Jeremy Hunt has received letters from dozens of Conservatives expressing concerns about the OBR. Photo: Stefan Rousseau/PA
Jeremy Hunt More than 45 Conservative MPs have called for ensuring that “deeply worrying” forecasting errors by budget watchdogs do not hamper the UK's economic recovery.
In a letter to the Chancellor, seen by The Sunday Telegraph, dozens of Tory MPs warned the Office for Budget Responsibility was suffering from “systemic problems” that needed to be “addressed urgently” given the body's “central role” in decision-making. ministers.
MPs including Dame Priti Patel, Suella Braverman, Sir Simon Clarke and Sir John Redwood cite a report due to be published next week which claims the difference between OBR growth forecasts and actual growth since 2010 totaled £500 billion.
A report from campaign group Conservative Way Forward said that even if forecasts for 2019 and 2020 were excluded from the figures, and differences caused by the unforeseen Covid pandemic aside, the OBR's errors would still amount to £138 billion.
The letter marks the most significant coordinated attack on the OBR by Tory MPs to date, following growing criticism expressed privately and publicly by MPs and ministers in recent years.
Signatories also include Sir Jake Berry and Damien Moore, members of the executive committee of the Conservative Northern Research Group, as well as Sir Jacob Rees-Mogg, the former business secretary, and former Tory leader Sir Iain Duncan Smith.
The watchdog, set up by George Osborne, provides an official “estimate” of the impact of policy changes, which it then uses to calculate the total headroom available to chancellors in financial statements.
The numbers: deeply worrying'
Senior Tories have previously warned that they are underestimating the potential impact of tax cuts on economic growth and are “assessing” immigration policy largely on the benefits that extra labor brings to the economy. Ms Braverman, a former home secretary, accused the OBR of largely “ignoring” the costs of higher migration due to increased pressure on the NHS, schools and housing market.
MPs warn: “The success of the country depends on the OBR getting everything right. We would therefore like to draw your attention to a working paper published by the OBR itself earlier this year, entitled OBR Outlook. The OBR paper says it has made many miscalculations about the health of the British economy since 2010, including a tendency to “overestimate real GDP growth and underestimate government borrowing.”
“The group's new report, OBR: A Straitjacket of Failure, The Conservative Way Forward estimates that since 2010, the cumulative value of these mistakes in economic growth has amounted to more than £500 billion. Similarly, the OBR's errors in forecasting public sector net borrowing totaled more than £600 billion higher than reality.”
They add: “These figures are deeply worrying and prudent economic management cannot continue in this direction.” basis. At a time when the British public is having to make every penny count, more needs to be done to ensure the OBR's mistakes do not hold back the country's recovery.
“As we approach the Spring Budget, we urge you to take advantage of the findings of the OBR and Conservative Way Forward reports , and take steps to correct identified forecasting deficiencies.”
A new group is being formed
It is understood that concerns about the influence of the OBR and other quangos are likely to be the focus of a new Popular Conservatism group formed by Liz Truss, the former Prime Minister, along with Dame Priti, Sir Jacob and Sir Simon in a bid to influence the manifesto conservatives with right-wing ideas, including fighting “woke” culture and supporting deregulation and tax cuts.
The letter comes after The Sunday Telegraph reported last month that Rishi Sunak had delayed introducing a crackdown on legal migration after raising concerns the OBR would reduce his ability to cut taxes. The newspaper previously reported that shortly before joining the OBR, the organisation's head of economic forecasting said Jeremy Corbyn's plan to increase borrowing by £250bn could potentially “provide a significant boost” to economic growth.
An OBR spokesman said : “The accuracy of our real GDP forecasts is similar to that of external forecasters. Our borrowing and GDP forecasts are more accurate than those previously provided by the Treasury. The OBR is also recognized as one of the most transparent official economic forecasters in the world.”
Ms Truss was criticized in 2022 for not asking the OBR to produce a forecast ahead of her ill-fated mini-project. budget. She later said: “The OBR is one of the pillars of the current economic consensus, a drag on competitiveness and a barrier to prosperity.”
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