In order for the external interim group responsible for forecasting the budget to succeed, they need to take significant steps to be perceived as independent.
The Office for Budget Responsibility (OBR) formed in May 2010 and is led by the Budget Responsibility Committee (BRC) having been sourced by the Chancellor of the Exchequer. The Office assessed the Government’s fiscal policy prior to and at the time of the June 2010 Budget, therefore holding crucial responsibility in the judgement of the UK’s economy.
Permanent arrangements for the OBR will be made in late 2010 through primary legislation and the report ‘Office for Budget Responsibility’ (HC 385) comments on what action the Office should take.
The proposed structure of the OBR as a permanent body comprises that:
- the OBR produces forecasts for the economy and public finances;
- forecasts should be produced at least twice a year and include the official Budget forecast;
- the OBR should undertake broader analysis of fiscal sustainability;
- Parliament should have a role in the appointment of the members of the Budget Responsibility Committee;
- its technical independence should be enhanced through the transfer of analytical capacity from the Treasury to the OBR; and
- the OBR should be located outside the Treasury building.
The Treasury Committee suggests that the legislation should include:
- Establishment of the OBR as an institution with its own legal personality
- That the OBR to act transparently, objectively, and independently
- A requirement that the OBR has a right of access to the information it needs
- A clear remit and set of core tasks
- For the responsible select committee to have a veto over appointment or dismissal of the Chair
- A requirement that government officials support the OBR when it is preparing forecast.
Once legislation has been confirmed, the Committee recommends that there be a comprehensive review of the OBR no later than five years after it is established by statute.
The most important indicator of the OBR’s success will be that it establishes and retains a reputation for independence and impartiality.
Found this story interesting?
Spread the news by
clicking below to add it to your bookmarking service: