all, we don't have the impact assessment for what's going to happen to the welfare cuts in relation to PIP, the personal independence payment that the government's focused on.

We don't have that and we're not expecting it until the spring statement is announced, so I'm expecting it to sort of be bundled up with all these other documents that will no doubt be released. There is a green paper on welfare reform, but that in itself is interesting because well, first of all, it's nice to see a return to green papers and white papers. Should explain for listeners, green [00:13:00] papers and white papers as part of the policy development process.

Green papers being where the government consults on its policy, sort of lays out options and how it might implement them and invites views.

Mark D'Arcy: What do you think of this world?

Ruth Fox: Yeah. And then the white paper is where it's decided what option it thinks it's going to pursue and it's getting really into the technical operational detail of it and invites responses from those who are going to be affected to make sure it hasn't missed anything before it then legislates for it.

So in the context of where the government is. in terms of its cuts. The extent to which we know this is Treasury driven. I thought it was quite interesting that they're consulting on a green paper basis about options. My question would be how serious is it as a consultation? To what extent has the government made up its mind about what has to be done?

How really genuine is it?

Mark D'Arcy: There is a huge difficulty here because this is quite clearly something that is treasury driven. They desperately need to make big savings in the budget. They've got to try and find a way that First of all, doesn't seem too inhumane and doesn't cause a huge [00:14:00] political rebellion within Labour who, and you can see lots and lots of Labour MPs are deeply, deeply uncomfortable about what they're going to be asked to vote for.

The Lib Dems, the Scottish National Party and Plaid Cymru are sharpening their knives on this and they can see that there's a political opportunity opening up for them. So Labour MPs who feel vulnerable really, really need some level of reassurance that they're not going to be eaten alive by their own voters.

Ruth Fox: Yeah, and you've talked in the past about Labour MPs walking through the voting lobbies for things they don't really believe in and how sort of destructive that is to your sense of purpose as an MP and your political soul, if you like. It's also true of cabinet ministers. Cabinet ministers also have manifesto commitments and that sort of fear that

Mark D'Arcy: They also came into government to do stuff.

Yeah.

Ruth Fox: And if you can't , if you can't do it, through the comprehensive spending review, you're not going to get enough money in the Home Office or the Ministry of Justice, for example, to make the changes that you want. then what's the point of being there? And are your manifesto commitments and your [00:15:00] priorities being burned in order to protect Rachel Reeves in her straitjacket at the Treasury?

Mark D'Arcy: That's the key problem. Liz Kendall is a serious policy wonk. Someone who's been immersed in the detail of social security issues for a very, very long time. Health issues before that, she was special advisor to Patricia Hewitt when she was health secretary back in the day. So she's been around in Government circles for a very, very long time, but she's got to try and find a way of squaring this circle, delivering something that Labour MPs can live with while also delivering the amount of money the Treasury wants to squeeze out of the welfare system for whatever reason.

And those two objectives may turn out to be incompatible.

Ruth Fox: Yeah. Yeah. So, you know, next week it'll be tax, spend, breach your fiscal rules.

Mark D'Arcy: Or not breach them.

Ruth Fox: Or not breach them, which would, yeah, I mean, that all depends on the OBR forecast. We're all assuming that, uh, from what's being said, that the OBR forecast will not be good for the government.

I suppose it could be. We may have all got it wrong, but

Mark D'Arcy: As a flock of pigs fly [00:16:00] majestically past the studio window.

Ruth Fox: Um, and to put this in context, what we're talking about is essentially ten billion pounds. Because the OBR forecast in the last budget, in the autumn, was that the chancellor had what they call headroom on her fiscal rule, the stability rule about having a surplus in 2029, 2030 of 9. 9 billion pounds. Now, the idea is that since the autumn budget, the world has changed. We've had the deteriorating situation in European security and defence, the situation in Ukraine, President Trump's election, tariffs upending, thinking about economic future here in Europe and the wider world. And that's driven inflation and cost pressures elsewhere, not least, as you say, on the defence budget.

So the argument is that there are new pressures bearing down and this headroom's going to be evaporated because the government's spending more to service its debt, not least. To put it in context, The House of Commons Library, that wonderful resource, says that this headroom, it's the third lowest of [00:17:00] 28 forecasts since the OBR was established back in 2010, and around a third of the average margin that chancellors have had since 2010.

So the average margin has been about 30 billion. You know, it sounds a lot to you and I.

Mark D'Arcy: I could just about muddle by on ten billion, I reckon.

Ruth Fox: But it's not a lot in the context of the national budget.

