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, a member of 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 the OBR's 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 refuted 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 shifted its bond yield assessment timeframe under government pressure, and the notion that its forecasts dramatically changed at the last minute, influencing Labour's decisions. He contradicted a government briefing suggesting improved forecasts led to the income tax plan abandonment.
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 fiscal policy assessment. Miles also suggested that the leaks may have hindered economic growth by intensifying consumer and business uncertainty, which he believed was exacerbated by inconsistent leak information.
Additionally, Miles defended the OBR's decision to reassess its economic productivity forecasts this summer, citing the need to wait for the impact of economic shocks to subside before making changes. This decision was met with frustration from Reeves and Keir Starmer, who felt it should have been implemented earlier.
