Office for Budget Responsibility

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Office for Budget Responsibility
Formation May 2010
Purpose/focus Economic forecasting to provide guidance for the budget
Region served United Kingdom
Chairman Robert Chote

The Office for Budget Responsibility (OBR) is an advisory non-departmental public body that provides independent economic forecasts as background to the preparation of the UK budget.[1] It was formally created in May 2010 following the general election, although it had previously been constituted in shadow form by the Conservative party opposition in December 2009,[2] and was placed on a statutory footing by the Budget Responsibility and National Audit Act 2011.

The office is currently headed by Robert Chote, formerly a director at the Institute for Fiscal Studies.[3]

History[edit]

George Osborne, the Chancellor of the Exchequer of the Conservative-Liberal Democrat coalition formed after the 2010 general election, announced the body in his first official speech. He criticised the economic and fiscal forecasts of the previous Labour government, and announced that the OBR would be responsible for publishing these independently of government in future.[4] According to the Treasury, the OBR will not be a large team. The Treasury will continue to carry out most of the work of economic forecasting. The role of the Office is to advise whether the declared policy of the Government is likely to meet its targets.[5]

The OBR was initially chaired by Sir Alan Budd who, along with Geoffrey Dicks and Graham Parker, formed the Budget Responsibility Committee.[6] Budd had been a founding member of the MPC; Dicks was chief economist at Novus Capital and former chief economist of the Royal Bank of Scotland; and Parker headed up the Treasury’s public sector finances team. The remainder of the initial team comprised eight staff seconded from the Treasury. The initial team planned to recommend the eventual size of the Office.[5]

Colin Talbot, Chair of Public Policy and Management at Manchester Business School and Treasury adviser on public spending, questioned the credibility of the new organisation. He said that the body could not be set up in time to judge the forecasts in the June 2010 United Kingdom Budget. In his opinion, the OBR would not be sufficiently independent of politicians or the Executive to remove the politics from economic decision-making.[5] The office made adjustments to its forecasts in the week before the June 2010 budget. These were thought to be politically favourable to the coalition government and so cast doubt on its independence.[7]

In July 2010 it was announced that Budd would not continue in the role after his initial 3-month contract expired.[8][9] The Financial Times reported "His departure was expected and Sir Alan had let it be known privately that he had never intended to serve as chairman of the OBR for anything other than a short period. His contract spanned the emergency Budget, leaving enough time thereafter to advise on the legislation needed to establish the OBR on a permanent basis."[10] Speculation on his successor had included Rachel Lomax, John Gieve, Andrew Dilnot, Robert Chote, Michael Scholar and Ruth Lea.[11][12]

In September 2010, Chancellor George Osborne announced that Robert Chote had been appointed as the new Chairman.

See also[edit]

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