Mark D'Arcy: Well Ruth, shall we take a break there and when we come back we're going to be talking about how the Commons gets to scrutinise the money and whether that scrutiny is really genuine scrutiny or just a kind of empty ritual that's enacted because history dictates that MPs are supposed to scrutinise government's tax and spending decisions, but it doesn't really have any impact.

Ruth Fox: Yeah, but before we go, Mark, can I ask my usual small favour of our listeners? If you're enjoying the podcast, can you think of someone else who might enjoy it and forward the link on to them? Someone who's interested in politics, wants to understand more about how Parliament really works in for a bit of procedural nerdery in parliamentary history?

[00:18:00] Basically, someone like yourself, perhaps a friend, a colleague, fellow student, party, trade union member, whoever it might be. Send them the link and encourage them to listen. We're, as you know, if you're a regular listener, we're a small independent podcast. We haven't got a marketing budget, just word of mouth.

So if you can rate us on your podcast app as well, that would be a huge help. Um, so now we'll go to that quick break, Mark, for the ads, which help pay the bills. And, uh, we'll give you a moment to share the podcast. Thanks. See you in a minute.

Mark D'Arcy: Hey, Ruth, we are back and we're going to re-enter the world we've just been discussing, the world of fiscal events, budgets, mini budgets, spring statements, and we'll look at exactly how much traction members of Parliament actually have over the nation's finances, over those big decisions of tax and spend. Professor David Heald of Glasgow University knows more about it than most. He's been an advisor to the Commons Treasury Committee, to the Public Accounts Committee, has repeatedly submitted evidence to various Commons [00:19:00] reform processes about how things could be done better.

So when we spoke to him a little earlier, I asked him, was the Commons scrutiny of those big decisions really just a kind of empty ritual.

Prof. David Heald: There's a massive difference in the UK between what happens after the spending has taken place. Thanks to William Gladstone, Prime Minister in the 19th century, who established the Public Accounts Committee and the antecedent of the National Audit Office, the UK is very good at ex post scrutiny.

Those members of Parliament who were members of the Public Accounts Committee do an excellent job in terms of telling us what happened after the event. In contrast, the budget setting process is entirely executive dominated. It's basically the government of the day and the treasury who decide everything.

Because it's so important to the existence of the government, basically the government will whip members of [00:20:00] parliament to fall into line. Before the event, MPs have virtually no role. After the event, MPs are very influential.

Mark D'Arcy: So there's no kind of pre consultation here. The Chancellor is a bit like Moses coming down from Mount Sinai with the tablets of the law, just comes down and presents them.

Prof. David Heald: Except that the Chancellor or his staff has leaked. And one of the indications of the lack of prestige and power of parliamentarians is that this practice just continues from government to government. There was an opportunity for parliament to change it. Charles Walker, who was then the chair of the procedure committee, ran an inquiry in the late 2010s, which was a moment of opportunity for actually having proper ex ante scrutiny of public spending. But the moment of opportunity passed to some extent because of [00:21:00] Brexit, to some extent because of the churn of prime ministers and chancellors. There's no way the UK will actually change the system because it suits the government of the day, which can use its power of the whips to get through whatever it wants, provided it's got a parliamentary majority and it suits the opposition because they'll get the same power when they become the government themselves. So any opposition that believes they might become the government is actually not going to complain too much. They'll complain, but they'll do exactly the same thing when they get power.

Ruth Fox: It's a regular phenomenon in relation to parliamentary process. The Procedure Committee recommendation, David, was this for the idea of having a budget committee?

Prof. David Heald: Yes, I gave evidence to that committee. One of the things that's long concerned me, and as a declaration of interest, I was Treasury Committee advisor for a long time.

The Treasury Committee is too preoccupied with the big macroeconomic issues and monetary [00:22:00] issues of the day. It doesn't function as a budget committee in the way that in many other parliaments there would be a committee that deals with the nitty gritty of the budget.

Mark D'Arcy: And this is, if you like, the balance of spending between different departments and how much is going to be raised in tax and how much is going to be borrowed.

So it would be those kind of decisions rather than, as you said, sort of grand issues about monetary policy and how the interest rates are.

Prof. David Heald: More the fact that the Treasury Committee deals with the kind of macroeconomic side of budget and spending, spending announcements. How it's going to affect the economy as a whole, what the deficit is going to be, what it's going to actually do to the, to the public debt ratio.

What you need ex ante is actually a serious discussion in Parliament of what the choices are. Now, there was good intentions after 1998 when Gordon Brown established the Spending Review System. But because of the disruption of the period since 2008 the spending review system, which is [00:23:00] supposed to set spending envelopes and budgets three or four years ahead actually fell into disuse.

