Could Hunt-Sunak poverty budget be based on ‘dodgy (and anti-Brexit) dossier’?
Our personal economic futures all now hang on the reliability of the OBR’s forecasts
Montage © Facts4EU.Org 2022
Facts4EU.Org lifts the lid on the Establishment mandarins whose forecasts and beliefs affect us all
One of the main criticisms levelled at Liz Truss and Kwasi Kwarteng’s budget – and one of the reasons they were brought down - is that they failed to involve the Office for Budget Responsibility (OBR) in the budget’s preparation.
Those who had voted for Rishi Sunak in the leadership election then briefed widely that the Truss-Kwarteng plans were uncosted and dangerous, which promptly spooked the markets and led directly to the bringing down of an administration in just six weeks.
Given that the OBR’s costings and forecasts are what then underpinned Remainer Chancellor Jeremy Hunt’s Autumn Budget on Thursday last week, it seems reasonable to ask some questions about this organisation.
Today Facts4EU.Org asks :-
- What is the OBR?
- Who runs it?
- To what extent is it HM Treasury 2.0, with accompanying anti-Brexit belief systems?
- And crucially, has the OBR’s economic forecasting ever been right before?
1. What is the Office for Budget Responsibility (OBR)?
The OBR was set up by former Chancellor and arch-Remainer George Osborne in 2010. He claimed it was necessary to have an “independent” body to provide the economic backdrop and justification for every Government’s tax and spend policies.
The OBR’s work has five strands :-
- Economic and fiscal forecasting
- Evaluating performance against targets
- Sustainability and balance sheet analysis
- Evaluation of fiscal risks
- Scrutinising tax and welfare policy costing
The powers given to this new body were so wide that even its first Chairman in 2010 could not quite believe his luck.
"It is quite remarkable that the Chancellor has given us authority to produce independent forecasts for the budget and the pre-budget report and to provide a public assessment of the action needed to achieve his fiscal mandate.”
- Sir Alan Budd, first Chairman of OBR, in 2010. (Former chief economic adviser at the Treasury and one of the first members of the Bank of England's monetary policy committee.)
We were unable to find the words “economic growth” featuring prominently on the OBR’s website so we assume this is not part of their focus.
2. Who runs the OBR?
The OBR is run by three men who have executive responsibility for the core functions of the OBR, including the judgements reached in its forecasts. They are currently:
- Richard Hughes, Chairman
- Andy King, Member of the Budget Responsibility Committee
- Prof. David Miles CBE, Member of the Budget Responsibility Committee
Given their fundamental role in the Government’s decisions about how much tax we all pay and how much is spent on all our public services, we look next at the background of these men. We have de-personalised the analysis from here on by using job titles.
3. To what extent is it HM Treasury 2.0, with accompanying anti-Brexit belief systems?
Below we cite the previous roles of each of the OBR’s top team. The backgrounds of all three are in organisations well-known for their anti-Brexit stances.
Current Chairman’s former roles :
- Director of Fiscal Policy and Acting Chief Economist at HM Treasury
- Division Chief in the International Monetary Fund (IMF)
- Research Associate at the Resolution Foundation
- Advisor to the French Government
- Visiting Lecturer at Sciences Po in Paris and the Blavatnik School of Government
Current Member No.1 of the Budget Responsibility Committee – former roles :
- Chief of Staff at the OBR for five years
- Head of the Fiscal Policy team and Macroeconomic Coordination & Strategy team at HM Treasury
- Technical adviser to the IMF’s Fiscal Affairs Department since 2014
Current Member No.2 of the Budget Responsibility Committee – former roles :
- Member of the Monetary Policy Committee at the Bank of England
- Chief Economist at Morgan Stanley
- Research fellow of the Centre for Economic Policy Research
- Research fellow at the CESIFO research institute in Munich
- Chair of the Trustees of the Institute for Fiscal Studies (IFS)
Currently : He holds a Professorship at Imperial College London, and is a Member of the Commission of the Central Bank of Ireland.
We find it inexplicable that one of the triumvirate in charge of providing the economic information on which the Jeremy Hunt's budget has been based is a current member of the Commission of the Republic of Ireland’s Central Bank. Ireland is of course a member country of the European Union.
