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17 May 2010updated 27 Sep 2015 2:19am

Osborne’s first press conference: the key points

Osborne announces the creation of an independent body to make financial forecasts -- but is he alrea

By Samira Shackle

George Osborne has just held his first press conference as Chancellor, flanked by the Liberal Democrat David Laws, Chief Secretary to the Treasury.

This follows several days in which Osborne has attempted to sweeten the pill by loudly criticising the mess left by Labour. This is standard practice for incoming governments, and given that cuts are high on the agenda, it is not surprising that the new Chancellor is keen to lambast his predecessor’s irresponsibility.

We already know that the Lib Dems have acquiesced to the Tory commitment to £6bn spending cuts this year. The main revelation on this from today’s press conference was that the allocations of these cuts will be announced a week today — meaning that we will know where the axe is to fall, ahead of the Budget on 22 June.

The other key point is the creation of the Office for Budget Responsibility, which, Osborne said, will make government financial forecasts independently and without political interference.

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There are echoes here of Gordon Brown’s decision, in his first week as chancellor, to give the Bank of England the freedom to set interest rates. Despite the obvious comparison in the decentralisation of financial controls, introducing independent forecasts is not quite as drastic as freeing the Bank. However, the new office still has the scope to become a hugely powerful body. Stephanie Flanders summarises:

At least twice a year, this unelected three-person body, with its own staff, will publish independent fiscal forecasts around the time of the Budget and pre-Budget report.

. . . On the basis of its independent forecast, it will then recommend how much policy needs to be tightened or loosened to have a decent chance of meeting that goal.

Yes, the Chancellor can ignore this advice. But the point of the exercise is that politically, this will be very difficult to do.

Despite his emphasis on transparency and holding the government to account, it seems that Osborne could already be being disingenuous. He said the cuts would amount to just £1 in every £100 of government spending. However, if you take into account the ring-fencing of areas such as health care, it is likely to be considerably more than that.

Osborne still claims that the promised cuts can be implemented without damaging front-line services, while Laws stresses that the economies will be “fair”. Now that they have set the stage by justifying the need for making immediate cuts, it will be interesting to see, next Monday, just how this is to be done.

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