One of the other things that is an issue is that when governments are under pressure, they actually tend to have two fiscal events a year, two, essentially two budgets, whatever they're actually called. And it makes it very difficult to see how the overall position is developing. So the new chancellor has actually said there'll only be one fiscal event a year.

It's beginning to look as though the March spring update is actually going to be a significant budget occasion. Certainly given the leaks that have been going around.

Mark D'Arcy: Is it a thought here that maybe the Spring Statement could be used as an opportunity for consultation before a budget? You could announce measures on a consultative basis as Chancellor that way and get a bit of ex ante, as you call it, consultation in first.

Prof. David Heald: Yes, that would be possible, but it would weaken the control of government over Parliament. I've already, already made the [00:24:00] point that the Opposition likes the system, though it doesn't actually say so at the time, because it means that the UK is such an executive dominated system. When I speak about how the UK functions at international audiences, everybody looks in amazement at me when I say that the estimates aren't actually voted by parliament until July, four months after the beginning of the financial year.

And any member of parliament who really wants to address what's in the estimates will be ruled out of order.

Ruth Fox: Just to explain, David, for our audience, so the estimates process, which we've talked about on the podcast before in previous episodes, that's the departmental spending plans. And the reason is for the delay and considering them in July is that there's provision in our system that the government gets about 40 percent of the money for the for the financial year up front and then MPs scrutinise.

to a limited degree, some of the departmental spending plans in the summer.

Mark D'Arcy: And they're a bit of a fait accompli by then.

Prof. David Heald: You're well into [00:25:00] the financial year. The point I was making is that the estimates days don't actually relate to the estimates in any meaningful sense. It means that Parliament's notional control of spending before the event doesn't exist.

I suspect it would only change in the context of having proportional representation for Westminster, which would make it much more likely you had to have coalition government or some kind of inter party agreement. The devolved governments in the United Kingdom are actually elected on proportional representation.

They generally are, if not minority governments, they are actually dependent on other parties not opposing major parts of the budget. The old thing is the devolved administrations have to decide their budget before the beginning of the financial year. So if the Scottish Parliament didn't agree the Scottish income tax resolution, income tax wouldn't apply in Scotland in that year and [00:26:00] basically the institution would collapse.

So there's no discipline on Westminster to do things before the beginning of the year. By the time the estimates have gone through, uh, the estimates are a kind of essentially a legal process to give authority for his spending. They don't have much effect on the actual spending process itself.

Mark D'Arcy: And if you were to compare that to, say, the U. S. Congress, which does have a much more direct control over the purse strings and taxation decisions, members of Congress have a great deal more backup. To scrutinize these things there's a far bigger bureaucracy in place to explain to them the details of a budget and go through it with a fine tooth comb and bring out any anomalies or difficulties that might be lurking within it.

Prof. David Heald: Yes, essentially a totally, totally different system. Though we are now finding out. with the new U. S. administration of the extent to which the U. S. President can use executive orders to do things which Congress wouldn't necessarily agree with.

Ruth Fox: Back to the UK, David, [00:27:00] and once we navigate next week's spring statement, we've got then coming up in June the announcements on the Comprehensive Spending Review. So how the, the spending envelope the government announced in the budget last autumn is going to be divided up at a departmental level. And we're hearing obviously an awful lot about spending cuts. What is parliamentary scrutiny of the Comprehensive Spending Review going to look like?

Because as you say, the process has sort of fallen into a little bit of disrepair in recent years. We've got an awful lot of new MPs who are not familiar with the process. And it's happening in early June, but MPs will go into recess six, seven weeks later.

Prof. David Heald: Oh, that's highly convenient for the government.

Because it means that there's no way. When I was Treasury Committee advisor, I tried to excite the interests of committee to deal with a spending review published in June or July. Because Parliament essentially shuts down over that summer recess, there's a great temptation for governments to actually [00:28:00] have big events at a time when parliamentary scrutiny will be impracticable. The weakness of parliament is not an accident. It's something which is unusual internationally, but it's very convenient for the executive of the day, particularly if it's got a significant majority. Parliamentary view will only become important when one doesn't know the outcome.

Because of presently large parliamentary majority, however many Labour MPs are unhappy with what's in the Spring Statement or in the Spending Review, it will go through. You will only get effective scrutiny before the event if there is some doubt. And the Scottish Parliament is a very good example, because at different times, the SNP administration has done deals with the Conservatives to get budgets through under Alex Salmond, and has actually been recently doing deals with the Greens and the Liberal Democrats to get the budget through.

So, essentially, it's a question of political power rather [00:29:00] than anything else.

