OBR head's resignation leaves potential landmines for Reeves

The shock resignation was motivated by a concrete reason, the early publication of Budget estimates, but the Office for Budget Responsibility (OBR)'s story will continue, with a series of decisions to make over Richard Hughes' replacement. Firstly, Rachel Reeves will have to find a respected and credible economist to head the OBR. There are several candidates who may fit the mold of fiercely independent bean counters. Any deviation from the normal model will be closely monitored by the markets. There's a problem, and there's just some political pressure to do just that.

Mr Hughes's decision not to honor the government's pro-growth policies was one of the points of contention. He had said he would not score any initiative until it was relevant in the economy's effect on the economy. In the event, none reached the 0. 1% of national income threshold. It is a careful balancing act, however. Any suspected interference with the OBR's independence may damage market reputation, as well as increasing UK government borrowing rates, for example.

When I saw the now-departing chairman on the evening of the Budget last week, he was clearly distraught by his employer's inability to post Budget data early. Although it is no surprise that Mr Hughes took the courageous decision to resign for an error traced to a junior employee of staff, it was not the only issue vexing him. He was a ferocious defender of his organization's political and ministerial attacks, both right and left. That was evident during the Liz Truss mini budget episode, as well as in recent weeks. There had been a drumbeat of noise from both the right and left, and now from the center, regarding the restrictions placed on elected governments' freedoms. In some places, the OBR was seen as an arm of a woke deep state and in others as a 'agent of austerity.

Budget tension

However, there had been doubts over the budget. Changes had already been planned. The chancellor had already confirmed that she would only respond to the OBR's forecasts once a year.

We'll still be delivering two complete economic and fiscal forecasts five years out, twice a year, both now and in the spring.

However, the government does not feel obligated to respond to those predictions with policy in the spring with this update. It'll be more like a health check on the economy and the public finances.

There will be no loss of transparency from the forecast paper we'll produce.

The precise details of the new OBR's forecast will matter. If there is a noticeable rise in the public finances in spring, will the chancellor really avoid investing any surplus money ahead of critical local elections? The OBR saw an increase in the UK economy as a result of AI use by the end of the decade, according to the Budget. The OBR also started a difficult cost for special education needs in England, causing some Cabinet ministers to retaliate. For those that are not campaign or Cabinet minister initiatives, the ability of the government to narrow government priorities has been emphasized. Mr Hughes said that the 35-member forecasting group was too large.

The powers given to us by Parliament in an Act of Parliament are those that have been promised to us,

the Parliament representative said, and that would produce a forecast. Chancellors set their own targets. They set their own policies. Chancellors are in charge of £1. 5 trillion worth of revenue and £1. He told me that 5 trillion dollars in investment would be worth it.

They don't want to achieve their goals, they can change them,

Chancellors have done in the past.

All we do is produce a baseline forecast, cost government initiatives that they send to us, and we give them an evaluation about whether we're on target to meet those goals.

Mr Hughes may also include some key information about the timing of various lawsuits relating to the state of the public budget and his gardening leave, in light of the government's wrangling over the lead up to this Budget. He had been scheduled to appear before the Treasury Select Committee this morning, but that had now been postponed. On Friday, he acknowledged that the publication of his clarification table about the forecast's evolution was remarkable. Richard Hughes' five-year tenure at the OBR Richard Hughes was one of five chancellors, and his friendship with them was designed to help foster UK economic stability. The government's latest collaboration with a different OBR is a great opportunity for the government but it comes at a price. Get all the headlines you need to start the day with our flagship newsletter. Sign up here.