As the nation eagerly awaits Wednesday’s Budget announcement, a debate has emerged over the growing influence of the Office for Budget Responsibility (OBR) – a small department that has gained extraordinary sway over economic policy.
The OBR, staffed primarily by young intellectuals and civil servants, is tasked with producing forecasts, scrutinising the cost of government policies, and assessing whether the Chancellor is on track to meet her fiscal rules. However, some critics argue that this unelected institution has become too powerful, essentially “half-running the government’s economic policy.”
Former Labour Cabinet minister Lou Haigh has described the OBR as an “unelected institution dictating the limits of government ambition,” while the Trades Union Congress has accused the “unaccountable OBR” of being a “straitjacket on growth.”
OBR chairman Richard Hughes, a Harvard-educated former Treasury mandarin, has defended the department’s role, insisting that “the only powers we have are the ones given to us by Parliament in legislation.” He maintains that the Chancellor ultimately chooses the policies and rules she wishes to implement.
Yet the timing of these questions around the OBR’s influence is ironic, as they follow the Chancellor herself giving the forecaster even more independence and authority. When Labour entered office in 2024, it passed a new law empowering the OBR to initiate forecasts even when the government does not request them, a move aimed at improving credibility in UK tax and spending policy.
However, by September of this year, reports suggested the Treasury’s own frustrations with the OBR were circulating. Chancellor Rachel Reeves has stated that the OBR’s job is to “produce forecasts on the economy – not to give a running commentary on government policy.”
The debate over the OBR’s role comes as the department is understood to have lowered its forecast for productivity growth, a key factor in long-term economic prospects. This could have significant implications for the Chancellor’s Budget decisions, potentially adding £21 billion to the government’s borrowing requirements.
As the UK navigates a challenging economic landscape, the role, record, and future of the OBR will undoubtedly be a focal point of discussion in the run-up to and aftermath of Wednesday’s Budget announcement.