Mark D'Arcy: If we were to go into the realm of fantasy parliamentary reform here, what would a proper scrutiny process for an event as big as a comprehensive spending review be?

Prof. David Heald: Well, the spending review would be published well before the beginning of the first financial year to which it relates.

And there would be a significant opportunity for the work that the parliamentary select committees do to have some effect on the outcome. Because of this executive domination of the process, it's become such a big deal for the government to backtrack. Once the government takes a position, it's seen as a sign of weakness if the government is willing to compromise.

That is a particular problem Westminster's got.

Mark D'Arcy: So you would need a system where, for example, the Education Committee could say, hang on, we've looked at this and there's a problem with the way you're proposing to fund colleges of further education in the coming year, you ought to do something about it now, and the government would be in a position to take that on board and respond, as [00:30:00] opposed to just plonking something down as a fait accompli and repelling all borders any time anyone attempted to change anything.

Prof. David Heald: Yes, but it's a cultural point of how it would look in the context of the devolved parliaments. Where political control is contested, not just in elections, but between elections, it's possible to have a negotiation. When a government's got a majority, it is seen as a sign of weakness if it gives in. Hence, it does its best through mechanisms like organizing spending reviews at the wrong time of year, so it's difficult for Parliament to function.

Unless one could get over that problem, and as a long time observer of the UK Parliament, I've come to the view that nothing will ever change. The only thing that might make me change my mind about that would have been if there had not been a majority government in 2010. I think in the run up to the 2015 election, people, including the then Prime Minister, were not necessarily expecting a majority parliament.[00:31:00]

That's when the change might have been made. So, like, ten years ago, the wind of opportunity went.

Ruth Fox: Going back to the spending review, David, I mean, you've been, as you say, an advisor to the Treasury Select Committee, you've given evidence to lots of other Westminster committees. I mean, what would you expect the Select Committees to be doing?

Prof. David Heald: Well, I think it would be a mixture. As I said before, I think the Treasury Committee's remit is too broad. Treasury Committee should be looking at the overall numbers, the overall direction of policy, but you need a budget committee which actually deals with the detail of the spending. There's always going to be interest in specific committees, health, education, defense.

The central budget committee has got to be thinking about the overall balance. In my view, people tend to overdo the pessimism about the UK's fiscal position. But there is no kind of acknowledgement of the work that the Office for Budget Responsibility does on [00:32:00] UK fiscal sustainability. And their 50 year projections show that the present structure of the state is unsustainable.

In broad terms, the OBR forecasts a net debt ratio of about 300 percent of GDP in 50 years time. That's driven by demographics, driven by the lack of economic growth. Now, there's no way that we ever get to a position of 300 percent of GDP. We know now that there is a massive problem, but that problem is too far away in terms of electoral cycles.

It's too far away in terms of most of our concerns.

Mark D'Arcy: In the long run, we're all dead.

Prof. David Heald: In the long run, we're all dead.

Ruth Fox: Well, this is a bit depressing.

Prof. David Heald: But our children and grandchildren are not necessarily dead. But it's very difficult to concentrate attention on the medium and long term. If you do not do things now, it will be much more difficult in future because there'll be a [00:33:00] big crisis, because the big crisis will be beyond the period of office of present prime minister present government and present ministers It's very difficult, but for the government of the day to say we're going to do things now because it will make the adjustment in future when we will not be in office a lot easier.

So you're basically going to hit a cliff edge. And I think that's the big issue for Parliament to get people to understand that.

Ruth Fox: And is that then, David, a role for a select committee, a dedicated select committee, or possibly one of the existing ones, possibly the liaison committee, maybe reporting at the end of the Parliament as a sort of look ahead for a future government and trying to hold the government's feet to the fire.

Is that a possibility?

Prof. David Heald: Yes, I mean, New Zealand does a lot of these things much better than most other countries. At the end of every New Zealand parliament, I think the election cycle is three years in New Zealand, the New Zealand Treasury produces a document with forecasts. So parties [00:34:00] go into the election knowing what the New Zealand Treasury sees as the medium and long term scenario and that forms quite a significant point of reference in New Zealand elections.

In contrast, in the UK, what the Labour Party did was say, we're not going to use any of the main taxes, not increase employees national insurance, not to increase VAT, not to increase income tax. You end up in a position where you're looking around lots of smallish taxes, some quite economically distortionary, actually looking for money.

And I think that if you had a different kind of governance structure, it might be better to get a sensible debate before an election about what the choices are. If you look at the OBR forecasts, it was obvious that whichever party was elected, it was going to run into budgetary problems. The other point I would want to emphasize is that during the 2000s, Gordon Brown, as Chancellor [00:35:00] of the Exchequer, spent a lot more money on the National Health Service.

