How I knew George Osborne was in trouble
8:30 am - March 23rd 2012
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contribution by Damian McBride
Bear with me while I explain some basics.
Anyone can come up with an idea for the Budget: members of the public who write in; NGOs and Business groups; other government departments; officials in HMRC; Treasury staff, special advisers and ministers; and of course the Chancellor himself.
It would be nice to say they are all given equal weight and consideration, but the order I’ve put them in usually corresponds to the amount of effort the Treasury will put into developing their ideas.
Each viable idea – called a ‘Starter’ – is given a snappy 4-5 word description – a useful discipline to check whether it can be explained in one sentence – and a lead official and lead minister is assigned to it.
It’s also given a number, so if Chapter 6 of the Budget is on the environment, each relevant idea is numbered Starter 601, 602, etc. With fuel duties, etc., where there are lots of different options, they are listed out as 601a, 601b, etc.
All the starters – about 150-200 in total – are placed in an Excel file called the Budget Scorecard. Each line contains the name and number of the starter, and the amount in revenue that it will raise or cost in each of the next 5 years, before and after inflation.
Sheet 1 of the Scorecard contains the Starters which are almost certain to proceed, Sheet 2 very likelies, Sheet 3 probables, Sheet 4 not likelies, and so on. Starters are gradually promoted to Sheet 1 over a 3-4 month process, and at the bottom of Sheet 1 – constantly evolving – is the Budget arithmetic, which says how much the entire package costs or raises.
No Starter ever disappears from the Scorecard. Even if it is firmly rejected early in the process, it still lurks on a distant Sheet waiting to be recalled in case the distributional analysis of Sheet 1 calls for a measure targeted at a particular income group or segment of society.
On Budget Day, Sheet 1 is literally copied and pasted as a table into the chapter of the Red Book entitled ‘The Budget Decisions’, which is what politicians and journalists generally turn to first to see what the Chancellor’s actually announced after he’s announced it.
The Two Eds and Gordon
I can only speak for Gordon Brown’s Treasury, in particular the two years when I was the official in charge of the Scorecard. Each week, with Ed Balls and Ed Miliband, we would go through the Scorecard, line by line, sheet by sheet.
James Bowler, until recently David Cameron’s trusted PPS, would be there; as would Michael Ellam, the Treasury’s then Head of Communications.
A dozen times or more, we would go over the same Starter, and the two Eds would ask a dozen questions about each one: why would we want to do this? Who’s proposing it? How robust is this costing? What’s the distributional impact? What does the Minister think about it?
Occasionally, the lead officials for particular Starters would file in for an interrogation, or the entire group would decamp to one of the Minister’s offices to go through all the Starters for which they were responsible.
In a separate weekly meeting, the two Eds and the Ministers would then sit down with Gordon and repeat the process, officials would be summoned for detailed discussion, additional analysis would be commissioned and digested, and from those intense sessions, emails would emerge stating: “The Chancellor has taken the following decisions…”
By that process, Sheet 1 would be finalised, and there is no doubt that – with a few painful exceptions – on each of the 11 occasions Gordon Brown stood up to announce his Budgets (20 if counting PBRs), he did so confident that every decision had been comprehensively analysed and thought through.
As importantly, this allowed Gordon to dodge hundreds of bullets over the years – saying ‘No’ to Starters which officials and Ministers had recommended to him, but which rightly failed to survive the intense scrutiny of the Scorecard process.
Alistair and George
I don’t know whether, how or why the process changed when Alistair Darling became Chancellor, but one thing was clear: Starters which Gordon and the Eds had blocked on previous occasions began to appear in the final list of Budget decisions; officials had given them another whirl and succeeded.
One example springs to mind. There was a perennial Starter in each of Gordon’s last 5 Budgets to raise the road tax rate for older, high-emission cars to the much higher rate charged on their brand new equivalents.
The DVLA proposed it every year for sound administrative reasons; DEFRA backed them up for sound environmental reasons. Gordon rejected it every year for the equally sound reasons that it was unfair and political madness to impose a retrospective tax hike on millions of family cars.
Alistair put the measure through in his first Budget, and promptly had to reverse it in the face of a media and public outcry, led by the Telegraph. What was telling was the reaction from Alistair’s ‘people’: “the officials didn’t tell us”, “we didn’t realise”. Clearly, the Scorecard process was no longer working.
George Osborne
I looked through the 2010 and 2011 Budget Decisions tables, eager to see what fast ones my old civil service friends had managed to pull on the new Chancellor, and I was gravely disappointed.
These were highly-disciplined Budgets where all but the most significant and carefully-considered measures seemed to have been stripped out. I imagined George Osborne going even further than the two Eds in his Scorecard meetings, rejecting without question any measure which did not fit within his big picture. I confess I was very impressed.
