The budget drama has claimed a scalp: Richard Hughes has resigned as head of the OBR, following an inquiry into the leak of his organisation’s forecasts before Rachel Reeves’ budget. The report into the budget-day leak found it was “not a case of intentional leakage” but an “inadvertent” one as a result of IT weaknesses. It concluded the incident was the “worst failure” in the organisation’s 15-year history.
Hughes wrote to Reeves this afternoon that he was stepping down “to play my part in enabling the organisation that I have loved leading for the past five years to quickly move on from this regrettable incident.” His resignation, taking “full responsibility” for this instance of glaring incompetence, may draw a line under one embarrassing moment for Reeves. But it is far from the biggest story about the OBR today, nor the one causing most difficulty for the Chancellor.
Reeves continues to face a messy outcry over whether she misled the public as she pitch-rolled for the budget – and in all of that, the OBR hasn’t exactly been helpful to Reeves’ case for the defence. We now know that when Reeves cited the OBR’s productivity downgrade – giving her £16 billion less to play with – as justification for tax increases, she failed to mention that the OBR had simultaneously upgraded her fiscal numbers by £32 billion. This omission has led to front-page calls for her to resign and even a piece from the BBC’s respected political editor Chris Mason, concluding that “we were misled.”
We know about this omission because the OBR, notably and unusually, published an exact timeline detailing which forecasts it gave the Chancellor and when. The forecaster had plainly read itself mentioned in print too many times, and hit back with the truth. There was a time when Reeves hugged the forecaster close. She legislated to require two OBR forecasts a year, and used it as a stick to beat Liz Truss and the Conservatives with.
Since entering government, however, the OBR has become a convenient punching bag for Labour – and the bogeyman to blame tax rises on. Starmer, Reeves and their aides have complained repeatedly in recent weeks about the timing of the OBR’s productivity downgrade. For months before that, there were grumblings about how unreasonable the OBR’s approach to “scoring” was – about how measures designed to boost growth weren’t being fairly recognised in fiscal forecasts.
“In a development that will surprise no one, please note that the OBR made (another) error in the outlook document…” read one message I and other journalists recently received from an aide. It gives you a small sense of the tone the government takes towards its fiscal watching. Then the OBR hit back. The subsequent row over whether Reeves misled the public has done her more damage than the leak of the budget details. Now, as one Labour MP puts it, the entire budget discussion is swallowed up by the question “how much did we lie?”
Reeves and Starmer are already in a position of almost unparalleled unpopularity. The risk, as their colleagues see it, is not that the lying row makes them more unpopular still, but that it reinforces a conclusion voters have already reached, making it yet harder still for Labour to claw its way out of a deep hole. Reeves maybe should have chosen a different bogeyman.
[Further reading: Rachel Reeves mugs the youth]
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