The sudden announcement that Sir Alan Budd is to leave the Office of Budget Responsibility (OBR) after only 3 months may fatally wound the already less than fully credible flagship reform introduced by Chancellor George Osborne.
Various reasons that have been cited as to why the OBR is somehow superior to previous arrangements.
The first was that it would be ‘politically neutral’ and not subject to the ‘political cycle’. The allegation was that Treasury forecasts in the past had been unduly influenced by Ministers. This objective has been repeatedly undermined. First, the proto-OBR was set up by the Tories before the election and Sir Alan was employed to work on it – as a political employee. Hardly conducive to maintaining an image of impartiality!
Then last week the OBR conveniently rushed out a 2 page report on employment forecasts, which appeared just-in-time for David Cameron to wave it around at PMQs. This raised further issues about OBRs “independence”.
The second claim was that somehow the OBR would produce ‘better’ forecasts than the Treasury. But it is staffed by Treasury officials, housed in the Treasury, reliant on Treasury models, data and number crunching. It has does not have substantialy independent staff, methods or data sources. It has no track record. We will not know if any of its forecasts are better than HMTs (or independent forecasters) for years.
Why government should “outsource” economic and fiscal forecasts to an unproven outfit with no track record, no really independent operation and and only a supposedly independent head as a reason to believe in it is a mystery. Why anyone took this seriously, especially the media, is an even bigger mystery.
The spin today is that Sir Alan always intended to go after 3 months. If that is the case (a) why didn’t they say so and (b) why didn’t they moderate the impact of his decision to leave by having his replacement already lined-up?
Unless the government does something drastic, quickly, it looks like OBR will be one of the shortest-lived ‘radical innovations’ in British government ever.
