Treasury rejects call for OBR forecast alongside mini-budget

MPs' request for "vital" assessment rejected, with Treasury citing need to move at "immense speed"
Chancellor Kwasi Kwarteng

By Tevye Markson

21 Sep 2022

The Treasury has refused to allow the Office for Budget Responsibility to assess the economic impact of tax cuts and energy bill freezes planned in this week’s mini-budget.

New chancellor Kwasi Kwarteng is expected to announce a series of economic policies on Friday, including tax cuts of £30-50bn and energy price freezes which could cost more than £100bn.

Treasury Committee chair Mel Stride wrote to Kwarteng on Tuesday, seeking assurance that an OBR forecast would be published alongside his statement.  

But the Treasury has said it will stick to the legally mandated two forecasts per financial year, despite the OBR telling MPs last month that it was ready to provide one for Kwarteng's fiscal statement this week.

The OBR usually requires a minimum of ten weeks’ notice to produce a forecast but occasionally produces them more quickly.

The organisation said last month it could provide a less detailed version which would give “the most complete and up-to-date picture of the economic and fiscal outlook as possible”, having started work at the end of July in preparation for the new PM and chancellor being appointed.

But a government spokesperson said: “Given the exceptional circumstances our country faces, we have moved at immense speed to provide significant energy bill support for households and businesses, and are acting swiftly to set out further plans to kickstart economic growth later this week.

“We remain committed to maintaining the usual two forecasts in this fiscal year, as is required.”

Stride warned Kwarteng that significant changes to taxation should be announced alongside an OBR forecast,  saying these forcasts are “a vital indicator of the health of the nation’s finances, and provide reassurance and confidence to international markets and investors”.

Kwarteng is expected to deliver a full Autumn Statement later this year, which would include the 2022-23 financial year's first OBR forecast.

The OBR last provided a forecast alongside March’s Spring Statement. Since then, the government has made fiscal interventions including increasing national insurance payments and providing energy bills support amid soaring inflation and a cost-of-living crisis.

Further interventions are coming this week, with Friday’s budget set to include cuts to stamp duty, a reversal of the national insurance rise and a freeze on corporation tax, as well as energy bill freezes for households and businesses.

“There has been a deterioration in our economic outlook since the last OBR forecast in March,” Stride said.

“There have been significant fiscal interventions since then and we are told there will be further significant interventions including major permanent tax cuts to be announced on Friday. Under these circumstances, it is vital that an independent OBR forecast is provided.”

The OBR has produced less-detailed reports when asked for forecasts at short notice six times in the 12 years since it was established as a non-departmental body funded by the Treasury.

Truss, who pledged on Tuesday to review all taxes in a bid to drive growth, was elected Conservative Party leader, therefore becoming PM, on September 5, defeating former chancellor Rishi Sunak.

She appointed ex-business secretary Kwarteng former as her chancellor they day after, who kicked off his leadership by sacking Treasury permanent secretary Tom Scholar less than 48 hours into his tenure.

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