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Willetts at the BIS select committee, or ‘schoolboy howlers’

January 14, 2014

David Willetts appeared before the BIS Select Committee this morning. A recording is available here.

At 11.59am (the video counter is set to horological time), he is asked about the Autumn statement’s use of gross proceeds from the planned sale of loans, instead of net proceeds, resulting in an overstatement of cashflow by £1.7billion.

Willetts claims that they did not ‘commit the schoolboy howler’ of which I supposedly accused them.

I’ll just make two points in relation to this specific point.

First, Willetts directs us to Table 4.32 of the OBR’s Economic & Fiscal Outlook.

This was and is precisely my point: those figures there undercut the ‘impact claims’ seen in Table 2.5 of the Autumn Statement as per the original post in December.

Second, it’s nice to have this confirmed because it took the Treasury two days back in December to provide a different account. Some of those following up my story were even told that you couldn’t interpret the OBR report in the manner Willetts now appears to accept.

So, we await with interest his single table setting out the various expenditures and cashflows associated with the sale and the planned expansion.

There’s an important point there. The Select Committee failed to press one of the key questions for BIS.

Yes, the Autumn statement shows the additional resource available for BIS in 2014/15 and 2015/16. Yes, that probably means that the first years of expansion are funded unconditionally.

The issue as originally stressed by the IFS and OBR is that we are not shown anything similar for 2016/17, 2017/18 and 2018/19 and that’s unusual.

The Select Committee ought to have asked directly about these years this morning.




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