A group of MPs are launching an investigation into the role of the UK government’s economic forecaster, after the body came under intense scrutiny in the run-up to the budget.
The Treasury Committee will examine the first 15 years of the Office for Budget Responsibility (OBR) and consider possible reforms, including any improvements or changes to its mandate.
The investigation comes after questions were raised about the OBR’s influence ahead of the Budget and after its director, Richard Hughes, resigned following a mistake that saw his key economic forecast published an hour before Rachel Reeves was due to give her speech.
But committee chair Dame Meg Hillier said the investigation was “not a stick with which to hit the OBR”.
The OBR’s role is to produce forecasts, examine the cost of government policies and see whether the chancellor is on track to meet her self-imposed rules on managing the economy.
But in the run-up to the Budget, some experts questioned whether the institution was too powerful and had too much influence over the government’s tax and spending decisions.
The OBR was in the spotlight ahead of the Budget when it reduced its productivity forecast, which Chancellor Rachel Reeves said would make it harder to meet its spending rules.
However, it later emerged that the reduced productivity alone was offset by higher tax revenues and that the economic outlook was better than previously thought, prompting claims that Reeves had misled the public about the state of the public finances, which the chancellor has denied.
A senior OBR official, Professor David Miles, told the Treasury committee last week that he believed the chancellor’s comments were “not inconsistent” with the situation she faced.
Professor Miles said the watchdog was not “at war” with the Treasury, adding that the OBR had raised concerns with Treasury officials about leaks to the media.
Reeves admitted to MPs this week that there were too many unauthorized leaks ahead of the Budget.
Dame Meg said the OBR had an important role but was often criticized by “frustrated economists who feel they should be in charge because they shout the loudest”.
“And we only need to remember Liz Truss’ mini-Budget to remember what happens when the OBR is left out,” he added.
“What my Committee aims to do is have an honest conversation about what the watchdog does well and where it needs to do better.”
The investigation also comes after the OBR published a key document early on Budget day, effectively confirming a raft of new measures before Reeves announced them.
That mistake led to the resignation of OBR chairman Mr Hughes a few days later.
The OBR was set up in 2010 to provide independent analysis of the government’s finances, and on budget day it publishes its report on the health of the British economy alongside the chancellor’s statement.
The Treasury Committee will examine how well the OBR has communicated its forecasts and analysis and how they have improved over time, whether it has improved the Treasury’s forecasting processes and whether it has played its role fairly and transparently.
Parliamentarians will also consider what changes might be necessary to improve the organization and its communications, resources and its broader role and mandate.
Dame Meg said she hoped the research would be useful to the new president when he is appointed.
