The Office for Budget Responsibility (OBR) raised concerns with the Treasury about leaks spreading 'misconceptions' regarding its forecasts before the budget announcement. Professor David Miles, from the OBR's budget responsibility committee, informed the Treasury select committee that the OBR had addressed the issue of leaks with the department prior to the Chancellor's statement. He emphasized the negative impact of the leaks, stating that they contained information that wouldn't typically be released and were not helpful from their perspective.
The situation escalated when OBR chair, Richard Hughes, resigned, taking responsibility for the early release of budget documents. This incident followed a letter published on Friday, outlining the evolution of OBR forecasts, which sparked a heated debate about Rachel Reeves' budget decisions. Miles clarified that the letter was released to correct a false impression, which he deemed damaging to the OBR and the budgeting process.
However, he denied claims that the OBR's letter indicated Reeves was misleading in her pre-budget speech. Miles emphasized that the OBR's forecasts did not suggest a problem-free fiscal outlook and described the margin for error as 'sliver-thin'. He supported the Chancellor's statement about the challenging fiscal position.
Miles identified two misconceptions: the idea that the OBR altered the time period for assessing government bond yields under government pressure, and the notion that the OBR's forecasts dramatically changed at the last minute, influencing Labour's decisions. He contradicted a government briefing suggesting improved forecasts led to the income tax decision, stating that the forecast for headroom had gradually improved.
The OBR's officials were questioned by MPs, while Bank of England governor, Andrew Bailey, defended the institution. Bailey emphasized the OBR's role in providing independent forecasting and assessment of fiscal policy, urging people to remember the principles behind its creation. Miles further highlighted the potential negative impact of leaks on economic growth, suggesting they may have exaggerated consumer and business uncertainty.
Additionally, Miles defended the OBR's decision to reassess its forecasts for the economy's underlying productivity outlook this summer, addressing the frustration expressed by Reeves and Keir Starmer regarding the timing of the downgrade in growth forecasts.
