There has been much speculation surrounding the potential candidates for the position of chair of the Office for Budget Responsibility. This can be broken down into three areas:
- Who is qualified?
- Who would be acceptable?
- Who might take it?
As we see it, the candidate pool is likely to include some or all of the following:
- Robert Chote, director of the Institute for Fiscal Studies
- Andrew Dilnot, principal of St Hughes College, Oxford
- Rachel Lomax, former deputy governor of the Bank of England
- Sir Michael Scholar, president of St John’s College, Oxford
- Timothy Besley, professor of economics & political science at the LSE
- Sir John Gieve, deputy governor of the Bank of England
Our assessment of this unusually challenging role is that it requires a quite unique set of skills. The ideal candidate would be a quarter inspirational leader, a quarter brilliant economist, a quarter pragmatic politician and a quarter consummate communicator – and 100 per cent independent. Inspirational leadership is important because the OBR will be doing extremely complex and difficult work, with a high chance of failing in a very public fashion – think the economic equivalent of Apollo 13 but twice a year.
The brilliance as an economist goes without saying as this is the key technical skill. Political skills are important as, notwithstanding the OBR’s independence, the new chair will have to influence powerful people, over whom they will not have direct control.
The communication skills have to be very broad as the OBR has multiple audiences, for example, the Treasury select committee, the Chancellor, politicians in general, the media, the markets and the electorate.
So there you have the runners and riders and the lenses thr-ough which they should be assessed. How do they stack up?
Well, they are all exceptional economists. Lomax, Gieve and Scholar are all vastly experienced in the ways of Whitehall. Dilnot and Besley are regarded as extraordinary intellects and have solid track records. But many observers feel that Chote is the candidate best equipped to take on the role.
Before explaining why, let us deal with questions two and three. Would he be acceptable? Absolutely – he has established a reputation for brilliant analysis and complete independence – he gave Gordon Brown a tough time when he was Chancellor and has since taken an equally direct approach with both Darling and Osborne.
Would he take it? Much tougher question. My sense is that the intellectual challenge of the role would appeal to him. However, with the exception of Bes-ley, he is a good deal younger than the other candidates and might not feel he can shackle himself to relatively modest fixed earnings. However, if he has put himself forward he will have done so in the full knowledge that the salary is £142,000.
So, why Chote? He made his name as economics editor of the Financial Times and followed this up with two years at the International Monetary Fund in Washington. Since 2002, he has been director of the Institute for Fiscal Studies. In this role, he has become (along with former FT colleague and current BBC business editor Robert Peston) somewhat the “face” of the credit crunch. He is also the man to whom many politicians, businesspeople, City types and the media turn to make sense of the mess we find ourselves in.
While at the IFS (and previously at the FT), he eviscerated many Budgets and forecasts produced by both Labour Chancellors. The IFS has not held back either on the new boy, for example, the recent furore over the progressive/regressive nature of the coalition’s first Budget. Independent? Absolutely.
Will he be the new chair? As mentioned above, there are some outstanding candidates so, in a sense, Osborne and TSC chair Andrew Tyrie, who will approve the appointment, are spoilt for choice. The Chancellor has also given up sufficient control to make it a significant position. We think that Chote would be an excellent choice. But, then again, this is politics.