Office for Budget Responsibility: Expanded Role and Recent Changes
The Office for Budget Responsibility (OBR) is a small, independent unit based in a little-used corner of the Ministry of Justice that analyses policy costs and publishes forecast updates twice a year. It originated from a 2008 Reconstruction pamphlet, was created in 2010, and given statutory footing in 2011. The OBR's core roles include producing forecasts, scrutinising policy costs, assessing whether the chancellor is on track to meet fiscal rules, and monitoring spending plans.
Critics have described the OBR as unelected and potentially powerful enough to influence or constrain government policy. In response to the 2022 mini-Budget turmoil, Labour passed a 2024 law expanding the OBR’s powers to initiate forecasts without government requests, query departmental spending assumptions, and access Treasury data. Chancellor Rachel Reeves has pushed to strengthen the OBR’s independence, with Budget Responsibility Committee members appointed with Treasury consent.
A recent change to budget headroom calculations means it will now be calculated only once a year from this Budget to reduce tax-rise speculation. The International Monetary Fund has advocated for higher headroom to enhance credibility. In October, the OBR downgraded productivity by 0.3 percentage points; according to the Institute for Fiscal Studies, each 0.1-point downgrade could raise borrowing by about £7 billion in 2029-30, implying roughly £21 billion for a 0.3-point hit.
Despite political criticism, including from former Prime Minister Liz Truss, the OBR has gained market credibility, notably during the 2022 mini-Budget crisis.