But that missed the point that spending money is not a good idea if the real resources are not available. So, for example, there weren't the nurses, there weren't the doctors, there weren't the hospital buildings, and a lot of the extra spending in the 2000s went into higher costs for the same output.

What really worries me now, now we seem to be having a totally different discussion about defence. Uh, there seems to be fairly general cross party agreement that the UK has to spend more money on defence. But there's a great danger that what happens is one spends more money but you don't get more defence capability out of it.

That, I think, one of the crucial issues in the same sense that that on the question of the welfare costs, when a government tries to undo something that had been done in the past, be it winter fuel allowance, [00:36:00] the criteria for disability payments, there's a political explosion. But that tends to, distract from the point that the welfare budget is actually still going to be going up.

So once things are done, it's very difficult to backtrack.

Ruth Fox: And can I ask you a question about the Office for Budget Responsibility, because this is something that has been of interest to parliamentarians, particularly on the right, in the aftermath of the Liz Truss' mini budget debacle. This whole question about whether or not it's a good idea for what the Chancellor is doing in terms of forward planning to be so influenced by OBR forecasts from a, yes, an independent authoritative body, but fundamentally not an elected one.

What's your thoughts on that?

Prof. David Heald: I'm very supportive of what the OBR does. I think the big mistake which the Labour government made was not having a budget quite quickly after taking up office. The [00:37:00] speculation during the summer about what was going to happen was politically and economically damaging. So there might be some scheduling issues, but most democratic countries in the world have something like the OBR.

They tend to call it a fiscal council. The people's lack of trust in government, uh, with some justification about Treasury forecasts before the creation of the OBR mean that the OBR's forecasts are going to be much more trusted than the forecast that would be done by the Treasury. Of course, it now allows the Treasury to pass the buck to the OBR and blame the OBR for things.

Whereas if the Treasury had to do the forecast itself. So all these things can have their own ambiguities.

Mark D'Arcy: There is an issue here though about whether it's a good idea to have government policy shaped by whether or not an inherently inaccurate forecast, because any economic forecast is subject to a considerable margin of error, whether an inherently inaccurate forecast [00:38:00] determines whether or not you are likely to meet an arbitrary target.

Is that really a sensible way for a government to do business.

Prof. David Heald: Most countries in the world have some kind of fiscal target because people don't trust governments anymore. The big problem is the way in which over time UK governments have played so close to the fiscal target. So you set a fiscal target, you try and find things like public private partnerships to get round the constraints of the fiscal target, and you actually tend to spend any fiscal margin you've got.

Clearly, governments could say that this is our medium term objective to get the debt down, which I think is a commendable objective, but you shouldn't worry so much about small overspend, small underspend relative to the fiscal target. Treating the fiscal target number as an absolute limit just encourages trying to go as close as possible to the target to get as much spending or tax [00:39:00] reductions as you possibly can.

And because, as you say, the numbers you're targeting are just massive and subject to all sorts of estimating and reporting errors and reporting changes. So I think we've tied ourselves in knots. about that. But fiscal targets won't go away, and the issue about the fiscal event in the Truss administration shows just quite how important internationally that government's having respect for a fiscal trajectory.

You need a credible guideline about how much borrowing you're willing to undertake, but getting involved in all sorts of games about a specific number I think is quite dangerous.

Mark D'Arcy: Well, David Heald, thanks very much for joining Ruth and I on the pod this afternoon.

Ruth Fox: Thanks, David. Thank you. Bye.

Mark D'Arcy: Bye bye.

Ruth Fox: So Mark, what did you make of that?

I'm a bit depressed, frankly.

Mark D'Arcy: Well, I think it's always depressing when you get into the kind of accountancy side of Parliament, really, because the decisions are always so tough and always so grim. There can't have been many [00:40:00] occasions when a Chancellor bounded into the Chamber with a spring in their step to announce, you know, huge amounts of largesse to a grateful nation.

It's very, very seldom like that, and it certainly isn't going to be like that for Rachel Reeves next week. But all the same, what really struck me about that is his basic message that the reason the Commons scrutiny of all these things is so weak is because it suits the party in power that it should be so.

Ruth Fox: And it suits the party in opposition as well.

Mark D'Arcy: Well the party in opposition, as long as they think they're going to be the party in power, is quite happy to sort of take it there now so they can dish it out later on.

Ruth Fox: Which is the perennial problem with getting any sort of reform and improvements in parliamentary processes and why it's such an uphill business.

