Shadow Chancellor Mel Stride has made a firm commitment to protect the Office for Budget Responsibility (OBR) in any future Conservative government, establishing a key economic dividing line with Reform UK leader Nigel Farage.
Defending Fiscal Independence
In a speech scheduled for Tuesday at an event hosted by the Institute for Government, Stride will reassert the Conservative Party's pledge to maintain the OBR as an independent fiscal watchdog. The body is responsible for assessing the impact of government tax, spending, and growth policies.
Stride is expected to directly criticise Nigel Farage's ambiguous stance towards the OBR, after the Reform leader repeatedly declined to commit to keeping the independent forecaster. "[The OBR] prevents Chancellors from marking their own homework, but their role has been questioned in some quarters," Stride will state.
He will add, "It is not hard to see why a politician like Nigel Farage might want to get rid of the OBR when he fought the last election on a manifesto which made £140bn of fantasy unfunded commitments."
Economic Credibility and the Truss Legacy
Conservative officials argue that abolishing the OBR would impose an additional premium on government borrowing costs, which are projected to surpass £110bn in the current financial year. They hope a robust defence of the institution will bolster the party's economic credibility.
Stride will also use the speech to distance the party from the economic approach of former Prime Minister Liz Truss. He will insist that a future government would not "undermine fiscal credibility" by sidelining the OBR or making unfunded promises. Officials have noted that Stride, as chair of the Treasury Select Committee in late 2022, opposed Truss's actions.
While defending the OBR's core role, Stride is set to suggest the watchdog could "benefit from reform," particularly regarding how its economic models capture the varied effects of tax policies.
Scrutiny and Future Reforms
The OBR has faced intense scrutiny following the inadvertent leak of the entire Budget prior to Chancellor Rachel Reeves's official statement. This incident led to the resignation of former OBR chair Richard Hughes, who is due to give evidence to the House of Lords Economic Affairs Committee on Tuesday.
Both the Treasury Select Committee and the Lords Committee are conducting separate reviews into the OBR's role in public policy. These reviews are anticipated to provide the Labour government and opposition parties with recommendations for reforming the watchdog, potentially leading to significant changes in economic policymaking in the coming years.
Concerns about the OBR's powers have also been voiced by several MPs, including from Labour's backbenches. Former transport secretary Louise Haigh has been a prominent critic, attacking what she terms "the unaccountable orthodoxy" of the public finances body.
