The Office for Budget Responsibility has rejected claims that Rachel Reeves misled parliament over the fiscal context surrounding last week’s Budget…reports Asian Lite News
The Office for Budget Responsibility has said Rachel Reeves did not mislead parliament when she warned of the fiscal challenges ahead of last week’s Budget, with a senior watchdog official describing the margin against her borrowing rules as “wafer thin”. Addressing MPs, David Miles, a member of the OBR’s steering committee, backed the chancellor’s fiscal warnings and said Reeves’ characterisation of the constraints she faced did not misrepresent its analysis.
Miles’ evidence came days after OBR chair Richard Hughes resigned under pressure from the government following IT failures that affected the forecast process in the lead-up to the Budget. Hughes had told MPs before his departure that the OBR had raised concerns with the Treasury about persistent leaks to the media indicating the watchdog’s forecasts were “fluctuating wildly” and that the government had “helpfully come up” with extra money late in the process. The remarks prompted political scrutiny of both the Treasury’s handling of the run-up to the Budget and the reliability of the forecasts feeding into Reeves’ first fiscal statement.
Miles told the House of Commons Treasury committee that the fiscal position was “very challenging at the beginning of that week”, adding that Reeves had not been wrong to state in early November that the public finances were under strain. He said he did not think it was misleading for the chancellor to describe the situation in those terms, emphasising the tight margins around her main fiscal rule.
However, Miles rejected suggestions that the OBR’s forecasts had improved in early November, as some media reports had claimed following the chancellor’s decision to drop a proposal to raise income tax rates. “There appeared to be a misconception there had somehow been some good news — I’m not sure where that came from. It didn’t exist,” he told MPs, underscoring that the fiscal outlook remained constrained throughout the period.
Miles also said that the OBR had told Reeves privately at the end of October that she had a margin of about £4bn against her key fiscal rule once decisions already taken by the government were incorporated. He described this as a “very slender buffer”, noting that it would have been wiped out by the £7bn-a-year cost of government U-turns on welfare spending. He added that the government needed to leave more room for fiscal manoeuvre.
Hughes, who had led the OBR since 2020, had been due to appear at the committee hearing but did not attend following his resignation. Instead, the OBR was represented by Miles and Tom Josephs, the other remaining member of the steering committee. In an unusual step, Hughes had written to the Treasury committee shortly before stepping down, setting out how the OBR’s forecasts had evolved during the run-up to the Budget. Miles said the letter aimed to remove misconceptions about the watchdog being used to justify political decisions, including suggestions that the OBR had produced its forecasts “through its own fickle behaviour” or had aligned its projections with government preferences.
Miles insisted the OBR was not “at war with the Treasury”, and expressed optimism that the pre-Budget forecasting process would be more stable in future.