In our lists above we have emboldened those organisations whose views on Brexit are well-known to us. Not one of these organisation could in any way be described as looking favourably on the vote to leave the European Union. In our ‘Observations’ below we comment further on this.
4. Has the OBR’s economic forecasting ever been right before?
As far as we can tell the answer to this question is “No”.
Every year the OBR publishes a ‘Forecast Evaluation Report’. In effect the OBR marks its own homework and supposedly looks at what it forecast, against what actually happened to the economy.
Facts4EU.Org has studied these ‘Forecast Evaluation Reports’ and their accompanying sets of spreadsheets. We had hoped to find consistent data which shows year-by-year what the OBR’s forecasts were and what the out-turns were. We were unsuccessful. Apart from anything else, the detailed spreadsheets seem to change from year to year. For example if you want to see what “Table 1C” looked like the previous year, you will find that “Table 1C” now covers a different topic.
A full assessment of the OBR’s accuracy – or inaccuracy - in forecasting therefore proved impossible. What we can do is give readers three recent examples and we can also observe that we couldn’t find one major OBR forecast which matched reality.
Brexit Facts4EU.Org Summary
Three recent examples of the OBR’s forecasts versus the reality
1. Government borrowing
- OBR borrowing forecast July 2022 : £131.2bn LESS than forecast in Mar 2021
- It’s even £48.3bn LESS than they forecast only in October last year
2. Tax revenues
- Tax revenues are £77bn MORE than the OBR forecast
3. Government spending
- The OBR overstated Government spending by £48.7bn
Here is the Rt Hon Sir John Redwood MP on this
“They [the OBR] accept they underestimate tax revenues by a massive £77bn and overstated state spending by £48.7bn. It should be easier to forecast what you spend when you are running the spending controls.
“We can all make mistakes. Forecasting is difficult. What is more difficult to forgive is that this was not the first time they have underestimated the revenues and overstated the deficit.
“Worse still is they used their precise forecasts of revenue and deficit to tell the Chancellor he needed to raise more taxes to reduce the gap between spending and taxing. It turns out they need not have asked him to do that as the numbers were so much better than the numbers they tried to create with tax rises.”
- The Rt Hon Sir John Redwood MP, 21 July 2022
[Sources: OBR 21 July 2022 | Sir John Redwood MP ]
Massive errors like this ruin lives
Sir John Redwood is of course quite right when he says “forecasting is difficult”. He is also right to point out that repeated errors of such magnitude matter to the lives of ordinary people, when they result in tax rises and cuts in public services.
The very recent errors in the examples of OBR forecasts we have shown are enormous. If such errors are repeated in the latest forecasts on which Chancellor Hunt based his Autumn Budget then we are all going to be much worse off.
The Establishment’s anti-Brexit ‘experts’
Of equal concern to readers may well be that the organisations which so dramatically influence our lives are still manned (and they are almost always men) by the same Establishment types who got Brexit so badly wrong.
In our report yesterday we once again reminded Rejoiners of just how wrong George Osborne and His Treasury accomplices were, when they threatened us all with an immediate recession, 520,000-820,000 immediate jobs losses, and a significant fall in GDP in the two years following the Referendum, if we voted to leave the EU.
What can and should be done?
As so often, Facts4EU.Org looks for solutions. The OBR, Treasury, and the Bank of England all need a good shake-up. We would start by installing dissenting voices into their structures at senior level, to ensure that alternative viewpoints are heard. Each organisation would be given a direct instruction that those who are not of the ‘correct’ Rejoiner, anti-growth mindset should be openly welcomed and that their views should be given prominence.
There are many fine economists we can think of, including Professor Patrick Minford, Julian Jessop, Catherine McBride, Bob Lyddon, and many more.
On the political front, we would like to see senior MPs being brought back into government, such as Sir John Redwood, David Jones, and yes, Liz Truss and Kwasi Kwarteng. From the Lords there's David Frost, Kate Hoey, Catherine Meyer, and others.
Finally, let’s start appointing good, pro-Brexit thinkers from the wider community, with positive mentalities. These people could go into Government and Agency roles to counter the relentless pessimism of the Rejoiner Establishment.
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[ Sources: OBR | Sir John Redwood MP | HMT | BoE ] Politicians and journalists can contact us for details, as ever.
Brexit Facts4EU.Org, Mon 21 Nov 2022
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