MPs urge protection of budget watchdog’s independence
Politicians should refrain from targeting the UK’s budget watchdog amid financial constraints, a prominent committee of MPs has warned, reports BritPanorama.
The Commons Treasury Committee emphasized the necessity of safeguarding the independence of the Office for Budget Responsibility (OBR) as Chancellor John Healey prepares for the upcoming Budget next month. In a newly released report, the committee dismissed calls for substantial reforms of the OBR.
According to the committee, motivations to reshape the economic forecaster often stem from a desire for increased spending flexibility, which they characterized as a “poor substitute” for sound economic policy. This highlights ongoing tensions between fiscal discipline and political pressures.
Committee chairwoman and Labour MP Dame Meg Hillier stated, “Certain policymakers and commentators like to characterise the OBR as a wielder of dark powers with a stranglehold on Treasury ministers and officials. It’s simply not true.” She noted that the OBR’s forecasts gain importance when government spending operates within extremely tight margins, attributing that situation to the decisions made by chancellors rather than any overreach by the OBR.
Hillier further remarked on the importance of exploring the longer-term implications of government policies, suggesting that initiating a debate on overcoming short-term thinking could benefit the country. “Now is the time to preserve the independent voice within our economic debate, not attempt to undermine it,” she added.
The committee also proposed the introduction of an additional 10-year forecast alongside the current five-year ones produced by the OBR each year, to accompany the Budget and the spring statement. This recommendation received backing from Professor Douglas Elmendorf, a former director of the US Congressional Budget Office, who indicated that such forecasts could help demonstrate potential long-term benefits of investments.
While advocating for a 10-year forecast, the committee clarified that it would not affect the current fiscal rules, which would remain linked to the five-year forecast. Furthermore, they urged the government to allocate time for MPs to discuss the OBR’s Fiscal Risks and Sustainability report, which includes 50-year forecasts, in Parliament.
The government is anticipated to respond to the committee’s recommendations within the next two months.