Mark D'Arcy: And the other point that really struck me was that there isn't really a mechanism for Westminster to build a bit more of the long term into its thinking. This point about the long term budget crisis that's hanging over the UK's finances. If you remember back to that Whipping Yarns interview we did with Steve Baker, he was very, very hard line [00:41:00] about this.

He said that, you know, we're sleepwalking into this massive financial crisis and no one's doing anything about it because it's just over the political horizon. John Maynard Keynes line, in the long run, we're all dead, is unfortunately very, very true. But, um,

Ruth Fox: Depressing me still further.

Mark D'Arcy: But I did like that idea of an end of term financial projection being published by the Treasury or maybe by the OBR or by someone that could then shape the discussion in the subsequent election so that people did raise their horizons a bit and look at those long term issues that are going to be confronting the country.

Ruth Fox: Well, that was the idea, I think, of, uh, I mean, the New Zealand model is you sort of, you'd have a budget or tax and spend committee, and it would produce that sort of report at the end of the parliament and sort of hold the feet to the fire. But of course, when you're in a situation where you've got such a big Labour majority, to what extent they're going to be willing to do that or want to do that is somewhat limited.

But there are other examples. I mean, you have these sort of foresight committees in Parliament in other jurisdictions where they [00:42:00] are doing that sort of long term thinking and foresight and horizon scanning and looking at the sort of the big challenges coming down the road. But, you know, as we've seen with issues like social care, for example, and that's an obvious one that's been crowded out of the debate, sort of kicked into the long grass. We've got a three year review and likely nothing will happen in this parliament.

Mark D'Arcy: We were discussing last week about climate change. That's the classic one. This is asking people to make real sacrifices now to stop something happening some years over the horizon. And it's the perennial problem, I think, for democracies.

It's much easier for autocracies to plan for the future because there aren't voters to give them any trouble when they do it. But for a democratic system, that's the hardest bullet to bite.

Ruth Fox: And on that score, Mark, shall we, uh, shall we take another break and

Mark D'Arcy: take a breather?

Ruth Fox: See you in a minute.

Mark D'Arcy: And Ruth, we're back and we're confronted in the not too distant future with the first by election of the [00:43:00] Parliament that was elected last July.

Mike Amesbury, the Labour MP for Runcorn and Hemsley, has taken the Chiltern Hundreds. The ancient ritual by which MPs assume an office of profit under the Crown so that it becomes incompatible with their MP status and they have to leave the House of Commons for reasons basically lost in the mist of time. And so, a rather awkward by election now confronts Sir Keir Starmer.

Ruth Fox: Yes, I think it formally takes effect next week, but things are in motion, so we've avoided the dreaded recall, that, uh, of MPs process that, that we talked about a few weeks ago. I mean, I'm assuming that it's all going to be synchronised to take place on the same day as the local elections and, uh, you know, possibly cover up any difficulties in, in that campaign with a broader electoral picture and fall out, uh, that night.

Mark D'Arcy: I think it may be an occasion for the government of getting all its bad news out of the way in one go if it Indeed does take any kind of shellacking at the local elections. The polls at the moment are genuinely quite [00:44:00] weird by historic standards in the sense that you've got Labour, Reform and also the Conservatives polling somewhere in the 20s, it varies of course from poll to poll, with the Lib Dems in the early teens and the Greens just below 10%.

And that's a combination of that makes the local elections very, very unpredictable indeed. Who knows what will happen in them? But if a bad by election result is in the mix, and we don't know that it will be a bad by election result for Labour, Runcorn and Helsby's quite a safe seat, at least according to the general election vote.

So again, a very unpredictable situation, but they're trying to stir it away. In the meantime, I was just going to note that while Mike Amesbury's, his political career may have ended on a rather sour note with that conviction for punching one of his constituents. He did manage to get a private members bill through in the previous parliament to make sure that school uniform requirements were not unduly expensive [00:45:00] for people sending their kids to a particular school.

So it didn't become a kind of soft mechanism for making sure that people couldn't afford to send their kids to a particular school or indeed something that just puts strain on family finances. So that was quite a subtle bill and the government of the day did actually support it.

Ruth Fox: Yeah, and that's now back as a political football because in the Children's Schools and Families Bill, I think it's called, I forget the name now, but the Children's Schools Bill that's Bridget Phillipson steering through, there are provisions in that, I think, to limit the number of items of school uniform that any school can insist on, and there's been quite a few amendments back and forth between the Conservatives and the government about wanting to give schools more freedom.

Mark D'Arcy: You can see all sorts of arguments about academic freedom and the kind of curriculum they teach, but really having schools requiring, you know, embroidered socks and, you know, from their pupils or something seems a bit excessive.

Ruth Fox: What school did you go to?

