Office for Budget Responsibility

It's quite a, a techy scoop, but it's important particularly for people who, um, are in the markets and are trying to look very closely at, at what the budget might bring.

Now, you know the way that budgets work, is that the Office for Budget Responsibility, the independent watchdog, draws up- ... economic forecasts ahead of the budget, and then in the months leading up to, to the big day, they deliver the Treasury sort of repeated estimates of how they think things are, are going.

Um, and that's when the government discovers, for instance, how much additional borrowing it can do before it hits its self-imposed ceiling, its fiscal rules.

So i- i- for John Healey, the, uh, in the past, the OBR would have given it repeated indications of how much of the £23 billion wiggle room, uh, the sort of buffer, uh, that, uh, Rachel Reeves left behind, uh, has been whittled away by the rising borrowing costs and the unfunded promises.

[lips smack] I think the other thing that I would say is that because the UK's, uh, part of the North Sea basin is so mature and there is so little left, there is basically just a shrinking tax base that we can tap into to contribute to the UK's coffers.

So if you look at the Office for Budget Responsibility's forecasts for what the UK's domestic oil and gas industry could contribute to Treasury in 2030, before, um, things started kicking off in Iran and oil prices spiked, they were estimating that it would be a £1 billion contribution in 2030 from the oil and gas sector if we have average prices.

Like, that is a rounding error as far as the Treasury is concerned.

It's not gonna pay for anything.

So that's your worst-case scenario.

Well, you can't do a worst-case scenario at this point, Steph, because we've got a new, um, chairman of the Office for Budget Responsibility.

He might just disagree about some of the judgments that they made before.

Um, and, you know, I think the forecast is still being prepared.

Contemporary government papers argue that this was a pragmatic compromise designed to address wage stagnation without alienating small businesses, a point still debated by economists who assess its impact on low wage labor markets.

At the same time, Blair's budgets allocated unprecedented sums for the National Health Service and higher education, a move supported by the Office for Budget Responsibility as an investment in human capital.

But these increases came hand in glove with reforms that restructured hospital administration and introduced tuition fees for students above eighteen.

Policy decisions that were justified through contemporary media as necessary for ensuring sustainability, but which critics argue created inequities in access to higher education.

So I think, yeah, this is an important distinction.

When we think about policy, in general, we should think about, you know, what are the true future impacts of these changes going to be on the public finances? But when we think more narrowly about budgets, what really matters actually is what do the Office for Budget Responsibility think about? You know, frequent listeners will know it's the Office for Budget Responsibility's economic and fiscal forecasts over the next five years that really determine how much, uh, you know, how the government's performing against its fiscal rules.

And for better or worse, that often influences the actual policies that are made.

So I think there's two parts to this.

And it's very wrong that many of these decisions have been taken away from politics in the interests of trusting the experts.

And would you therefore also get rid of the Office for Budget Responsibility, the Health and Safety Executive and Ofsted?

So each of those will be reviewed.

The OBR we are committing to keep for the time being.