MPs warn over Osborne watchdog

THE government’s fiscal watchdog should be entirely independent of the Treasury, an influential group of MPs has said, if it is to avoid accusations of political bias.

In its first report on the Office for Budget Responsibility (OBR), published today, the powerful Treasury Select Committee says the watchdog should be “an institution with its own legal personality, responsible for appointing its own staff”.

The OBR, which is charged with providing economic forecasts free from political interference, is currently an adjunct of the Treasury and borrows most of its staff on secondment, leading to accusations that it cannot be truly independent.

Its autonomy was called into question in June, after former chair Sir Alan Budd rushed out unemployment forecasts ahead of schedule, allowing David Cameron to use the figures as ammunition in a highly-charged session of Prime Minister’s questions.

Andrew Tyrie, chairman of the committee, said: “For the OBR to succeed, it will have to be, and be seen to be, independent, particularly after the difficult early period of the interim body.”

George Osborne set up the OBR to stop chancellors from “fiddling the figures to fit the Budget”, but today’s report will put him under pressure to make the body more independent than originally envisaged.

An aide to Osborne said he had already pledged to house the OBR in a building outside of the Treasury, but that he had not yet taken a view on whether it should be legally independent.

But Chuka Umunna, a Labour member of the select committee, said: “Just putting it in a different building is not enough to give the public and the City the impression that it is independent.”

The Treasury select committee has already convinced the chancellor to give it a veto over any plans to hire or dismiss the OBR’s chairman. Last week it approved the appointment of Robert Chote, formerly director of the Institute of Fiscal Studies, as the new chair.

The OBR is currently operating on an interim basis, and its final incarnation will depend
on legislation due in the Autumn.