OBR Fiscal Sustainability Report 2013 - Treasury Contents


2  Conclusions

16. Projecting the future path of public finances over a 50 year period is a highly uncertain and difficult exercise, as the OBR acknowledges. The length of the projection period, together with the sensitivity of the figures to plausible variations in assumptions, leads to substantial uncertainty about the central projections.

17. An assessment of the sustainability of public finances over a long period can be beneficial to policy makers. It can help to illustrate future pressures of which policy makers should be aware.

18. The exercise has some value but the Committee does not believe that the FSR needs to be produced annually. The same long-term policy making benefits would be served by a less frequent publication. This should also create scope for savings equivalent to the annual marginal cost of producing the FSR.

19. The OBR says that its annual FSR figures are dependent on ONS population projections which are only updated every two years. The OBR recently suggested that it might produce future Fiscal Sustainability Reports on a frequency aligned with the ONS population projections. However, the FSR relies on a large number of datasets, including the ONS's labour market statistics and the WGA financial accounting data. The publication frequency of a 50 year FSR should not be dependent on the availability of a single dataset when the overall projections rely on many other important data sources and assessments. Instead, the publication frequency should be determined by a judgement as to how the publication can be of most public benefit.

20. The OBR is currently obliged by the Budget Responsibility and National Audit Act 2011 to produce a Fiscal Sustainability Report every year. We recommend that the law be amended to reduce the publication frequency. The OBR should instead publish a Fiscal Sustainability Report twice a Parliament. The Fixed Term Parliaments Act 2011 sets 7 May 2015 as the date of the next general election, and stipulates that unless the Act's conditions for an early election are met, subsequent general elections shall be at five year intervals thereafter. We recommend that the first FSR should be produced at the latest within a year of an election, and the second at a time in the last two years of the Parliament that the OBR considers most appropriate for informing public debate. The first report would be able to take into account the policy announcements of the new Government and project the impact of these on long term public finances. The second would allow the OBR to show how the sustainability of public finances had evolved during the Parliament, helping to inform voters in good time before an election.


 
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