Smoke and mirrors

I undertook to leave the subject of the Liberal Democrats, but this post is merely an addendum to the last one.

An interesting discussion has been prompted in the comments section of that post by one of my regular contributors. He asks:

A claim made repeatedly by Lib Dem spokesmen on various discussion and debate shows is that the Lib Dem spending plans have been independently audited and pronounced Grade-A watertight through said independent audit. Can anybody, Lib Dem or otherwise, actually point us annoying sceptics toward where we might find details of this independent audit? Because surely this should all be open to clearing up in a trice. Unless various Lib Dem spokesmen are talking rubbish.

Another regular contributor, a member of the Liberal Democrat federal executive, rightly notes that this is a fair question and gives the following answer:

The audits are carried out by the Institute for Fiscal Studies. To quote the conclusion for the 2001 Audit in full: "The Liberal Democrats propose to increase personal taxes in order to increase expenditure on what they see to be priority issues. Some of the increases in spending represent a handing-back of disposable income through the benefit system. The overall effect of the changes in direct taxes and benefits would be progressive, with gains near the bottom of the income distribution and losses at the top. A proposal to abolish the 10% tax rate would make the package somewhat less progressive. This policy and some of the other proposals analysed here – notably those for the pension system – would represent a significant change in direction compared with the policy of the incumbent government."

At this point I chipped in, and I think it's worth expanding on the subject, for reasons that will become clear.

It should be obvious that something is wrong in the second of the contributions I have quoted. Whatever else may be said of this passage from the Institute of Fiscal Studies (IFS), it is certainly not a judgement that the Liberal Democrats' spending programme is 'Grade-A watertight'. It is neither more nor less than a careful and objective assessment of the impact of Liberal Democrat proposals on the tax system (the impact on household incomes, the extent of transfer payments, the extent to which the proposals would be progressive or regressive in practice). Moreover it is not an 'audit' (still less, as I infer my Lib Dem contributor believes, one of a series of annual such exercises), but a briefing note on the fiscal polices of the Liberal Democrats in the 2001 general election, alongside similar briefings on Labour and Conservative policies and the record of the Labour government. The entire series of briefings for the 2001 election can be found here.

The IFS does valuable and scrupulous work in analysing public policy disinterestedly. It raises questions about the rationale, effectiveness and consistency of proposals on fiscal policy, and it does it well. The briefing notes for the 2001 election conformed to those aims and standards. They are not designed to give a 'pass' or 'fail' to the parties individually, nor do they actually do so. Indeed, the deliberate limitation in their scope makes their questioning all the more effective, as in noting in this document that the Conservatives' aim of an £8 billion tax cut required in the longer term a willingness to consider significant measures of withdrawal from the provision of state services.

I certainly take that salutary observation as an unfavourable reflection on the amount of thought invested in the Conservative Party's proposals, but that is my own judgement; it is not the assertion of the IFS itself. To interpret that observation, moreover, as some implied seal of approval on the coherence of another party's proposals is fallacious and in my view presumptuous. I invite my readers to examine the IFS's briefing and try to reconcile it with the claim that that body audits and approves the Liberal Democrats' policies. I am unable to make that reconciliation.

Yet the Liberal Democrats are assiduous in making precisely that assertion, which appears to have become part of the party's mythology. Here, for example, is Paul Holmes, Lib Dem MP for Chesterfield, arguing in a Cambridge Union debate last year for the abolition of university tuition fees:

Before any cynics jump in and say this cannot be paid for, let me point out that the widely respected independent Institute for Fiscal Studies went through all three major party manifestos with a fine tooth comb [sic - he presumably means 'fine-tooth comb', there being no customary requirement to comb teeth in addition to brushing and flossing them] in 2001. They judged that only the Liberal Democrats' fully costed Manifesto added up over four years. The Conservatives' didn’t even pretend to and Labour’s costings fell apart after two years.

What the IFS in fact said about the two main parties' spending plans beyond March 2004 (i.e. beyond two years after the general election) was this:

The two main parties' manifestos plan for total public expenditure only up until 2003/04. This raises the question of their longer-term plans.

The briefing made observations on the pattern of spending under the different parties' proposals on the assumption of extrapolating forward, but then added:

Still, it is not obvious that differences in public spending growth that the parties have planned can confidently be extrapolated forward in this way - for example, because Labour has not, as yet, announced plans for public spending beyond 2003-04.

Holmes is an obscure political figure whose incapacity with economic subjects I have remarked upon before. But the Rt Hon. Charles Kennedy MP is Liberal Democrat leader and therefore presumably considered to be of prime ministerial calibre by his party. Here is what he had to say in an interview on the epolitix site on 29 December 2003:

Of course the other thing is that if the prime minister and the chancellor are so certain in their economic judgement then, alright [sic], do the same as we have done year upon year: submit your proposals to the Institute for Fiscal Studies - an authoritative, independent, outside body and see if the figures add up. Every time they've given us a clean bill of health.

