OBR questioned on Reeves’ flip-flopping and forecast changes
The Office for Budget Responsibility (OBR)’s chief has been questioned on whether he dramatically upgraded forecasts midway through the Chancellor’s Budget planning, affording Rachel Reeves as much as a £10bn swing in headroom projections and allowing her to abandon plans to raise income taxes.
Shadow Chancellor Mel Stride has written to Richard Hughes, chair of the OBR, demanding an explanation on media reports around changes to forecasts suggesting that Reeves had been saved by the fiscal watchdog’s more lenient revisions.
Briefings from Reeves’ team in the Treasury to national media have suggested an income tax hike plan could be ditched because the OBR had given her extra leeway and upgraded forecasts.
Those briefings came soon after bond markets reacted violently to reports that Reeves would in fact stick to Labour’s manifesto commitments, with income tax hikes seen by traders as being a reliable method to raising revenue and plugging fiscal holes.
Stride said the Chancellor had “sullied the Budget process by allowing it to be played out in the newspapers and drawing the independent OBR into the crossfire”.
He demanded that Hughes “confirm that no changes have been made to the forecast since Oct 31, beyond the impacts of measures submitted by the Treasury for scoring”.
OBR forecasts under scrutiny
The Tory frontbencher’s letter seeks questions on a complex process which some economists have accused Labour of exploiting for for some political cover.
Central forecasts are finalised in the first three rounds of Budget negotiations between the OBR and the Treasury.
It factors in areas such as productivity revisions, growth, wage growth, inflation and other assumptions on the labour market.
The effects of Budget policies on the UK economy are measured in the weeks leading up to the set-piece event.
But briefings issued to news outlets appeared to indicate that the OBR’s central forecasts had swung after the first three rounds had passed by the end of October.
Stride’s letter raises questions on the overall process and the OBR’s independent considerations when taking a view on the UK economy and government policy.
Independent economist Julian Jessop said briefings around forecast changes didn’t “add up”.
The letter to the OBR chief also takes aim at leaks from the Treasury on Budget plans and apparent expectation management efforts.
In an interview on Wednesday, Reeves said leaks were “unacceptable”. The day before, Keir Starmer said “distractions”, including press briefings from officials in Westminster, risked veering the government off-course from delivering its policies.