OBR Accuses Treasury of Fueling Misconceptions Amid Budget Leak Chaos
Table of Contents
The Office for Budget obligation (OBR) lodged a formal complaint with senior Treasury officials prior to the recent budget,alleging a series of leaks spread “misconceptions” about its economic forecasts. The accusations surfaced as the watchdog faced scrutiny following the resignation of its chair, Richard Hughes, and a contentious debate over the accuracy of pre-budget reporting.
Leaks Undermined OBR’s Position
According to testimony given to the Treasury select committee on Tuesday, the OBR raised concerns about the unauthorized release of information with the Treasury before the Chancellor’s statement last week. Prof. David Miles,of the OBR’s budget responsibility committee,stated,”I think it was clear that there was lots of information appearing in the press which perhaps wouldn’t normally be out there and that this wasn’t from our point of view particularly helpful.” He further emphasized the OBR’s inability to publicly correct the inaccuracies.
The situation escalated after Hughes stepped down on Monday, taking responsibility for the accidental publication of budget documents approximately an hour before Labor’s Rachel Reeves was scheduled to unveil her tax and spending proposals. However, a spokesperson for the
“very challenging,” Miles added.
Addressing Key Misconceptions
Miles specifically addressed two prevalent “misconceptions.” The first concerned the suggestion that the OBR had altered the timeframe used to assess government bond yields, potentially under government influence. The second related to the belief that the OBR’s forecasts had undergone dramatic last-minute shifts, impacting Labour’s budgetary deliberations.
He told MPs that there was “a view that the OBR’s forecasts were wildly fluctuating in the process both leading up to the pre-measures forecast, and perhaps after it as well, and that that had made the budget process more chaotic than it otherwise would have been.” Miles directly contradicted a government briefing from November 14th, which suggested that Reeves’s decision to abandon plans for an income tax increase was prompted by improved forecasts. “There seemed to be a misconception that there seemed to have been some good news, and I’m not sure where that came from: it didn’t exist,” he stated. He clarified that the headroom forecast had only “gradually improved a little bit” leading up to the final pre-budget forecast delivered to Reeves on October 31st.
Defending Independence Amidst Criticism
Miles emphasized the OBR’s commitment to impartiality, stating the watchdog did not want to be perceived as “either the patsy that was doing what the government wanted, or that through its own fickle behavior changing from one day to the next [it] was making it virtually impossible for the government.”
Concurrently, Bank of England governor Andrew Bailey defended the OBR against attacks on its independence, reiterating the institution’s crucial role in providing unbiased forecasting and fiscal policy assessment. Robert Chote,Hughes’s predecessor,echoed these sentiments,arguing that ministers and officials should focus on the substance of the budget and its description,rather than managing expectations through a “running commentary” on forecasts.
Uncertainty and Economic Impact
Miles suggested the flurry of leaks may have negatively impacted economic growth by amplifying consumer and business uncertainty. “I don’t think that can have helped,” he said, noting that the inconsistent information circulating in the press “may well have been exacerbated by leaks which some days seemed to be suggesting one thing and the next day something different.”
He also defended the OBR’s decision to reassess its productivity outlook this summer, acknowledging the frustration expressed by Reeves and Keir Starmer that this review wasn’t conducted sooner. Miles maintained that it was prudent to wait until the effects of major economic shocks – including the COVID-19 pandemic and Russia’s invasion of Ukraine – had subsided, arguing that an earlier reassessment would have been “trigger-happy.”
