The Treasury failed to inform its own fiscal watchdog in advance about a key plank of the Autumn Statement, according to Robert Chote, the chairman of the Office for Budget Responsibility (OBR).
The Chancellor, George Osborne, announced plans to get UK pension funds to invest £20bn in infrastructure projects across Britain in his fiscal statement to Parliament last week. The announcement was trailed in the media in the days leading up to the Autumn Statement. But Mr Chote revealed yesterday, under questioning by the Commons Treasury Select Committee, that the OBR was not informed of those infrastructure plans when it was drawing up its own economic forecasts to be published alongside the statement. "We knew only what we read about it in the newspapers" Mr Chote admitted.
Mr Chote also defended the OBR from the charge made by the Conservative MP David Ruffley that the body had got its forecasts "horribly wrong", after it was forced to downgrade its growth projections for the fourth time in 18 months. "You have to recognise that the evidence changes" Mr Chote said, adding that economic forecasting is inherently uncertain. "If our forecasts were absolutely bang on the nail now, I would be warning you that the chances of them remaining bang on the nail were virtually nil," he said.
Mr Chote suggested that the Treasury's failure to inform the watchdog of its plans to get pension funds to invest £20bn in a host of road- and rail-building projects as part of a "National Infrastructure Plan" indicated that government officials believed the plan was unlikely to have a significant impact on national finances.
"The very fact that the Treasury did not come to us and say, 'This is a policy that we think you ought to include because we think there's a confidently estimable estimate of the impact it would make on the aggregate economic forecast,' is probably telling you something anyway about the amount of evidence at this stage," he said.
Mr Osborne will appear before the Treasury committee today.Reuse content