But now we come to Wednesday. Even before the Budget documents had been published; even before I’d seen the Budget Decisions table, I knew something was wrong when George Osborne said the dread words: “We will also address some of the loopholes and anomalies in our VAT system.”
“For example, at present, soft drinks and sports drinks are charged VAT; sports nutrition drinks are not.” Blimey, I thought, that’s Starter 328 from 2003 – Dawn Primarolo rejected that one before it even got to Ed Balls.
He continued with hot takeaway food. You’re joking, I thought, not that old chestnut. I personally blocked that one back in 2005. “Some companies”, he went on, “are using the VAT rules that exempt the rental of land to avoid tax.” That’s Hairdressers, I thought! Starter 318 every year. Gordon would never touch it.
Suddenly, I became worried for George Osborne. Where had the ruthless discipline of the previous two Budgets gone? If he’d let these kind of measures through the net, what else had he let through?
And what were his next words: “We should also simplify the age related allowances… many pensioners don’t understand them.”
Conclusion
I may be totally wrong. George and his team may have thought through every individual measure, and their cumulative impact on different groups, just as carefully before this Budget as they did before Budgets 2010 and 2011.
But for me, it felt as though they were so focused yesterday on the big ticket tax cuts – 50p and the raising of the personal allowance – and what they thought were the most high-profile tax rises – fuel duty and stamp duty, that they took their eye off a number of other balls.
And it wasn’t just pensioners. I’d be surprised if there were many Budgets from 1997-2007 when Gordon hiked duty on each of the 6 main excise duties: beer, wine, spirits, cigarettes, fuel and cars, because when he and the Eds looked at a Scorecard with all those tax rises side by side, you can bet they would have frozen at least one to sweeten the overall pill.
The days after a Gordon Budget were often difficult as individual measures came under scrutiny, but it was rarely something he wasn’t prepared for (the 75p pension being the obvious exception), and it rarely overshadowed the Budget package as a whole. The Scorecard process had a lot to do with that, as well as ensuring there were a few (happy) surprises left to be announced on the day.
George and his team didn’t seem prepared for the pensions row, and it certainly has overshadowed the overall package. Yes, that’s because of problems with the policy. Yes, it’s because the presentation was badly flawed. But also, and not to be underestimated, it looks as though something went very badly wrong in the Scorecard process.
Someone didn’t ask the basic questions the Eds used to ask, or they didn’t ask them often enough. If they had, Wednesday’s Sheet 1 would have been much shorter, and with fewer unpleasant shocks.
—
Damian McBride was formerly an aide to Gordon Brown. He writes in a private capacity.
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Reader comments
Amazing that you did all this yet still managed to bugger up the companies finances.
To me it seems miserable that you would make these decisions based on a crude, bean-counting Excel spreadsheet.
Where is the political philosophy?
This is a very interesting and enlightening piece. It goes towards confirming the impression that the Government have run out of ideas now they’ve entrenched wealth and privilege further than they had dreamed possible, screwed the welfare system and set in motion the privatisation of the NHS.
Government by numbers?
Ozzy really has got his finger on the pulse?
He is reported to have said, “It would be unfair to expect the shallow, vapid rich or bubble-wrapped middle class professionals under 50 to suddenly develop some character. If I had increased taxes for wealthy, spineless people they would be crying in the street and embarrassing everyone. Older people have been wise enough to build-up valuable reserves of fortitude so that they now have the decency to weep in the privacy of their own home.”
Ozzy added: “Meanwhile, poor people are wonderful characters who shake off their misfortune with a joke and a dirty song. I could make life a lot easier for them but I would be hacking away at the very foundations of British folk music.”
These dazzling insights which seem particularly prevalent amongst members of the Bullingdon club beat any spreadsheet to hell.
Leaving the appalling McBride aside, here we can see in black and white how the UK tax code has doubled in size over the past decade or so, and indeed how the public finances were left in such deep shit.
It was just “clever” wheeze after wheeze after wheeze.
No strategy. No big picture. Other than a bias to spend spend spend.
And heaven forfend there should be any attempt to make things less complex. Oh no.
Is Osborne much different. Not really.
Now where did I put that Swiss property guide…
Henry (08.58), the “crude, bean-counting Excel spreadsheet” was the mechanism by which the Treasury ensured the whole package added up, and that individual measures were properly considered, but the big political direction was applied at the outset in terms of what we’d call the Big Ticket items that Gordon wanted to introduce (big increases in tax credits or pensioner benefits to tackle child and pensioner poverty; the 2001 step change in NHS spending, etc.). The rest of the package was then put together around those items. And clearly, political principles played a part in individual decisions: for example, Gordon was implacably opposed to VAT increases or extensions in all his Budgets because of the impact on pensioners and others on fixed incomes.
@ 6. the a&e charge nurse
“He is reported to have said,” in an article titled ‘Burden should fall on those with the most character, says Osborne’. Published by the Daily Mash, a satirical news website. Not something to be taken seriously.
