Rachel Reeves insisted today she was the fiscal watchdog’s biggest fan – but could still sack its beleaguered boss.
The Chancellor confirmed that she will receive a report tomorrow on the ‘serious’ error that saw the Office for Budget Responsibility publish its crucial verdict on the Budget before she gave her speech on Wednesday.
It has called in the former head of the National Cyber Security Centre Ciaran Martin to find out how the document ended up online early – provoking fury in government.
In another headache for Ms Reeves, the watchdog also cast doubt on claims that the Chancellor dropped plans to raise income tax in the Budget because of rosier forecasts, saying she knew about these well before the change of heart.
OBR chairman Richard Hughes took what he acknowledged was the ‘unusual step’ of writing to the Treasury select committee to explain how its forecast evolved, ‘given the circumstances’.
But asked if Mr Hughes should go, Ms Reeves said: ‘There is no one who is a bigger supporter of the Office for Budget Responsibility than me. I reappointed Richard Hughes in the summer to strengthen the powers of the OBR. We will get a report tomorrow.
‘The report that looks at what happens about that Budget. It was clearly a serious breach of protocol but I’ll see that report tomorrow.’
Earlier in the same Sky News interview, Ms Reeves discussed the OBR downgrading Britain’s productivity level estimates in the run-up to her crucial Budget.
OBR chairman Richard Hughes (pictured) took what he acknowledged was the ‘unusual step’ of writing to the Treasury select committee to explain how its forecast evolved, ‘given the circumstances’
Asked if Mr Hughes should go, Ms Reeves described his actions as a ‘serious breach of protocol’ but added that it was her that reappointed him in the summer to strengthen the powers of the OBR
She said the watchdog’s recalculation was the biggest change to the public finances in recent months, and reflected the Conservatives’ handling of the economy rather than her own.
Told that she previously promised not to come back with another tax-raising Budget, Ms Reeves said: ‘Well, the Budget this year was not on the scale of the one last year. But as I set out in my speech at the beginning of November, the context for this Budget did change and I did have to ask people to contribute more.
‘And the biggest thing that happened between the spring forecast and the forecast that the OBR provided for this Budget was a big downgrade in productivity.’ She added: ‘The OBR have been really clear – that reflects the legacy of the previous 14 years, not anything this Government has done in the last 16 months.
‘But, nevertheless, that productivity downgrade means they forecast tax receipts that are going to be £16billion lower.’
Told that the difference between her two budgets was not that great, the Chancellor said it was down to reasons ‘not in my control’. She added: ‘It’s up to them to justify the timing of the productivity review.’
And told how she had previously insisted everything that happened after last year’s Budget would be her choice, she replied: ‘Well, look at the Office for Budget Responsibility, you’re not interviewing them, you’re interviewing me.’
Mr Hughes will appear before MPs on the Treasury committee on Tuesday, which published his evidence showing the OBR had told the Chancellor there was no black hole finances – while she was talking up problems in balancing the books. Mr Hughes has already said he will quit if Ms Reeves and the committee lose faith in him.
He told a post-Budget event: ‘I serve subject to the confidence of the Chancellor and the Treasury committee. If they conclude… they no longer have confidence in me, then of course I will resign, which is what you do when you’re the chair of something called the Office for Budget Responsibility.’
