Since his early days as a journalist, Robert Chote has been holding the government to account for its handling of public finances. Now, towards the end of his 10-year statutory term as chair of the Office for Budget Responsibility, he sits down with Geoffrey Lyons to discuss his career, the OBR’s role, and November’s cancelled budget. Photography by Baldo Sciacca
Photos: Baldo Sciacca for CSW
So sweeping was the global response to the 2007-08 financial crisis that it popularised a formerly specialist lexicon. “Quantitative easing” saw the injection of liquidity on an unprecedented scale, massive fiscal stimulus packages “primed the pump”, banks were “bailed-out”, “bailed-in”, “stress tested” and “ring-fenced”, and terms like “subprime” and “too big to fail” entered the collective consciousness.
It remains unlikely, however, that the average Joe or Jane knows what an “independent fiscal council” is, even though these public finance watchdogs have nearly tripled since the crisis. IFCs vary from country to country: some have been around for a while (Belgium’s High Council of Finance was the first, established in 1936), while others (Lithuania, Malta, Peru) are barely five years old. In total there are 39 IFCs, and while they can roughly be divided between those with an advisory role and those – like the UK’s Office for Budget Responsibility – that merely provide independent analysis, all have one thing in common: they don’t set policy.
“We don’t have any levers that we can pull,” says Robert Chote, the OBR’s chair. “Nor can we halt the budget process or require the government to do something that is consistent with hitting their targets, as some of the world’s other fiscal councils can.” Indeed, the OBR’s sole responsibility is to shed light on the public finances. “We are neither a policymaker nor a policy adviser,” Chote says.
CSW meets Chote towards the end of his ten-year term as chair in the OBR’s HQ in 102 Petty France, better known for being the Brutalist (and faintly phallic) home of the Ministry of Justice. Hanging on the wall of his 14th floor office is a framed Independent front page from the day after Black Wednesday, bearing the bold-lettered splash: “Pound goes into free fall.” The byline: Robert Chote.
It was one of many bylines from Chote’s 10-year career as a journalist, which was preceded by a stint as a travel guide writer (he co-authored works like Exploring Nature in the Wilds of Europe and The Alternative Holiday Guide to Exploring Nature in North Africa). After graduating from Cambridge, where he was president of the university’s Social Democrats, he spent the first half of his journalism career at The Independent, where he covered economics and business, and the second at the Financial Times, where he was economics editor. Asked whether it’s true that then-chancellor Gordon Brown tried to persuade the FT’s editor to sack him, Chote says with a grin: “So I’m told!”
“Your job is to report properly and without fear or favour, and some governments, some individuals, are more sensitive about these things than others,” he adds. “Even here [at the OBR], I’m still trying to be a good reporter. I get the facts, make a judgement about what’s important and what’s not, and then communicate it in the most effective way possible.” Journalism was a useful skill to acquire, he adds, and when he’s writing the executive summary of a report he’ll ask himself “how would I write this if it was on the front page of The Independent?”
“I’m still trying to be a good reporter. I get the facts, make a judgement about what’s important and what’s not, and then communicate it in the most effective way”
Having covered the International Monetary Fund as a journalist, Chote went on to take a job in its Washington D.C. headquarters in the late 90s as speechwriter to the IMF’s number two – and celebrated economist – Stanley Fischer. (Chote recalls Fischer’s office being lined with “obscure language translations” of his popular textbooks.)
Accompanying him to Washington was his partner Sharon White, then a Treasury official (and now, after a series of high-profile government jobs, chair of John Lewis). The two had both read economics at Cambridge – White a year ahead of Chote – and met shortly after they left via a mutual friend. White landed a job working for the British ambassador, and in 1997 the two were married in the British embassy.
Three years into his time at the IMF, Chote got a call from Mervyn King, then deputy governor of the Bank of England. King – who was also a non-executive director of the Institute for Fiscal Studies – asked Chote if he’d like to come back to the UK and apply to be the IFS’s director. Having been an admirer of the research institute’s output while he was a journalist, Chote jumped on the opportunity and he and White returned to Britain. He then spent the next eight years as director of the IFS where, according to the New Statesman, he resumed his role as unofficial tormentor of Gordon Brown, who would exclaim “Chote!” after reading the IFS’s damning post-budget analyses.
Chote on.... working for the IMF
Chote arrived at the IMF in the wake of the Asian financial crisis, so the atmosphere was charged with discussions around how the fund was responding (it ultimately issued a series of bailout packages worth over $40bn) and the lessons that were being learned.
He says working with Stanley Fischer and Fischer’s successor, Ann Krueger, was “enormously enjoyable” and that it rekindled the professor-student relationship.
Chote developed a keen interest in Krueger’s pet policy ideas by drafting her speeches.
As for Fischer: “He’s just a brilliant economist – somebody who has very successfully made the transition from being an academic economist to someone who is very involved in policy.”
