Has The Budget Watchdog Got Too Much Power?

The nation’s fiscal referee has gone from a niche forecasting team to one of Whitehall’s most talked-about players — and not everyone is pleased. As the Budget approaches, ministers, unions and economists are debating whether the Office for Budget Responsibility (OBR) now wields too much sway over what governments can do. Set up after the 2008 crisis and put on a statutory footing in 2011, the OBR was designed to bring independent numbers into fiscal debates. It publishes in-depth forecasts twice a year and checks whether chancellors are likely to meet the fiscal rules they set. Since Labour strengthened its remit in 2024, the office can now launch forecasts without waiting for government sign-off, query departmental spending assumptions and directly access Treasury data — changes intended to stop a repeat of the chaotic mini‑Budget in 2022. That extra clout has real effects. The OBR’s downgrade to productivity forecasts last autumn — a 0.3 percentage point hit — has been calculated by the Institute for Fiscal Studies to raise borrowing by roughly £21bn by 2029-30. Numbers like that shape what ministers think is affordable: they affect whether tax cuts land, how much can be pledged to public services and what counts as “headroom” in the Budget. Critics on both Labour benches and from trade unions argue the office now acts like an unelected brake on political choices, limiting ambitious spending plans. Some campaigners say it is built for policing austerity, not cheerleading growth. Defenders counter that the OBR simply lays out the maths and that credibility with markets — shown starkly during the 2022 turmoil when markets reacted to plans that lacked independent costing — matters hugely. After all, governments are constrained not just by forecasts but by who will buy the UK’s debt. The personalities running the OBR reinforce its standing: its committee includes former senior Treasury officials and an ex-member of the Bank of England’s monetary policy committee. Still, Whitehall insiders say the dynamics are shifting: the headroom calculation will now be produced only once a year, reducing the constant cycle of number‑checking between the Treasury and forecasters. The bigger question is political as well as technical. Handing more autonomy to a forecasting office can strengthen market confidence — but it also hands unelected analysts a louder voice in deciding how much Ministers can spend. For voters, the debate matters less as an institutional squabble and more as a question of who gets to set priorities: elected ministers accountable to Parliament, or a powerful independent scoreboard that insists on sticking to the numbers. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.bbc.co.uk | Read original article