The Office for Budget Responsibility
The Office for Budget Responsibility (OBR) was established within days of the Coalition Government coming to power in May 2010 with the aim of improving the credibility of fiscal policy.
Richard Hughes, a former holder of senior roles at the Treasury and International Monetary Fund (IMF), has been the chair of the OBR since October 2020. He replaced Robert Chote who served the two terms allowed under the Act that established the OBR. The Treasury Committee has the power of veto over this appointment.
The Budget Responsibility and National Audit Act 2011 established the OBR and sets out its functions and broad governance structure.
The OBR’s role
The Charter for Budget Responsibility (the Charter) sets out the OBR’s role, how it performs its duties and the required content of its key publications.
Part of the OBR’s role is to produce forecasts for the economy and the public finances. These are produced independently of the Government. In the past, the Treasury’s forecasts were based on the Chancellor’s judgement. This led to the suspicion that forecasts may be over-optimistic. It is hoped that any perception that the forecasts could be politically motivated is removed by an independent body producing them.
The OBR also comments on whether the Government’s policies have a better than 50:50 chance of meeting the Chancellor’s targets for the public finances – or ‘fiscal rules’ – which are set out in the Charter. The OBR also examines the long-term sustainability of the public finances, risks surrounding the public finances, spending on welfare and devolved taxes.
The Library briefing The UK’s fiscal targets discuss the Government’s targets for managing the public finances in more detail.