Two days later, perhaps realising that claiming annual 'clean bills of health' would be testing the credulity of even his closest friends, he at least adjusted his claim concerning the frequency of these assessments. In his new year message, he asserted:

My second resolution is that my party will lead the way in being rigorous and open in its approach to public finance. Not only will we be straightforward in explaining how we will raise money to fund the public services and what we will do with it, but we shall also invite independent auditors to scrutinise the figures. We’ve done it before. For the past three elections the Liberal Democrats have given our manifesto pledges to the Institute for Fiscal Studies for independent assessment. We’ve always received a clean bill of health.

This is so idiosyncratic an account of what the IFS's most recent election briefing states that I even wondered if there was some other document - whether publicly available or privately-commissioned by the party - that yielded the conclusion Kennedy claims. I checked with the IFS what they thought Kennedy was referring to in his epolitix interview, and - sure enough - they believed he was referring to the general election briefing I have linked to and quoted from.

In the circumstances, and given that I have quoted Kennedy's second new year's resolution, I can't resist recounting also his first:

So my first resolution is going to be to 'Tell it straight.' That, to many people, might be funny. 'A politician tell it straight – you must be joking!' But I have always believed that spinning and distortion will return to haunt you ....

You said it, old bean.

Comments

[David Duff]

Sorry for the diversion, Oliver, but I can't resist quoting a piece of prime frivolity from the excellent "Eats Shoots and Leaves" by the witty and erudite Lynne Truss on the subject of hyphens and their uses and mis-uses:

"Interestingly, Kingsley Amis says that those who smugly object to the hyphenation of the phrase 'fine tooth-comb' are quite wrong to assert the phrase ought really to be punctuated 'fine-tooth comb'. Evidently there really used to be a kind of comb called a tooth-comb, and you could buy it in varieties of fineness. Isn't it a relief to know that? You learn something new every day."

Quite so and now, back to the serious stuff.
David Duff

[Matthew]

As just about the only blogger who does research you deserve much credit Oliver. But did you not take the opportunity to ask the IFS whether they were happy with Lib Dem speeches on the subject?

[Andrew Duffin]

"...a willingness to consider significant measures of withdrawal from the provision of state services"

I wouldn't necessarily take that as proof that the Conservatives hadn't given enought thought to the likely outcomes of their aspirations.

I would hope that they HAD given it thought, and had decided that a willingness to consider etc etc (and perhaps do more than just consider) was actually a GOOD outcome.

Or are you suggesting that every single thing currently done by the State must continue to be done by the State, and could not be done cheaper and simpler by someone else, or simply left undone?

[Matthew]

Andrew the point is that they didn't explicitly say in the election campaign that they were willing to consider such cuts.

[Oliver Kamm]

Matthew - You anticipate me. In my email exchange with the IFS I was concerned just to establish the facts of the case. Having done so and found them surprising, I sent a letter to the IFS - which seemed to me the proper mode of communication when providing documentation - containing the information in this post and a further instance of Holmes's making the same claim (this time in Select Committee, which is a more serious matter than doing so at the Cambridge Union), and putting the question you raise. I have sent a copy of the letter to Charles Kennedy.

While politicians do spin research findings to their advantage, Kennedy's remarks are perplexing because so clearly at variance with the facts (and indeed with each other). I therefore initially assumed that he was referring to some other IFS work, real or imagined. But that doesn't appear to be the case: I specifically asked the IFS what Kennedy was referring to, and the IFS believed that it was their election coverage he was talking about. Moreover Kennedy's new year message confirms that what he had only two days previously depicted as an annual assessment undertaken on the initiative of the Lib Dems was in fact the regular analysis of the IFS undertaken before general elections.

Fortunately Paul Holmes's remarks are explicit on this point, and equally clearly do not give an accurate account of the IFS's conclusions.

Thank you for your kind observation.

Andrew - No, I'm not making the suggestion you speculate I might be making, or indeed one contradicting it, or at least not in this post. I'm pointing to the IFS's judgement that, "In the long run, a desire to reduce taxes must, if it is to be achieved, be matched by a willingness to identify reductions in the scale of public services." Because the Conservatives did not display such a willingness, let alone actually do the identification required, or at least not in their manifesto, I drew the inference from the IFS's analysis (though I stress that this is my own judgement and not the IFS's) that the Conservative programme was not a credible one.

[David Duff]

And I would like to add that if the Tories claim they will cut taxes on the basis of 'making savings in the bureaucracy' they will, yet again, fail to get my vote because that is pure bull! They will only ever convince me when and if they point to a series of programmes or services and promise to either cut them or sell them.
David Duff

[PooterGeek]

Oliver, you "undertook to leave the subject of the Liberal Democrats", but can you resist this?

[tom]

I can't resist entering the fine-tooth debate. James Cochrane in his book 'Between you and I' prefers 'fine-toothed comb', one capable, metarphorically, of thorough sifting of searching.

[Ed]

I appreciate that it is nowhere nearly as serious a matter to (mislead or) lie to a Select Committee as it is to (mislead or) lie to the Cambridge Union; nevertheless it may be harder to convince the audience of the Union than it is a Select Committee. When he delivered this speech the hostile reaction showed that the audience, fortunately, took it with a pinch of salt.