The Office for Budget Responsibility (OBR) has slammed Rachel Reeves after information appeared in the press before Budget day. Officials said they have “set the record straight” after complaining to the Government about it adopting “misconceptions”. Professor David Miles CBE, a member of the OBR’s Budget Responsibility Committee, told MPs that information appeared in the media which “wouldn’t normally be out there. This “wasn’t from our point of view particularly helpful,” he added.
“We were not in a position of course to put them right.” The situation gave the impression that experts’ forecasts had “fluctuated”, which was “adding to the difficulties of this Budget”, Professor Miles said. He added: “I think it was clear that we didn’t find this helpful. We made that clear.” Of particular concern was the suggestion that the Government’s plan to hike income tax was dropped because the OBR had found cash “down the back of the sofa”.
The watchdog’s chief Richard Hughes quit yesterday after a report into the early release of its analysis of the Budget, before Ms Reeves had stood up in the House of Commons.
Professor Miles said Ms Reeves’s pre-Budget speech and press conference was not “inconsistent” with the figures she had been given by the OBR.
The November 4 press event was viewed as an attempt to roll the pitch for manifesto-busting increases in income tax, with the Chancellor saying the OBR’s downgrade of productivity would have an impact on the public finances.
But it is understood that by the time the speech was given, the OBR was forecasting that she would remain within her rules of funding day-to-day spending through taxes rather than borrowing by a “very small” margin of £4.2billion, due in part to the tax impacts of higher wages and inflation.
Professor Miles said: “My interpretation was, and others might interpret differently, that the Chancellor was saying that this was a very difficult Budget and very difficult choices needed to be made.
“And I don’t think that that was in itself inconsistent with the final pre-measures assessment we’d be made, which, although it showed a very small positive amount of so-called headroom, it was wafer thin.”
Professor Miles said the £4.2billion surplus figure “was not a number that we in the OBR in any way wanted to be interpreted as this is very, very good news, there is no hole to fill, as people were saying”.
Asked about the Chancellor’s speech on November 4, he said: “A number that was plus £4 billion in the pre-measures forecast is not inconsistent with the statement, the sentiment that this is a very challenging fiscal position.”
