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Policymakers must resist the temptation to blame the UK’s independent economic forecaster, the Office for Budget Responsibility (OBR), when required to make difficult decisions as a result of tight public finances and higher government debt, a new report by the Treasury Committee warns.

• Read the report
• Inquiry: The OBR: 15 years on

Calls for reform are often fuelled by the desire for additional spending capacity but this is a poor substitute for having a coherent economic policy and the courage to make tough decisions with public money, MPs find.

The UK’s constrained public finances mean the OBR’s independent voice must be protected rather than castigated, the Committee concludes. The Members reject any siren calls to fundamentally reform the position or independence of the institution.

In his evidence, former Director of the United States’ Congressional Budget Office, Professor Elmendorf, endorsed the production of an extended 10-year forecast to sit alongside the existing five-year forecast, as this would allow governments to demonstrate when investments may generate positive outcomes in the longer term. 

While noting other evidence which pointed to the inherent uncertainty in forecasts as they move further into the future, the Committee recommends the OBR should produce a new, additional 10-year forecast. The new forecast would have no bearing on the government’s current fiscal rules, which would still be assessed with reference to the five-year forecast.

The Committee also requests that the government makes time to debate the OBR’s Fiscal Risks and Sustainability report, which contains 50-year forecasts, in Parliament to ensure this important document receives the attention it needs.

In July, the Committee approved the appointment of Professor Jonathan Haskel as the new Chair of the OBR.

Chair comment

Chair of the Treasury Committee, Dame Meg Hillier, said:

“Certain policymakers and commentators like to characterise the OBR as a wielder of dark powers with a stranglehold on Treasury ministers and officials. It’s simply not true. The fiscal rules, and therefore the OBR’s forecasts, become more important when government spending operates on razor-thin margins. That is a feature of decision-making by Chancellors, not overreach by the OBR.

“I do, however, think there is merit in looking at both the potential longer-term effects of government policies and the possible path of the economy further out. While these will be highly uncertain, it can help to start a debate on how to break the cycle of short-term thinking, which so often holds this country back.

“Now is the time to preserve the independent voice within our economic debate, not attempt to undermine it. I would like to hear our new Chancellor and the wider administration make that point clearly and regularly.”