ALEX BRUMMER: Rachel Reeves’ plan to ‘gold-plate’ OBR budget inquiry is not a radical new deal
- Reeves promises ‘permanent tax and spending changes’ will face OBR scrutiny
- She says Labor will commit to a common budget by the end of November each year
- But the idea that this is a radical new deal must be dismissed
Labor used the anniversary of Liz Truss’ explosive mini-Budget to highlight the role of the Office for Budget Responsibility.
Unlike the cuts, the creation of the independent OBR is a George Osborne initiative that Rachel Reeves can support.
The shadow chancellor promises to enshrine in law that ‘permanent tax and spending changes’ will be subject to OBR scrutiny.
Planning: Rachel Reeves promises to legislate that ‘permanent tax and spending changes’ will be subject to OBR scrutiny
What Reeves did not mention was that the OBR did offer to conduct a rapid review of the Truss-Kwasi Kwarteng tax and spending obligations, but the proposal was rejected.
The Tory right believes the OBR is the Treasury in disguise. Truss and Kwarteng didn’t want this to mark their homework.
The refusal to give the OBR a look was one of the reasons why returns on gilt-edged shares exploded, leading to the crisis that forced the resignation of then-Chancellor Kwarteng and the Prime Minister’s swift resignation.
Neither (nor, one might think, the OBR) could have foreseen that the pension funds had become casinos by converting British bonds, one of the safest assets in the world, into derivatives known as ‘liability driven investments’ ‘ (LDIs).
Reeves says Labor will set a common budget by the end of November each year, giving families and businesses time to plan before the start of the fiscal year in April. The idea that this is a radical new deal must be dismissed.
The word “permanent” is crucial to Reeves’ statement
It was her Labor predecessor Gordon Brown who came up with the draft of the pre-budget report in November for that very reason.
When Brown announced a huge, excessive expansion of spending on the NHS (which would later be paid for by a 1 percent surcharge on national insurance), it was largely about tightening Sir Tony Blair’s guns.
The word “permanent” is crucial to Reeves’ statement. It would allow a Labor chancellor to follow in the footsteps of Rishi Sunak with the Covid furlough scheme and Truss with its energy subsidy after Russia’s war on Ukraine.
A Labor chancellor will still be able to make policy without consulting the OBR.
Plus some change, plus c’est la meme chose.
Guard post
Microsoft boss Brad Smith appears to have finally overcome the UK Competition and Markets Authority’s justified opposition to the tech giant’s £60 billion takeover of Call of Duty gaming company Activision Blizzard.
The breakthrough came when Activision promised to sell its cloud streaming rights to French gaming rival Ubisoft. Victory for Microsoft may now be in sight, but Smith has won few friends from his public attack on the CMA and Britain.
There are still questions to be asked about Ubisoft’s arrangements and whether it is wise for so much power over the gaming world to be in so few hands
His exaggerated criticism of the British process has been self-serving and has cost Microsoft millions of pounds in legal fees. In objecting to the original deal, the CMA and its CEO Sarah Cardell raised universal concerns about Big Tech’s desire to rule the world.
Previous Silicon Valley acquisitions have often been a substitute for new ideas and an attempt to dominate the markets.
There are still questions to be asked about Ubisoft’s arrangements and whether it is wise for so much power over the gaming world to be in so few hands.
Fears that the open architecture would be destroyed kept Nvidia from purchasing Arm Holdings. The EU is cracking down on Google over its alleged misuse of ad technology to dominate advertising space.
The Microsoft deal threatens to stifle a young creative venture, weakening the ability of game innovators to reach markets.
Microsoft has achieved a narrow victory. In the process, Smith and the company have caused significant reputational damage.
Opening bell
Saudi Arabia’s sovereign wealth fund PIF loves nothing more than a good blow – as we saw when its LIV golf franchise waved the dollar bills and took effective control of the US PGA tour.
It has now set its sights on wrestling and the mixed martial arts champion Ultimate Fighting League. The weapon of choice is the smaller Professional Fighters League (PFL), into which $100 million has been sunk.
Like golf – raised by Phil Mickelson – a Saudi-controlled PFL could change the economy by luring big-name fighters with contracts beyond the dreams of greed.
The appeal of mixed martial arts is the relatively small number of fewer than 1,000 participants, which allows for dominance.
Let the fight begin.