For many years, Westminster has been enthralled with the idea of “taking the politics out of” various realms of decision-making. The prevailing narrative argues that independent bodies help avoid the day-to-day grind of Westminster politicking, the transitory influence of focus groups and opinion polls and the short-termism which is embedded in Parliament. However, de-politicisation means we miss out on important benefits of political decision-making: electoral accountability, voter representation and transparency.
The ongoing public sector pay disputes have highlighted that navigating state spending on the NHS is incredibly political and cannot be left to unelected experts. Decisions on these matters, where public, taxpayer’s money is concerned, demand democratic accountability.
There are multiple areas of politics where significant power has been transferred from elected politicians to unelected officials, but one of the most significant is fiscal and monetary policy. In the realm of fiscal policy, whether we raise or cut taxes is a decision we would assume is accompanied by high levels of democratic accountability. However, the Office for Budget Responsibility (OBR) – the organisation responsible for setting the limits for changes to fiscal policy – is essentially free from accountability and scrutiny.
A recent review of the work of the OBR has highlighted that the Budget Responsibility Committee exercises “a vice-like grip over the UK’s economic levers,” having recently sent ‘a warning shot to Conservatives’ considering tax cuts and told the Government to cut benefits. Chancellor Jeremy Hunt referenced the OBR’s forecasts over 50 times during his Autumn Statement to the House of Commons in 2023, also discussing the ‘headroom’ that the Chancellor will be ‘allowed’ in the Spring Budget by these forecasts.
Yet, OBR forecasts are never 100% accurate and we should not expect them to be. Between 2010 and 2023, the OBR’s one-year budget forecasts misjudged UK economic growth by £558 billion. Their forecasts are so incorrect that the average yearly error is equivalent to the combined contribution of the British auto manufacturing, agricultural and pharmaceutical manufacturing industries. This is not because the OBR is any worse at analysis than other forecasters, but because they are in the business of estimation. Our public debate and political system must recognise that we should not bestow so much influence on a single body which was established for the purposes of forecasting.
Another area where politicians have shirked responsibility is monetary policy. Until 1997, monetary policy was within the remit of the Treasury. Then Labour made the Bank of England ‘independent’ by transferring power to set interest rates to the Bank’s ‘Monetary Policy Committee.’
It seems the Government has forgotten just how political monetary policy is. Interest rates are hugely influential on the public finances, although their greatest impact is on households. Recent increases in the ‘base rate’ have seen fixed-rate mortgage payers renewing their payments at 6.5% or higher. The recent rate-raising campaign by the Bank of England has seen many households paying an additional £500 per month for their mortgage.
If burdening homeowners with additional mortgage expense was not political enough, higher interest rates also widen inequality. This is because lower income workers are more likely to be in ‘problem debt’, which they will now pay higher rates on. Meanwhile pensioners and high earners, who are already typically wealthy, will benefit from the higher interest payments they receive on their savings.
This would not be such an issue if the Bank of England was an accountable institution. However, the individual responsible for rate changes and their detrimental effects on households – the Governor of the Bank of England, Andrew Bailey – cannot be voted out or even sacked by the Prime Minister. Whilst the Governor is subject to a degree of scrutiny via Select Committees, we must ask whether it is appropriate that the power to set policy, influencing the finances of millions of Britons, rests with someone unaccountable to voters and someone who is practically unimpeachable until the end of his contract in 2028.
The OBR and Bank of England are just two examples of elected politicians handing off power and responsibility for decisions which are deeply political. Each demonstrates, to differing degrees, the undemocratic culture of “taking the politics out of” decision-making processes, which have profoundly political consequences for business, families and working people.
Politicians are far from perfect, and are often not the best listeners or critical thinkers that Britain has to offer. But, their singular overriding quality which outshines all others is that, when they get it wrong, voters can boot them out. The electoral accountability of MPs means their decisions are likely to be more representative and transparent than those made by ‘experts’ behind closed doors.
Westminster must stop relying on undemocratic bodies to shape policy. It is time that those who are democratically accountable started acting with the authority given to them by the electorate.
Callum Westwood is the winner of Bright Blue’s Tamworth Prize 2023.
Views expressed in this article are those of the author, and not those of Bright Blue.
[Image: Photocreo Bednarek]
