OBR: independent oversight or anti-democratic quango?

Recorded at the Battle of Ideas festival 2024 on Saturday 19 October at Church House, Westminster.

ORIGINAL INTRODUCTION

Established in 2010 by the then-chancellor George Osborne, the Office for Budgetary Responsibility (OBR)  was created in the wake of the global financial crisis to provide independent and transparent analysis of the UK’s public finances. The idea was to take political bias out of economic forecasting and restore credibility to the government’s fiscal policies. The OBR was tasked with producing economic and fiscal forecasts, assessing the government’s performance against its fiscal targets, and evaluating the long-term sustainability of public finances.

However, more than a decade on from its founding, the OBR’s role and effectiveness have come under scrutiny. Critics argue that the OBR, while independent, often struggles with the inherent unpredictability of economic forecasting, leading to projections that can be wildly off the mark. Some believe that its forecasts are treated with undue reverence, shaping fiscal policy in ways that may not always be beneficial. Others suggest that the existence of the OBR undermines democratic accountability by placing too much power in the hands of unelected technocrats.

On the other hand, defenders of the OBR argue that its independent oversight is crucial in preventing governments from manipulating economic data to suit political agendas. They contend that, while no economic forecast can be perfect, the OBR provides a necessary check on government spending and borrowing, contributing to fiscal discipline. In response to the chaos of the short-lived Liz Truss premiership, Labour has now passed the Budget Responsibility Act, which makes OBR assessment of any ‘fiscally significant’ measures mandatory.

Is the OBR an essential institution that safeguards economic stability, or is it an obstacle to democratic governance that should be reconsidered?

SPEAKERS
Catherine McBride
economist; fellow, Centre for Brexit Policy

Professor Vicky Pryce
chief economic adviser and board member, Centre for Economics and Business Research; author, Women vs Capitalism

CHAIR
Rob Lyons
science and technology director, Academy of Ideas; convenor, AoI Economy Forum; author, Panic on a Plate