Brown cooking the books

Gordon Brown was accused yesterday of moving his economic goalposts by the leading independent arbiter of the public finances.

The Institute for Fiscal Studies (IFS) said the Chancellor had fiddled with the dates of the economic cycle and that these should be set in future by an independent body, possibly the Office for National Statistics.


Gordon Brown has pushed back the end of the cycle by three years
The dates for the start and end of the cycle are crucial to assess whether Gordon Brown's two fiscal rules are met. "He has extended the seven-year economic cycle to 12 years - less a cycle than a stretch limo," said Robert Chote, the head of the IFS. "The goalposts have been moved so far that they are barely still on the pitch."

The Chancellor pushed back the end of the cycle by three years in Monday's pre-Budget report, to 2009. In July, he pushed forward the start date by two years, from 1999 to 1997.


Mr Chote said it was odd that the date change, which would have been "unremarkable if it was made at any point in the previous three years" was made in July, just as it looked as if the Golden Rule would be breached.

The Golden Rule calls for the books to be balanced over the cycle, to show that he has only borrowed money for investment and not to pay day-to-day bills. Mr Brown is now on course to meet this rule by a comfortable margin, thanks to the date changes.

However, a side effect of the earlier start date is that the Chancellor appears to have broken his other fiscal rule in his first year of office. The sustainable investment rule says government debt should be no more than 40pc of the size of the economy.

It was above this level until 1998-99, the old date for the beginning of the cycle. "This has certainly made me laugh," said Professor Peter Spencer, economic adviser to Ernst & Young.

Mr Chote said: "It is hard to argue that suddenly moving from a seven-year to a 12-year cycle is going to do anything to improve credibility and there are obviously going to be fears that this is going to be moved around in the future."

He suggested the Treasury adopts a two-year target for the current budget balance, much like the Bank of England has a two-year inflation target. The Treasury said the economic cycle was set based on "independent data from the independent ONS and audited by the independent National Audit Office".

A spokesman said: "A few months ago the IFS agreed that the assessment of the economic cycle beginning in 1997 was reasonable. They appear to have changed their view. The IFS also said that extending the economic cycle beyond 2006, as set out in the pre-Budget report, would make it more difficult for the Government to meet its fiscal rules."

Whether the Chancellor has plugged the £11billion hole in his public finances by tax rises and public spending cuts is still questionable. The IFS said it would deliver a verdict in January.

Mr Chote said he would be looking at whether the economy will grow as strongly as Mr Brown predicts. "He appears to have dug himself a deep hole to give himself something to climb out of," he said, adding that the projections might go awry if the Bank ''puts the brakes on". He also said the Chancellor's plan to cut £8billion from government budgets from 2007 to 2010 would put a "very tough squeeze" on civil servants.

From Malcolm Moore, Economics Correspondent of the Daily Telegraph