Comment: The OBR mask is crumbling

Sir Alan Budd’s departure sheds light on the fake independence of the Office of Budget Responsibility (OBR).

By Craig Berry

It emerged this week the OBR head has left after only three months in his post. The government claims Budd was only ever a short-term appointment – but if so, why is there no successor in place?

Admittedly, Budd is 73 years old, and his CV suggests he is far more suited to an advisory role rather than actually managing a government agency. Yet there is more than a whiff of spin in the government’s response.

What is equally likely, if not more so, is that Budd has finally realised that the OBR’s independence is little more than a political gimmick.

As I argued in a previous politics.co.uk piece, the creation of the OBR didn’t represent a commitment to independent forecasting with government economic and fiscal policy. Rather it was an attempt by George Osborne to create his own Bank-of-England-independence moment (straight from the Gordon Brown playbook), while actually increasing his power over forecasting.

Budd was a Conservative party employee before entering government as a political appointee. Previous forecasts were undertaken by civil servants, appointed and managed entirely independently of ministers.

The fact that Budd’s deputies also look set to depart adds fuel to the fire. The Treasury has not confirmed whether or not they will remain in post. In politics, that usually means that they will not – but the government has not worked out what to say the reason is yet.

In creating the OBR, Osborne tried to hoodwink us. He removed his power to formally ‘sign off’ forecasts, while augmenting his informal power of appointment.

Already questions have been raised about the OBR’s governance and funding. The Treasury select committee has expressed concern about whether the OBR will be directly accountable to parliament, or instead represented by the Treasury. Perhaps Budd has discovered that formal independence has little value in a Whitehall system dominated by the Treasury, and a Westminster system in which ministers’ main concern will always be presentation rather than principle.

It may be the OBR signing off the forecasts, but if its leaders are hand-picked by the chancellor and its staff come from the same pool as every other government department its credibility will be severely undermined.

Craig Berry is a former policy advisor at HM Treasury. He completed his PhD on the impact of globalisation on UK trade policy at the University of Sheffield in 2008. He has published in several leading journals, including The Political Quarterly and New Political Economy, and his book ‘Globalisation and Ideology in Britain’ will be published by Manchester University Press in 2010.

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