Mark D'Arcy: If only, if only. But that does lead us to our next exciting topic, which is the sudden rise of [00:46:00] post legislative scrutiny in parliament.

This is something that people like us have been banging on about since roughly the Paleolithic era, the idea that when Parliament passes a law it should perhaps a few years later see how well that law is working or not as the case may be.

Ruth Fox: Yeah, you think, you know, sort of review what the government wanted to achieve with the legislation and then actually look at did it achieve those objectives?

If not, why not? If it did, what can you learn for future legislation? Sort of have this cycle of learning around the legislative process, which, uh, sadly I'm afraid is rather missing.

Mark D'Arcy: And the reason that we raise it on this occasion is because on Monday evening in the House of Lords, their Lordships passed an amendment, actually without a vote, so that is with government support, an amendment went through to the Football Governance Bill, saying that within five years of it coming into operation,

this whole new series of requirements that's being put on the various football leagues should be reviewed to see whether it's working as intended. To see whether the policy intent [00:47:00] behind the bill is unfolding as imagined or whether it's all going, I suppose, disastrously wrong.

Ruth Fox: Yeah, and the interesting thing here is that since, I think, 2008 or so there's been a commitment, if you like, on the part of successive governments to review Acts of Parliament three to five years after enactment to see exactly are they working in to publish what they call a post legislative memorandum.

Mark D'Arcy: But this on this occasion the kind of good chaps principle involved is being bypassed and they're having a statutory requirement written into the Act that it will be reviewed after five years.

Ruth Fox: Yeah, and I think you can read several things into that one is it It's a way of assuaging concerns of opponents of the bill and opponents of the football regulator that if they think it's creating problems in terms of the role of the Premier League in particular and the value and efficacy of English, the English football leagues, then there'll be an opportunity to possibly roll back on some of the regulators provisions.

So it's sort of a way of assuaging concerns. But it also works the other way. [00:48:00] One of the reasons to put it into statute and to sort of insist on it in law is because government's not always been great at actually implementing and following up this convention of reviewing legislation three to five years.

It's sort of a pick and choose menu. It decides whether it does or it doesn't. And part of the problem is that the House of Commons in particular, and the House of Lords don't really have the systems in place to do it. And the House of Lords picks several Acts of Parliament each session to review, but it's

Mark D'Arcy: This session they're doing the Autism Act, the private members bill from the late, great Cheryl Gillan.

So that's a very significant piece of legislation, but it's not at the cutting edge, you'd have to say, of political controversy. I'd like to see the Commons maybe having two full dressed select committees set up to review a piece of legislation every session. I think that might be start to get the thing on a bit more of a footing than it is at the moment, but otherwise it's a grace and favour of government thing where maybe they just point a particular departmental select committee at a relevant act.

Ruth Fox: Yes, I mean they publish their [00:49:00] memorandums when they do them, they send them to the relevant departmental select committee, it's one of select committee's core tasks, committees have ten of these core tasks. That's one of them, but there's no obligation on them to do it. It's for them to choose whether they want to.

Mark D'Arcy: The government can't instruct a parliamentary select committee. You can ask nicely.

Ruth Fox: Yeah, and the other, the other way of looking at it is if the, uh, common select committee wanted to look at something and weren't getting information from the government, they could approach the department or they could themselves just decide to undertake a review of the Act.

Bit more difficult without government cooperation, but that's also within their purview. But what tends to happen is it gets sent by the government to the select committees, and then they choose whether to pursue it or not. And part of the problem is even if they do that and do a report on it, there isn't necessarily the sort of the follow up in terms of the recommendations.

Mark D'Arcy: I suppose it might be a bit more difficult when you're talking about the scrutiny of one of these big sweeping criminal justice bills, the kind of thing that covers everything from public order offences to nasty doings on the internet, for example. It's extremely difficult [00:50:00] to do that whole bill and look at every single different provision on it without calling a myriad of witnesses and taking a very, very long time.

Ruth Fox: Yeah, and the other thing is, you know, what's the best point in time? Because firstly, of course, as we've discussed on the podcast before, sometimes aspects of acts are not implemented for quite some time. Sometimes not at all. You know, they're never commenced. Sometimes they're commenced over quite a long period of time.

There's a lot of regulations and a lot of implementation work has to be done, guidance, directions and so on to see. So do you do it three years, four years, five years? Is that enough? Some people have suggested no, you need seven, eight. years. But interestingly, something to think about, Mark, and perhaps for our listeners to look out for, particularly if you're colleagues in the public affairs world and campaign world, one of the underutilized tools is this question of post legislative scrutiny.

