Spending watchdog put brakes on Hunt’s plans to boost growth

JeremY Hunt was left ‘frustrated’ after a Government spending watchdog forced him to scale back this week’s budget, it emerged last night.

Senior Tories said the Chancellor had to abandon several measures designed to boost growth after the Office for budget responsibility (Obr) ruled they were too expensive.

mr Hunt yesterday hinted that he could hold a second budget this year, after Tory mPs warned tax cuts did not go far enough.

but the impact of any further tax cuts is likely to be blunted as they would be delivered just weeks before the likely date of the next general election, giving little time for voters to feel the benefit.

A Treasury source confirmed mr Hunt’s original budget plans had to be rewritten at the last minute after the Obr warned they would breach the Government’s fiscal rules. The intervention forced the Chancellor and rishi Sunak to throw out several key measures and introduce a number of tax rises to pay for the package.

A senior Tory source told the mail: ‘It was a frustrating process for the Chancellor. There were things that he wanted to do that he had to abandon because of the way the Obr measured them.

‘It felt like they were unwilling to give him the benefit of the doubt on anything and that meant that some potentially transformational stuff had to be removed.’ mr Hunt is said to have clashed with the Obr over the value of measures designed to boost growth and over the impact of immigration forecasts. At one point, the watchdog slashed growth forecasts on the basis of a promised immigration crackdown. It later relented, and in the end forecast that longterm immigration is likely to rise.

The revelation that the Obr forced the Chancellor to cut back his budget will infuriate Tory mPs hoping for tax cuts to transform the party’s fortunes ahead of the election. mr Hunt was constrained by Obr fears of whether the Government would hit its fiscal rule to get debt falling in five years’ time.

The Obr is an independent body set up by George Osborne to prevent chancellors rigging their economic forecasts. It insists that its predictions are more accurate than those previously produced by the Treasury.

but former Cabinet minister Sir John redwood said it was ‘time to get rid of fanciful, made-up figures by the Obr’. Sir Jacob rees-mogg said the influence of the Obr was ‘a real problem for policymaking, because we treat the forecasts as if they were holy writ’.

Fellow grandee Sir David Davis pointed to a report suggesting Obr forecasts had been wrong by a combined £500billion since it was established in 2010.

mr Hunt yesterday said his ‘working assumption’ was the election will be held in the autumn, making it ‘possible’ to hold a second taxcutting event before the country goes to the polls. The Prime minister also played down speculation of a may election, saying ‘nothing has changed’ since he said in January it was likely to be held in the ‘second half’ of this year.

The Chancellor slashed 2p off National Insurance in his budget on Wednesday – and hinted at a long-term aim to abolish the levy altogether. The move, coupled with a similar 2p cut last November, provides a combined tax cut worth £900 to 27 million workers.

but some mPs have warned it will not be enough to transform Conservative fortunes at the election. Tory mP Andrew rosindell urged mr Hunt to use another event to ‘go much further’.