It was Brown’s successor, George Osborne, who announced the OBR’s creation in his first speech as chancellor in May 2010. “I am the first chancellor to remove the temptation to fiddle the figures by giving up control over the economic and fiscal forecast,” he said, promising to “change the way that budgets are made forever”. Chote was appointed chair four months later, taking over from former chief economic adviser to the Treasury Sir Alan Budd, who had served as interim chair.
The rationale for the OBR’s creation was to cure what Chote calls the “disease” of deficit bias – a term economists use to describe a government’s habit of allowing public debt levels to rise. “Democratic governments borrow more on average than they should,” Chote says. “They either spend too much or tax too little, and they often feel emboldened to spend money when the public finances look healthy, even if they’re healthy for temporary reasons.”
Combined with this short-termism, governments take advantage of the fact that public finances are, to most of us, essentially unintelligible. “They’re unavoidably opaque,” Chote says. “The functions of the state are complicated, and the accounting for them is even more complicated.”
Chote says that by shining a light on the figures, the OBR eliminates the opacity problem while at the same time discouraging short-termism. “We do this by making it clear what the true situation is and what the consequences of a particular action would be.”
Three years into his time at the OBR, Chote’s truth-unto-power role in public life would garner attention for another reason. After White became second permanent secretary at the Treasury in 2013, the couple were dubbed “Mr and Mrs Treasury” and their clashing responsibilities became a source of glee for journalists. (“No pillow talk please,” said the Spectator – although Frank Field MP countered by telling The Times: “They have both carved out areas of expertise with a huge sense of old-fashioned decency. I think they have made public service cool again.”)
The OBR has a number of key responsibilities including scrutinising individual tax and welfare measures and publishing comprehensive risk reviews of the financial system. What it’s best known for, however – and what usually makes headlines – are its biannual forecasts that accompany the major fiscal events: the Budget and the Spring or Autumn Statement. These usually happen in March and November, though Chote says: “You’d think there’d be a greater logic to having one in November and one in June. That way they’d be spaced out more.”
Because the government has been so focused on Brexit, the last few fiscal events have been anything but orderly. This is reflected in the OBR forecasts themselves, which these days are often accompanied by disclaimers (“This forecast has been produced against the backdrop of considerable uncertainty,” last March’s report said).
Chote says he expects things to return to normal “once we emerge from this period of exceptional circumstances”. “It’s important that we get back to a more orderly process where some weeks ahead of the Budget we’re told what the timetable is and what we need to know.”
While primary legislation requires that two OBR forecasts be published each year, it’s the chancellor who ultimately determines their publication date since he decides when fiscal events take place. This caused some controversy in November when Sajid Javid cancelled the Budget after the general election was called.
“It’s not unless we get to the point that we are right at the end of the year and might fall foul of our primary legislation [of publishing two forecasts a year] that we say: ‘Sod you. We’re going to go ahead and do this,’” Chote says. So the OBR decided to do just that. In an exciting plot twist just an hour before the documents were due to be released, however, cabinet secretary Sir Mark Sedwill intervened and blocked their publication.
Some have speculated that this move was taken to balance out the decision made just two-days prior to halt government’s plans to publish an assessment of Labour’s spending plans (the OBR forecast, by contrast, was expected to be damaging for the Tories since it would have shown a negative fiscal outlook). The official line, however, was that the forecast would be in breach of the Cabinet Office’s pre-election guidelines.
Chote says that what the OBR was set to publish wasn’t technically a forecast and was entirely compliant with pre-election restrictions. That’s because a typical forecast report has three elements to it: first, the OBR takes its last forecast and restates it for basic statistical changes (i.e. bringing it into line with current Office for National Statistics methodology); second, it states what has been learned about the economy and public finances since the last forecast; and third, it explains the effect of the newly-announced policy measures. In September, the ONS incorporated student debt into public finances after it was determined that most student loans wouldn’t be repaid, so the OBR intended to publish only the first of those three elements.
“I basically said, ‘look, we’ve reached our view [about publishing the forecast], and I’m not going to pull this on the say-so of the Treasury or No.10,’” Chote says. “But at the end of the day, if the cabinet secretary is of the view that it should not go ahead, then we won’t do it.” The OBR ultimately published the forecast on 16 December, just a few days after the election.
Chote spends enough of his energy crunching numbers that when he can finally enjoy some free time he says he “steers clear of economics”. “I’d much rather read history, go to the theatre, and listen to music than add to the day job,” he says before adding that, “like everybody else”, he and White are fans of the hit TV series The Crown.
While Chote and White rarely talk shop – “it’s mostly ‘who’s picking the kids up?’ and ‘where’s the milk?’” – the two “know each other’s worlds”. “We understand the people and the idiosyncrasies of the environment – and we can feel each other’s pain, and that’s nice.” The pair have never worked together, apart for one meeting they both attended while George Osborne was chancellor. “I think he invited us largely for the amusement value rather than any substantive reasons,” Chote says with a laugh.