The Office for Budget Responsibility changed its economic outlook after the Treasury breached independence rules and interfered in its operation, according to MPs.
A report by the Treasury Select Committee says a senior minister and Treasury officials demanded changes to the OBR’s releases that “strayed beyond the factual”.
The parliamentary inquiry, the results of which were published on Monday, found that officials removed key words used by the fiscal watchdog to describe spending cuts.
As a result, the watchdog removed its description of part of government policy being “complicated” and no-longer referred to the practice of budget top-slicing.
Other, “non-factual”, changes were proposed by the office of Danny Alexander, then chief secretary to the Treasury.
The inquiry was prompted after emails obtained by the Times newspaper showing seven exchanges where the Treasury asked for changes to aspects of language or presentation of the Economic Outlook.
The Treasury is allowed to fact-check OBR documents before release for 'quality assurance' but is not supposed to try to spin their presentation.
“It is concerning that Treasury officials did not recognise that these requests were inappropriate. They appear to have been made routinely at previous fiscal events,” the committee concluded.
“It is far from clear why Ministers should have the opportunity to offer views to the OBR during the exceptional pre-release access period when, given the level of technicality, it is highly unlikely that they could make constructive contributions to any fact-checking and quality assurance process.”
The Office for Budget Responsibility was set up by George Osborne in May 2010 to provide apparently independent economic forecasts and analysis of spending policy.
It is headed by Robert Chote, a former director of the Institute for Fiscal Studies. The committee said it was satisfied that Mr Chote had “personal resilience” and would speak his mind to object when appropriate.
What does five more years of the Tories mean for Britain?
What does five more years of the Tories mean for Britain?
1/8 Welfare payments will be slashed
One of the most controversial parts of the Conservative manifesto was to cut benefits for the working age poor by £12 bn over the next three years. But during the campaign they only said where £2 bn of these savings would come from. That leaves £10 bn still to find. Some experts think the only way they can close that gap is by means testing child benefit – with millions of families losing out
2/8 There will be tax cuts for those in work and those who die
The Tories will increase the threshold at which the 40p rate of tax becomes payable to £50,000 by 2020. They haven’t said so but it is also likely that at some point in the next five years they will abolish that 45p rate of tax altogether for the highest earners. They also want to increase the effective inheritance tax threshold for married couples and civil partners to £1m
3/8 There will be an in/out EU referendum in 2017
The next two years are going to be dominated by the prospect of a referendum on Britain’s membership of the EU. First off David Cameron has the daunting task of negotiating a deal with other EU leaders an acceptable deal that he can sell to his party so he can go into the referendum campaigning for a ‘yes’ vote. This may be unachievable and it is possible that the Tories may end up arguing to leave. Opinion polls show Britain is divided on EU membership, one poll this year showed 51% said they would opt to leave compared to 49% who would vote to stay in
4/8 There will be more privatisation of the NHS
Having won the election the Tories now have a mandate to go further and faster reforming the NHS. In order to make cost savings there is likely to be greater private involvement in running services, while some smaller hospitals may lose services they currently provide like A&E and maternity units
5/8 There will be many more free schools – and traditional state schools will become a thing of the past
The Tories plans to create 500 new free schools and make 3,000 state schools become academies. They will also carry on reforming the Department of Education and remove more powers from local authorities over how schools are run
6/8 On shore wind farms will be a thing of the past and fracking will be the future
Government spending on renewable energy is under real threat now the Lib Dems are no longer in power with the Tories. Subsidies are likely to be slashed for off-shore wind farm and other green energy supplies. Meanwhile there will be generous tax break for fracking as ministers try and incentivise the industry to drill for onshore oil and gas
7/8 There maybe more free childcare – but not necessarily
In the campaign the Tories pledged to double the amount of free early education for three- and four-year-olds from 15 hours a week to 30. The extra hours would only be offered to working families where parents are employed for at least eight hours a week. However they have not said where the money will come from to fund the pledge
8/8 Workers' rights could be reduced
The Tories want to slash business regulation, merge regulator and cut costs. The Lib Dems stopped them from reducing the employment rights of workers in power – but these are now under threat
Because of the importance the Government has put on reducing the budget deficit, the OBR’s pronouncements have been very important politically.
In the autumn statement a small change in the OBR’s deficit forecasts gave the Chancellor billions of pounds to help him U-turn on highly contentious cuts to tax credits.
Andrew Tyrie, the Conservative chair of the Treasury Select Committee, said the episode “gives the appearance of a minister trying to lean on the OBR”.
The MPs however say that although rules were broken, in this case no serious damage was done.
“The OBR’s independence is hard-earned and easily squandered. Little or no damage appears to have been done in this case, but this shouldn’t be repeated,” he said.
A spokesperson for the Treasury said: “In establishing the OBR in 2010, independence and transparency was introduced to economic and fiscal forecasting process for the first time ever, with clear safeguards established to make sure this is protected.
“Officials and ministers have acted entirely properly, respecting that independence, at all times. We will respond formally to this report in due course.”Reuse content