UK (Parliament Politics Magazine) – Ahead of Chancellor Rachel Reeves’ Budget, OBR confronted the Treasury about leaks, warning that briefings were “unhelpful” for public understanding.
As reported by The Guardian, it has emerged that the Office for Budget Responsibility warned senior Treasury officials that pre-Budget leaks caused “misconceptions” about its forecasts.
Officials from the OBR told the Treasury committee on Tuesday that pre-fiscal statement leaks covering taxes, pensions, ISAs, and public finances were “unhelpful.”
What did David Miles tell MPs about leaks ahead of the Budget?
MPs questioned Budget Responsibility Committee member Professor David Miles, a day after OBR chief Richard Hughes resigned following the premature online publication of the watchdog’s review of the chancellor’s plans.
Rachel Reeves also faces scrutiny over claims she misled the public and markets by not revealing that the OBR reported a £4bn surplus, not a £20bn deficit, ahead of the Budget.
Professor Miles told MPs that briefings by the chancellor and officials had raised concerns at the OBR.
He said,
“I don’t think there was any formal complaint. We were obviously aware that information seemed to be getting into the press. There was lots of information appearing in the press which wouldn’t normally be out there and this wasn’t, from our point of view, particularly helpful.”
When questioned if the OBR discussed it with the Treasury, Professor Miles replied,
“I think it was clear that there was lots of information appearing in the press which perhaps wouldn’t normally be out there and that this wasn’t from our point of view particularly helpful.”
He added,
“We made it clear that they were not helpful and that we weren’t in a position of course to put them right.”
Professor Miles told MPs that the OBR is “not at war” with the government but hoped for a “smoother” process next year.
He said,
“I wouldn’t say we were at war with the Treasury. I mean, we have a very close relationship with the Treasury. In fact, we rely not just on the Treasury but other departments in government for analysis of many sorts of measures.”
“There are lots of very good – from my point of view – economic analysts in the Treasury and we rely heavily upon them. I hope we can run a process in the future – and we’ll do everything we can – that is somewhat smoother than the process we’ve just been through,”
Professor Miles continued.
According to him, the chancellor’s pre-Budget speech and statements aligned with the figures provided by the OBR.
He stated,
“My interpretation was, and others might interpret differently, that the chancellor was saying that this was a very difficult Budget and very difficult choices needed to be made. And I don’t think that that was in itself inconsistent with the final pre-measures assessment we’d made, which, although it showed a very small positive amount of so-called headroom, it was wafer-thin.”
Professor Miles said,
“It’s certainly true that there wasn’t any immediately good bit of news in that particular window.”
Giving his personal opinion, he added,
“I don’t think it was misleading for the Chancellor to say that the fiscal position was very challenging at the beginning of that week. Whether a message was then put out to say ‘well, it’s less challenging by the end of the week’, I don’t know, and I don’t know where that message would have come from. It certainly didn’t reflect anything that was news from the OBR being fed into the government.”
Professor Miles told MPs that the OBR’s forecasts “didn’t suggest the fiscal outlook was problem-free” and called the margin for error on the chancellor’s rules a “sliver.”
He warned that recent leaks may have slowed economic growth by increasing uncertainty for businesses and consumers, adding, “I don’t think that can have helped.”
According to him, the OBR’s choice to revise its forecast for the economy’s underlying productivity outlook this summer was justified.
Professor Miles told MPs it was important to delay adjustments until the economic impact of Covid and Russia’s invasion of Ukraine had eased, warning that earlier actions would have been “trigger-happy.”
What did Rachel Reeves say about her Budget and fiscal forecasts?
Rachel Reeves rejected claims she misled the public about pre-Budget forecasts, insisting she had been transparent about building a larger fiscal buffer.
She said,
“I have been underestimated all the way through my life. I’m proud of my budget this week.”
The chancellor added,
“The just over 4 billion pounds surplus was not enough. The headroom would not have been enough, and it would not give the Bank of England space to continue cutting interest rates.”
What did the OBR forecast say about the Rachel Reeves tax plans?
Ahead of the Budget, Rachel Reeves repeatedly warned that the OBR’s lower productivity forecast would affect public finances, fueling speculation she might break Labour’s pledge not to raise income tax.
In an unusual speech on November 4, the chancellor signaled possible manifesto-breaking income tax rises, citing the OBR’s productivity downgrade and its impact on public finances.
The chancellor partly attributed the £26 billion of tax rises to the OBR’s productivity downgrade, which cut tax revenues by £16 billion.
It has since emerged that, by the time of her speech, the OBR forecast Ms Reeves would remain within her fiscal rules on funding day-to-day spending through taxes rather than borrowing, with a narrow £4.2bn margin, partly due to higher wages and inflation.
The Office for Budget Responsibility is the UK’s official, independent fiscal watchdog. It publishes detailed five-year forecasts for the UK economy and public finances twice a year, which include the government’s Budget and Spring Statement.