If an act in your area of interest, like the environment, for example, is coming down the tracks, they tend to focus on bills in front of them, you know, what legislation is coming up, trying to lobby to improve them, get them amended. But actually looking behind [00:51:00] you at what acts have three, four, five years ago were enacted that would be subject to this review, working through, whether it's trying to persuade members to put parliamentary questions in or to encourage members on select committees to investigate it, persuade members to pursue, uh, the idea of post legislative review of some of these acts.

And of course, what's coming down the tracks quite soon are the swathe of Brexit related acts.

Mark D'Arcy: Oh, these big post Brexit things about the, yeah, environment and environmental framework after Brexit. Yes, I still have post traumatic stress about that and memories of talk streams dancing in my head.

Ruth Fox: So we know that the Environment Act, that was a big one, the Environment Act will be subject to post legislative scrutiny.

Mark D'Arcy: Oh yes, we spoke to Toby Perkins just a little while ago.

Ruth Fox: Yeah, so his committee has been looking into that, and they've agreed that there's going to be a memorandum and they'll commence post legislative scrutiny in 2026, so that'll be next year. We think there's going to be not dissimilar timescale for reviewing the Agriculture Act.

[00:52:00] Our friend of the podcast, Lord Norton, has been pursuing that, Conservative peer, Professor of Politics at Hull University. He's been looking into that with various written questions. But there's a whole swathe of other acts, you know, fisheries, cross border trade, taxation, some of these other big Brexit bills that we don't know what's going to happen to them and, uh, it would be, uh, interesting to get them reviewed as well.

Mark D'Arcy: Inquiring lobbyists will want to know.

Ruth Fox: Yeah.

Mark D'Arcy: And talking of the House of Lords, the House of Lords has begun to be a little bit more problematic to the government.

Ruth Fox: Yes, so Non-Domestic Rating (Multipliers and Private Schools) Bill Trips off the tongue, doesn't it? Yeah,

Mark D'Arcy: Yeah, um, just when, just when you think that the product safety and metrology bill is the least hip sounding piece of legislation you've ever heard of.

Ruth Fox: Oh, it's all happening here. Six defeats this week, and what we've basically seen is the Liberal Democrats and the crossbenchers teaming up with Conservative peers to defeat the government on a number of issues. So this is the bill to reduce business rates for retail and Hospitality Properties to remove charitable rate [00:53:00] relief from private schools.

This is separate to the VAT issue on private schools. This is about removing charitable rate relief. So charities like the Hansard Society, for example, you can get business rate relief. automatically at 80 percent and then you can apply to your local authority for discretionary rate relief at the remaining 20%.

So it was quite a significant sum of money for some of these schools and the government wants to remove that relief. And, uh, yeah, peers voted by a majority of 91, quite comfortable for a conservative amendment to cut that provision out of the bill to end tax relief for private schools. So, uh, it was sort of quite a bit of a stushie in the, in the Lords about this. And, um, the Conservatives were arguing that the government's overreaching politically on this issue and, and creating a two tier system and punishing charities for views that don't conform with the, with the government's possession.

Mark D'Arcy: And I think it's worth remembering just what a thorn in the side of the previous Conservative government, the House of Lords became, and the pattern's very similar to what you were describing there. You'd suddenly start getting amendments with cross [00:54:00] party backing to government legislation popping up in the House of Lords at report stage, and the tell tale signs would be that they're be in the old days, a Labour front bencher, a Liberal Democrat front bencher, a prominent member of the cross benches, all signing some amendment.

And you think to yourself, aha, , the, the, the, the games afoot, especially if there was a bishop in the list as well. Actually and now full house. Now just, just switch to conservative front bencher from Labour front bencher and, and the mirror image process is now beginning to unfold. And there were days I think there was one big. Conservative criminal justice measure where I think there were 14 amendments passed in one single night of report stage and as someone put it to me there was blood in the water. I don't think we're quite at that stage yet but the government may find that it starts to trip over the House of Lords in the way that Rishi Sunak's government repeatedly tripped over.

Absolutely. And I think with that, Ruth, I think we should call it a day for today. I hope you've enjoyed the programme, listeners. And in the meantime, don't forget that if you've been listening out in vain to this podcast, [00:55:00] hoping to hear about progress on the legislation to legalise assisted dying, we do have a whole separate podcast dedicated to that very controversial piece of legislation.

It'll be on your podcast feed, so do take a listen.

Ruth Fox: See you then.

Mark D'Arcy: Bye bye.

Intro: Parliament Matters is produced by the Hansard Society and supported by the Joseph Rowntree Charitable Trust. For more information, visit hansardsociety.org.uk/pm or find us on social media at Hansard Society.