The Office for Budget Responsibility (OBR) has told the Commons Treasury Committee that leaks by the Treasury to the media before the Budget gave the public a “false impression” of the country’s finances.
Professor David Miles and Tom Josephs, who are Members of the Budget Responsibility Committee, presented the following evidence to the Treasury Committee on Tuesday:
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The Treasury Permanent Secretary, James Bowler, not the chancellor, authorised the publication of the OBR letter. That contradicts Treasury briefings that there had been or would be wild swings in its forecasts, which suggests a gap or even tension between the “official” Treasury and the “political” Treasury.
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The OBR was deeply troubled by an impression created in the media that somehow the OBR was fiddling the figures to help the chancellor, which is why it wrote that letter. Before it wrote the letter, and over a period of weeks, the OBR told the Treasury it was concerned a false impression of the public finances was being presented in the media – a false impression that was not corrected until the day of the budget.
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The OBR hated what looked like partial leaks to the media of the fiscal analysis it was delivering to the Treasury. It insists it was not responsible for these leaks.
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There was no new information about higher tax receipts given to the chancellor in November when she made her U-turn on increasing the basic rate of income tax – even though government officials briefed journalists that such new information had been presented to the Treasury only days before the U-turn.
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That said, Miles in effect endorses the chancellor’s decision to raise taxes by £26 billion to more than double the fiscal headroom – the buffer against shocks – to £22 billion. The disagreement between the OBR and the political Treasury is not over what the chancellor actually did in the Budget. It is about what journalists, voters, and investors understood for weeks before the Budget about the health of the public finances and how the OBR’s assessment was changing, which the OBR saw as seriously wrong.
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