Hunt told to halt ‘unhealthy dependence’ on OBR advice
JEREMY HUNT has been urged to end the Treasury’s “unhealthy dependence” on the spending watchdog’s “wildly inaccurate” economic forecasts.
A report backed by more than 45 Tory MPS said the Chancellor should consult independent experts as well as the Office for Budget Responsibility (OBR). The dossier, by the Thatcherite group Conservative Way Forward (CWF), found its sums have been awry by a total of £558 billion since 2010.
Long-term OBR forecasts on the state of the public finances heavily restrict the Treasury’s room for manoeuvre on budget measures such as tax cuts. They are used to calculate how much fiscal “headroom” available to the Chancellor, but have been heavily criticised by Tory MPS who say they are inaccurate.
The free market CWF warned the official spending watchdog has been “captured by a particular worldview” and risks losing its credibility. Its report said that Mr Hunt should bring in economists from different backgrounds to mark the OBR’S homework and provide an alternative perspective.
“The Government must look to end its unhealthy dependence on just one economic forecaster and should instead allow a diverse range of perspectives to provide scrutiny of the government’s budget and fiscal events,” it said.
“Working alongside economists with a range of opinions, backgrounds and experience would greatly strengthen the efficacy of the UK’S independent fiscal forecasting.
“The OBR’S shaky performance since 2010 risks culminating in a crisis of legitimacy unless it is able to break out of the cycle of miscalculation and error.
The report, published today, has been backed by more than 45 Tory MPS including Suella Braverman and Dame Priti Patel. It found that since the OBR was set up by George Osborne in 2010, it has on average miscalculated the UK’S annual growth by £46.5 billion. Even excluding the Covid years, when economic performance was erratic, its forecasts have been out by £138 billion during that 13-year period.
The dossier recommended that Mr Hunt introduce an external “red-teaming” process to test the “underlying assumptions” behind OBR forecasts.
A No10 spokesman said that there are “no plans” to change the OBR’S status and it will “continue to be an important part of how the Government plans fiscal events”. The OBR said that the accuracy of its forecasts is similar to those produced by external bodies and more so than the predictions previously produced by the Treasury.