The OBR appeared destined to be one of the first casualties of a Reform government. “I have questioned the need for it,” Nigel Farage declared last month. “I worry once again that we have a Blairite-style quango effectively dictating to elected politicians what they should or should not do.”
But any prospect of abolition was ended by Robert Jenrick yesterday. “The OBR is far from perfect,” he said in his first speech as Reform’s economic spokesperson. “But the impetus for its creation was a desire to instil fiscal discipline, and that is something we wholeheartedly endorse.”
It’s now as common to hear criticism of the OBR from the left as it is from the right. That its founding father was George Osborne always induced a degree of suspicion among Labour.
And that has only been heightened by the party’s experience in government. The spectacle of Rachel Reeves announcing further welfare cuts based on the OBR’s projections was cited as proof by Labour MPs of its overweening power.
Tribune co-chair Louise Haigh, who would be a key player in any Angela Rayner government, has assailed the OBR as one of the “unelected institutions” that “dictate the limits of government ambition”. The TUC has branded it a “straitjacket” on growth. The OBR’s radical reform or even abolition will now be a running debate on the left.
But it’s become too easy to lay the blame for Britain’s woes at its door. First, the OBR reports that accompany fiscal events have, by any measure, raised the standard of economic debate. There’s a reason why journalists and policy wonks lean far more heavily on the body’s blue books than they do on the Treasury red book (and there’s a reason why one of Viktor Orbán’s first acts in power was to scrap Hungary’s fiscal watchdog).
Second, the power that the OBR enjoys is purely at the discretion of politicians. You can ignore it, as Liz Truss did, and it does not mandate policy. Reeves announced welfare cuts to meet her self-chosen fiscal rules but she could have revised those or opted for tax rises instead. The pros and cons of these choices are not the point on this occasion – the freedom of action is.
Finally, the OBR is too easy a whipping boy for a harsh reality: Britain’s lack of economic growth. Despite its Eeyorish reputation, the body’s forecasts have tended to err on the side of optimism (whether they take adequate account of the benefits of public investment is a debate that should continue).
Until growth improves, the UK will face unavoidably difficult choices. You could abolish the OBR but the markets would simply rely on the likes of Institute for Fiscal Studies to offer a judgement on government policy. Time spent impugning the OBR would be better spent on what Paul Krugman describes as “almost everything”: boosting economic productivity.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
[Further reading: Nigel Farage’s empty economic strategy]
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