This shock resignation came for a very specific reason, but the OBR saga will continue with a series of decisions the Chancellor will have to take on Richard Hughes’ replacement.
First, the Chancellor needs to find a respected and credible economist to run the OBR.
There are several candidates who might fit the framework of highly independent bean counters.
The list will be carefully monitored by the market for any deviation from the normal model. The problem is that there is some political pressure to do so.
One point of tension was Richard Hughes’ refusal to give the government credit for “pro-growth” policies.
Mr Hughes said he would not make any policy unless it had a significant impact on the economy. In the event, no one reached the 0.1% national income threshold.
However, it is a careful balancing act.
Any perceived interference with the OBR’s independence could also affect market credibility, and could, for example, increase the UK government’s borrowing costs.
When I saw the now-departing Chairman at the Budget evening last week, he was clearly frustrated with his organisation’s responsibility for the early release of Budget information.
Although it is no surprise to me that Mr Hughes made the honorable decision to resign over what he identified as the mistake of a junior member of staff, this was not the only issue troubling him.
He was a staunch defender of his organization’s independence from political and ministerial pressure – right and left. This was also seen during the Liz Truss Mini Budget episode and in recent weeks.
There was a drum beat from right, left and now even the center about the restrictions imposed by the OBR system on the independence of elected governments.
The OBR was seen in some corners as an arm of the “woke deep state”, and by others as an “agent of austerity”.
However, there was tension over the budget.
The change had already been planned. The Chancellor also announced that he would respond to the OBR’s forecasts only once a year.
Mr Hughes told me: “We will still produce two full economic and fiscal forecasts for five years, twice a year, now and in the spring.
“But with this change in the law, the government does not feel obliged to respond to those forecasts with policy in the spring. It would be like a health check on the economy and public finances.
“There will be no reduction in transparency in the forecast document we will prepare.”
The precise design of the new approach will matter for the OBR’s forecast. If there is a significant improvement in the public finances in the spring, will the Chancellor really avoid spending any “surplus” ahead of important local elections?
Around the Budget the OBR saw the UK economy improving as AI was deployed by the end of the decade. The OBR also used new powers to introduce a hard-cost cap on the rising costs of special educational needs in England, leading to criticism from some cabinet ministers.
For some it highlights the ability to focus on government priorities, like a campaign or cabinet ministerial initiative. Hughes denied that the 35-member forecasting group was too powerful.
“The powers we’ve been given are given to us by Parliament under an Act of Parliament, and its purpose is to make predictions. The Chancellor sets his own targets. He sets his own policies. The Chancellor is in charge of £1.5 trillion worth of revenue and £1.5 trillion worth of spending.
“If they don’t want to meet their targets, they can change them, as we’ve seen chancellors do in the past. We simply set a baseline forecast, calculate the costs when they give us government policies, and we give them an assessment about whether we’re on track to meet those targets,” he told me.
In the context of the Government’s difficulties ahead of this Budget, Mr Hughes may also take some important details about everything from the state of the public finances to the timing of his various claims for gardening leave.
He was due to address the Treasury Select Committee this morning, which has now been cancelled. He acknowledged that the publication of his explanatory table on Friday regarding the evolution of the forecasts was unusual.
Richard Hughes faced five Chancellors during his five years at the OBR and his relationships with all of them were built on helping to promote Britain’s economic stability.
The new relationship with a different OBR is an opportunity for the government, but also a major risk.
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