Leading article: A loss that damages government credibility

Share
Related Topics

When the Office for Budget Responsibility (OBR) was established with great fanfare in May it was presented by the Government as a revolution in economic policy-making. Here was a reform, we were told, of similar magnitude to the granting of independence to the Bank of England in 1997. There was no suggestion at the launch that Sir Alan Budd was a temporary appointment as chairman. Yet now it has emerged that Sir Alan will leave this post at the end of the month.

The Treasury's assertion yesterday that Sir Alan's departure this summer was always expected is scarcely credible. After all, revolutions do not happen every day. Surely the Government would have tried to make a permanent appointment to such an important new institution, or, at the very least, made it clear that Sir Alan was only a caretaker?

There were some sound arguments for the creation of the OBR. There was a case for a guardian of the integrity of financial information presented by the Government and a body with the authority to tell ministers uncomfortable truths about the state of the public finances. But we warned when the OBR was established that trouble would lie ahead if the Government used its work to provide a crude economic justification for what are, ultimately, political choices on the public finances. Yet that is precisely what ministers have done.

To be fair, the OBR made a good start in establishing its independence and credibility. Its pre-Budget forecast confirmed that the public finances were in a rather better condition than the previous government had predicted, making the assertion of the Chancellor, George Osborne, that the situation is "worse than we thought" look ridiculous. But it has, sadly, been downhill ever since then for the OBR.

Mr Osborne's argument that last month's Budget was "unavoidable" is misleading. A major retrenchment was indeed unavoidable under whatever party won the election. Labour itself had committed to a tightening of £73bn by the end of the Parliament. But the coalition has chosen to go further and faster, despite the lack of any pressure from the bond markets to do so. Mr Osborne intends a consolidation of £113bn by 2014-15. And he has decided to begin cutting public spending this year, while the private sector is still manifestly fragile.

The problem for the OBR is that the Government has used Sir Alan's tentative forecasts on the effect of these austerity measures at every possible opportunity to justify the Budget in recent weeks. This has, inevitably, undermined the OBR's political impartiality. The OBR's independence was also called into question when it released information on projected job losses last week, which provided useful rhetorical ammunition for David Cameron at Prime Minister's Questions. And now the OBR's credibility has been dealt a potentially mortal blow by the surprise news of Sir Alan's departure.

Speculation about why he is leaving has already begun. Was there unhappiness about political pressure behind the scenes? Was there disagreement about what the OBR's remit will be when it is eventually established on a statutory footing? The fact that the Government did not have a replacement lined up for Sir Alan will only add to suspicions that this was not an expected departure. The choice of his successor now takes on an invidious new significance for the Government. The suspicion is that the new head will be chosen on the basis of his or her willingness to take part in a political game that Sir Alan refused to play.

The OBR was intended to shore up economic confidence in the Government. But this institution's troubled inception may end up dealing it a serious blow.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Bookkeeper / Office Co-ordinator

£9 per hour: Recruitment Genius: This role is based within a small family run ...

Recruitment Genius: Designer - Print & Digital

£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...

Recruitment Genius: Quantity Surveyor

£46000 per annum: Recruitment Genius: This property investment firm are lookin...

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Day In a Page

Read Next
 

If I were Prime Minister: Unlike our current party leaders, I'd actually stand for something

Natasha Devon
Leonard Nimoy as Mr Spock, whose expression was coveted by Alex Salmond as a young man  

Leonard Nimoy: Why Spock was the blackest person on the Enterprise

Bonnie Greer
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?