Spending watchdog to publish forecasts despite scrapping of Budget
The UK’s tax and spending watchdog has said it will publish an updated version of its March fiscal forecasts next month, despite chancellor Sajid Javid cancelling his Budget due to the Brexit extension.
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The Office for Budget Responsibility (OBR) also said that it could be forced to publish a full official forecast soon if the government does not give it a clearer idea of when the next Budget might be.
Javid had planned to hold a Budget, where he would lay out his tax and spending plans for the country, on 6 November. This was scrapped, however, after Prime Minister Boris Johnson requested a Brexit extension.
OBR chair Robert Chote today wrote to Javid to say that various changes to the way the budget deficit is assessed – which have added billions of pounds to short-term borrowing – meant it was important to publish updated forecasts.
One key change is the way student loans are accounted for. The proportion of the loans that will never be paid off is now treated as government spending, adding over £10bn to the annual deficit.
Chote said: “Given the importance of these changes for public understanding of the baseline against which the government will need to judge its fiscal policy options, we believe that it would be useful to explain publicly the impact that they would have had on our March forecast.”
The OBR – an independent fiscal watchdog set up under former chancellor George Osborne – is legally required to publish two official forecasts each financial year, with one alongside the annual Budget.
The watchdog said it still expects to publish two more forecasts in the 22 weeks that are left of the financial year.
However, Chote warned Javid that given the time it takes to produce the forecasts, the OBR may have to publish a full forecast soon if the chancellor is not clear about a Budget date.
Chote said: “It is not for us to determine the date on which we publish our forecasts, unless the chancellor leaves it so late to name a date himself that we feel we have to do so to ensure that we are able to publish two forecasts within the financial year.”
The Treasury Select Committee (TSC), the parliamentary body which scrutinises the Treasury, also had a warning for Javid, with MPs saying he should appear before them soon.
“It’s been over six months since the previous chancellor’s final evidence session with the Treasury Committee in April,” the newly appointed chair of the TSC Mel Stride said.
“The current chancellor has been in office for over three months, and we would hope that he would agree to appear before us sooner rather than later.”
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Stride also said Javid should “set out how he will support the OBR in publishing two forecasts in the remaining 22 weeks of the current fiscal year”.
(Image credit: Getty)