[deleted]
Where is the political philosophy?
Odd criticism to make. You can have all the political philosophy and values and morals you want – but that doesn’t mean you ignore the details and the process does it?
Sounds like sensible way to construct a budget to me – after all, at least it’s rigorous.
The alternative is…well, what happened to Osborne on Wednesday, frankly
[8] disagree entirely, KM – while the Mash would never stake any claim for seriousness it’s sardonic take on our politics and culture is often more informative and truthful than the usual propaganda machines that provide news outlets for most current affairs reporting.
For some NuLabour set new standards in economic incompetence and debt accumulation which tends to reflect badly on the sort of spreadsheet philosophy described in the OP.
So what has Bullingdon George done about it – well he might have shuffled a few bob this way or that but you can be sure his main concern is setting up the kind of the financial climate that will ultimately enable his city mates to accumulate fabulous personal wealth while ordinary people settle for whatever crumbs fall off the table.
The granny debate is no more than PR stunt to divert attention away from the privatisation of the NHS – a measure that will have a much more significant, and long lasting effect on tomorrow’s oldies.
The Mash highlights the intentionality of our political class better than most.
Agree that it seems policy making with no moral core, and actually explains how Labour lost it’s soul. This being the case, how the hell did ID cards make it through? Osborne is in trouble because he is of low intelligence, nasty and out of his depth. I do not think scare cards can help him.
How did the 10p tax rate cut get through?
I believe that should read “The disgraced Damian McBride”.
@10 Problem is that as Mcbride himself says, “I don’t know whether how or why the process changed”. If that’s the case his is pure conjecture apparently backed up with the “evidence” that a different Chancellor and team appeoved ideas that one Labour chancellor and his team rejected. It would only be news if NO different ideas were approved.
@11
“Quoting” something from a satirical website as an attributable statement is bad enough, but then to argue that this is reasonable when your mistake is pointed out is both absurd and intellectually indefensible, and undermines the credibility of the debate. Poor show.
[16] “Quoting” something from a satirical website as an attributable statemen – oh, you mean the chancellor didn’t actually say those words?
As a matter of interest are any of the other reports in the Mash satirical as well?
I must admit it is getting harder to distinguish between reality and fantasy when it comes to the daily doses of spin-drenched propaganda being pumped into the MSM by our political representatives.
They’re Measures now, not Starters. Have been for 5 or 6 years.
Why did Sunny remove the nudity and swearing?
Reactions: Twitter, blogs
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How I knew George Osborne was in trouble http://t.co/4jaDnwyG
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As a process manager, I loved this peep into systems. MT“@sunny_hundal: Utterly fascinating post by Damian McBride http://t.co/0DpMyurq”
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- Simon Caulkin
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- Frank Pasquale
“All the starters – about 150-200 in total – are placed in an Excel file called the Budget Scorecard” http://t.co/xwpWh77Q
- Frank Pasquale
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Interesting stuff about those most fascinating subjects, Budget-making and spreadsheets. http://t.co/rjhTBUBi
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RT @sunny_hundal: Damian McBride: 'How I knew George Osborne was in trouble' http://t.co/9901nIhd << fascinating blog on the budget from…
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Being an incompetent liar runs in the family >>How I knew George Osborne was in trouble http://t.co/86xGaFBV #uk
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RT @libcon: How I knew George Osborne was in trouble http://t.co/1P3Cn0Rg << Really interesting on Budget process
- Robbie Tucker
How I knew George Osborne was in trouble | Liberal Conspiracy – http://t.co/mS0FEn08
- Damian McBride
@Peston Liberal Conspiracy have a version of my Budget blog minus the nudity and swearing – http://t.co/fCJBjKkS
- Robert Peston
@Peston Liberal Conspiracy have a version of my Budget blog minus the nudity and swearing – http://t.co/fCJBjKkS
- Mark Rogers
Fascinating Damian McBride analysis of UK budget snafus http://t.co/ulsmBVsM via @libcon
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@Peston Liberal Conspiracy have a version of my Budget blog minus the nudity and swearing – http://t.co/fCJBjKkS
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Well worth a read RT @DPMcBride http://t.co/NmUH9NXv
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@Peston Liberal Conspiracy have a version of my Budget blog minus the nudity and swearing – http://t.co/fCJBjKkS
- Sam Taylor
As the 50p tax, granny tax and pasty tax fiasco worsens – this blog from Damian McBride looks more & more prescient http://t.co/h6DsExew
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Articles: VAT Supper http://t.co/410Tlh8D Excelling idiocy http://t.co/MrWTg0KE Homeopathetic http://t.co/btkOWHkt Sol! http://t.co/WRutU0np
- Martin McGrath
@mkincaidspeller This bit by Damien McBride http://t.co/eaXMkYfi gives an interesting insight into how the budget might have been ashambled
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