The British government will “work closely” with the UK's Office for Budget Responsibility (OBR) in the coming weeks after a key meeting between the UK's Prime Minister, Chancellor and officials from the independent spending watchdog.
The unusual meeting between Liz Truss, Kwasi Kwarteng and the OBR, which appeared to last under 50 minutes, came amid market turmoil following last week’s mini-budget.
A Treasury read-out following the meeting said a highly-anticipated OBR forecast will be published on November 23rd, when the Chancellor is due to reveal his medium-term fiscal plan.
The confirmation suggests the Government plans to ignore calls from some Tory MPs to bring forward the OBR forecast’s publication in a bid to reassure markets.
Richard Hughes, Andy King and Professor David Miles CBE – all members of the OBR’s budget responsibility committee – arrived for the meeting at 11 Downing Street at 9.45am on Friday.
“They discussed the process for the upcoming economic and fiscal forecast, which will be published on November 23rd, and the economic and fiscal outlook,” according to the Treasury statement.
“They agreed, as is usual, to work closely together throughout the forecast process and beyond.
“The Prime Minister and Chancellor reaffirmed their commitment to the independent OBR and made clear that they value its scrutiny.”
Such meetings, while significant for economic planning, rarely attract the kind of attention Friday’s gathering received.
Huw Pill talks about recent developments in the UK economy, and what the Bank of England has been doing to calm financial markets this week. He explains how the MPC will assess the Government’s new spending plans, when setting interest rates:https://t.co/pHUgntrw1I
Advertisement— Bank of England Press Office (@BoE_PressOffice) September 29, 2022
The UK government has been plunged into an economic and political storm and has spent the days since the chancellor’s mini-budget attempting to win back the confidence of the markets and of voters, many of whom, polling suggests, were left deeply unhappy following last Friday’s announcement.
Not least among the concerns facing Britain's households is the looming possibility of thousands of pounds being added to mortgage bills as the Bank of England will be forced to increase interest rates to shore up the pound.
To many Tory MPs sceptical about the economic and political wisdom behind Ms Truss’ plan, the meeting with the OBR offered another opportunity to reassure the markets and re-think some of the policies announced in the fiscal event, after the £45 billion tax-cutting package plunged the pound to historic lows and forced the Bank of England to intervene to calm the markets.
In a statement published shortly after the meeting, the OBR said it will deliver an initial forecast – which “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the government’s policies” – to the Chancellor on October 7th.
It said it will set out the full timetable up to November 23rd next week.
Welcome move by No10 today. In the space of 1 week we’ve gone from the OBR being dismissed to the PM turning up to its meetings. Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics
— George Osborne (@George_Osborne) September 30, 2022
Treasury minister Andrew Griffith had played down the significance of the meeting, telling Sky News: “It seems to me a very good idea that the Prime Minister and Chancellor are sitting down with the independent OBR. Just like the independent Bank of England, they have got a really important role to play.
“We all want the forecasts to be as quick as they can, but also as a former finance director I also know you want them to have the right level of detail.”
It followed calls from the Treasury Select Committee, chaired by Tory MP Mel Stride, which had urged Mr Kwarteng to reveal his medium-term fiscal plan at the end of October, while also calling for OBR forecasts to be brought forward to reassure the markets.
The Government appears to be ignoring such calls, confirming that the economic and fiscal forecast will be published on November 23rd.
Such a decision is unlikely to put at ease some of the most concerned Tory MPs, after a YouGov poll for The Times showed Labour opening up a 33-point lead over the Conservatives, raising further questions about Ms Truss’ leadership a few weeks into the job and days before the Tory party conference in Birmingham.
Sir Charles Walker, a Tory MP commenting on the poll, told Times Radio on Friday: “It’s hard to construct an argument now that the Conservatives can win that general election.”
The latest public comments from the Truss and Kwarteng on Thursday maintained that the pair are still committed to the economic plan, arguing their £45 billion package of tax cuts is the “right plan” for the economy.
Questions about the lack of a forecast from the OBR to accompany the mini-budget have dogged the UK's prime minister and the chancellor practically since they entered office.
Further details emerged on Thursday after the watchdog said it prepared a draft forecast for the new Chancellor on his first day in office.
The independent @OBR_UK offered to provide a forecast to the Chancellor to go alongside his fiscal statement last week - this would have set out the full impact of his policies. @KwasiKwarteng clearly decided to refuse that offer - he must now explain why. pic.twitter.com/BrYdEnQ0WQ
— Alison Thewliss 🧡 (@alisonthewliss) September 29, 2022
In a letter to the Scottish National Party’s Westminster leader Ian Blackford and the party’s shadow chancellor Alison Thewliss, Mr Hughes said the body sent “a draft economic and fiscal forecast to the new Chancellor on September 6, his first day in office”.
He wrote: “We offered, at the time, to update that forecast to take account of subsequent data and to reflect the economic and fiscal impact of any policies the Government announced in time for it to be published alongside the ‘fiscal event’.”
He said the OBR was not commissioned to produce an updated forecast but said it would have been in “a position to do so to a standard that satisfied the legal requirements of the Charter for Budget Responsibility”.
The details prompted renewed criticism from opposition parties, but on Friday Mr Griffith appeared to stick with the Government’s claim there was not enough time to produce a sufficiently detailed forecast.
“That forecast wouldn’t have had the growth measures in that plan. They were being finalised in the hours before the Chancellor stood up,” he told Sky News.
The British Labour Party has attacked the government over the market chaos, with shadow business secretary Jonathan Reynolds claiming that people and businesses are looking at the “entire approach” of the Government and “saying: ‘We have no faith in these institutions’”.
The Liberal Democrats also accused ministers of “allowing the economy to fly blind for two months”.
In a sign of some of the concerns within the Tory party, Conservative MP Peter Aldous used a piece for the Politics Home website to warn that “time is running out to show the British people that the Conservative party deserves to retain the honour of serving as their Government”.
