The Office for Budget Responsibility (OBR), the UK’s independent fiscal watchdog, is facing intensified scrutiny over its perceived excessive influence on government economic policy, particularly ahead of the upcoming Budget. Critics argue that the OBR’s forecasts and assessments are constraining political choices, while defenders emphasize its role in ensuring fiscal credibility and transparency.
The OBR, established in 2010, provides independent analysis of the UK’s public finances, but recent criticisms suggest it is overstepping its mandate. Ahead of Wednesday’s Budget, some politicians and unions have accused the OBR of acting as an unelected body that limits government ambition, with the Trades Union Congress describing it as a ‘straitjacket on growth’. These concerns arise despite the OBR’s statutory role being strictly defined by Parliament, focusing on forecasting and assessing compliance with fiscal rules.
Richard Hughes, the OBR’s chairman, has defended the institution, stating that its powers are limited to producing forecasts and scrutinizing policy costs, with the chancellor retaining full control over decisions. In a March interview, he emphasized that the OBR does not dictate policy, highlighting its non-partisan nature. This defense underscores the OBR’s importance in enhancing credibility, especially after the 2022 mini-Budget crisis under Liz Truss, which spooked financial markets due to a lack of independent oversight.
The Labour government has further empowered the OBR through recent legislation, granting it new abilities to initiate forecasts and access Treasury data directly. This move was intended to prevent a repeat of the 2022 events and restore market confidence. However, this increased independence has fueled the current debate, with some insiders reporting Treasury frustrations over the OBR’s influence, as noted in broader media discussions.
Historical context shows that the OBR was born from the 2008 financial crisis, with the aim of restoring fiscal discipline. Under previous governments, it has published data that challenged official narratives, such as highlighting post-war high tax burdens. Critics like former Prime Minister Liz Truss have alleged that a ‘deep state’ including the OBR opposes change, though such claims are contested by evidence of the OBR’s consistent, evidence-based approach.
Looking ahead, the OBR’s role is evolving, with plans to adjust how it calculates fiscal ‘headroom’ to reduce speculation and improve stability. The International Monetary Fund supports increasing headroom to stabilize markets, and the chancellor is expected to address this in the Budget. Ultimately, the OBR’s credibility relies on its independence, but the debate raises questions about balancing expert oversight with democratic accountability in economic governance.
