Treasury’s leaking of Covid-19 recovery policies to some media outlets weeks in advance, while keeping tight lipped on important details, risks eroding public trust, a leading economic think tank has warned.
A new report by the National Institute of Economic and Social Research (Niesr) said the current method has led to serious fiscal failures and more transparency is needed – and that measn an end to serial leaking of policy decisions ahead of budgets.
The report also calls for chancellor Rishi Sunak to set out a structured timetable for fiscal events like the Budget and allow for greater scrutiny and debate on spending decisions to avoid errors arising.
Sunak has previously faced criticism from the Government’s own Office for Budget Responsibility (OBR) for failing to set out longer-term spending plans at the last Budget.
The report from Niesr and funded by the Nuffield Trust also called out the Treasury for leaking certain policies but with key details missing, while holding back crucial business policy while CEOs and decision makers sat waiting.
Many Budget announcements last month were also leaked well in advance of Sunak’s statement to the House, but requests for clarity in other areas to support businesses were ignored until Budget Day.
No details, just headlines
Niesr director, Professor Jagjit Chadha, said: “Politicians would benefit because their credibility would be much higher if they conducted this more seriously. The leaking is really very tactical and I think it reflects badly on them in the wider debate.”
He added: “Has the process of fiscal policy as we’ve been setting it for the last quarter of a century worked for the British economy?… I think in many areas we’ve found many failures.
Deputy director Hande Kucuk of Niesr said the Covid-19 furlough scheme extension until September could have been announced far earlier and prevented a swathe of redundancies last summer.
She explained: “Until the very end of October we didn’t know that it was going to be extended. It was extended last minute and there were lots of redundancies running up to that.
“Instead, if the chancellor had announced that the furlough scheme’s duration would be conditional on the pandemic and the lockdown, the policy would’ve been more effective. So, giving more guidance… could have reduced uncertainty and given greater confidence to the public.”
More than just balancing the books
The Treasury also needs to stop focusing so heavily on debt and deficit levels, and expand its remit to include wellbeing, job security and quality of life, it said.
Former Labour chancellor Alistair Darling, who contributed to the report, said: “Governments need to be open about what they are doing and why.
“Whilst a government’s approach to fiscal and monetary policy needs to be credible so it supports the wider societal aims, and flexible enough to adapt to the changing circumstances of the day, it must also be transparent.”
Another contributor, former Tory chancellor Lord Lamont of Lerwick, added: “It is clear from this authoritative study that any future framework should be based on a collection of clear principles, born from a clear strategy concerning expenditure, and agile enough to adapt to the unknown.”
HM Treasury has been approached for comment.