*Oliver Wright, Policy Editor, January 23 2024, The Times*
Jeremy Hunt’s spending plans from next year onwards are worse than a work of fiction, the head of the budget watchdog has suggested.
In a striking attack on the government Richard Hughes, chairman of the Office for Budget Responsibility, said ministers were not being honest with voters about the probable scale of public sector cuts because they had failed to publish detailed spending plans for the period after April 2025.
“Beyond 2025 we know virtually nothing,” Hughes told the Lords economic affairs committee. “It is just two numbers — one for total current spending and one for total capital spending. I think some people have referred to that as a work of fiction. I think that’s probably generous, given that someone has bothered to write a work of fiction whereas the government hasn’t even bothered to write down what its spending plans are, unpinning the plans for public services.”
Hughes also warned that the government after the election would have to “fundamentally rethink” how the state paid for challenges such as healthcare for an ageing population or risk going on a path to “unsustainable” debt.
His comments came after figures showed that the government borrowed £5 billion less than expected by the Office for Budget Responsibility in the first nine months of the financial year, raising the chances of the chancellor cutting taxes in the budget on March 6.
The government borrowed £119.1 billion in the period from April to December, according to the Office for National Statistics, lower than the £124.1 billion projected by the OBR at the autumn statement in November.
Since the OBR’s latest forecasts in November, which accompanied the autumn statement, inflation has risen much faster than anticipated, to 4 per cent in December. As a result, financial markets have priced in several interest rate cuts by the Bank of England over the next 12 months.
Under the UK’s fiscal rules, the chancellor is required to ensure that debt as a share of gross domestic product is falling and annual borrowing is capped at 3 per cent of output in five years. Hunt is projected to have an additional £15 billion to £20 billion of headroom against this measure as a result of lower market rate expectations, weaker inflation and stronger growth.
But Hughes suggested that the government was exposing itself to fiscal risks by leaving itself only a “tiny” margin for error in its debt-reduction rules.
There had been “errors in just one month of data worth £5 billion and the government’s got a fiscal headroom against its fiscal target in five years time of just £13 billion. That is a tiny, a tiny number compared to the risks that you face,” he said.
Hughes added that because the government pledge to make debt fall as a percentage of GDP was a rolling target there was a significant risk it would never be met.
“Because it’s a rolling rule … It’s a sort of mañana rule — the point at which you have to get debt falling is always five years ahead and never seems to be realised. What we’ve seen, at least in recent budgets, has been that as soon as you get an extra year to meet it [the rule] the chancellor fully takes advantage of that.”
I understand the initial need for the OBR but to be hamstring by their economic model seems a bit wild.
[removed]
Jolyon Maugham from the Good Law Project described today’s UK perfectly.
He said
​
>**The right wing always get to play politics on easy mode.**
​
You just wait until Keir Starmer eats a bacon butty wrong and plummets 20 points in the polls.
“There’s no magic money tree” – unless it’s to pay for some crackpot or corrupt Tory idea.
Brexit, Rwanda, Covid PPE, crap trad deals with distant places, that mad idea of creating our own GPS system,…
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*Oliver Wright, Policy Editor, January 23 2024, The Times*
Jeremy Hunt’s spending plans from next year onwards are worse than a work of fiction, the head of the budget watchdog has suggested.
In a striking attack on the government Richard Hughes, chairman of the Office for Budget Responsibility, said ministers were not being honest with voters about the probable scale of public sector cuts because they had failed to publish detailed spending plans for the period after April 2025.
“Beyond 2025 we know virtually nothing,” Hughes told the Lords economic affairs committee. “It is just two numbers — one for total current spending and one for total capital spending. I think some people have referred to that as a work of fiction. I think that’s probably generous, given that someone has bothered to write a work of fiction whereas the government hasn’t even bothered to write down what its spending plans are, unpinning the plans for public services.”
Hughes also warned that the government after the election would have to “fundamentally rethink” how the state paid for challenges such as healthcare for an ageing population or risk going on a path to “unsustainable” debt.
His comments came after figures showed that the government borrowed £5 billion less than expected by the Office for Budget Responsibility in the first nine months of the financial year, raising the chances of the chancellor cutting taxes in the budget on March 6.
The government borrowed £119.1 billion in the period from April to December, according to the Office for National Statistics, lower than the £124.1 billion projected by the OBR at the autumn statement in November.
Since the OBR’s latest forecasts in November, which accompanied the autumn statement, inflation has risen much faster than anticipated, to 4 per cent in December. As a result, financial markets have priced in several interest rate cuts by the Bank of England over the next 12 months.
Under the UK’s fiscal rules, the chancellor is required to ensure that debt as a share of gross domestic product is falling and annual borrowing is capped at 3 per cent of output in five years. Hunt is projected to have an additional £15 billion to £20 billion of headroom against this measure as a result of lower market rate expectations, weaker inflation and stronger growth.
But Hughes suggested that the government was exposing itself to fiscal risks by leaving itself only a “tiny” margin for error in its debt-reduction rules.
There had been “errors in just one month of data worth £5 billion and the government’s got a fiscal headroom against its fiscal target in five years time of just £13 billion. That is a tiny, a tiny number compared to the risks that you face,” he said.
Hughes added that because the government pledge to make debt fall as a percentage of GDP was a rolling target there was a significant risk it would never be met.
“Because it’s a rolling rule … It’s a sort of mañana rule — the point at which you have to get debt falling is always five years ahead and never seems to be realised. What we’ve seen, at least in recent budgets, has been that as soon as you get an extra year to meet it [the rule] the chancellor fully takes advantage of that.”
I understand the initial need for the OBR but to be hamstring by their economic model seems a bit wild.
[removed]
Jolyon Maugham from the Good Law Project described today’s UK perfectly.
He said
​
>**The right wing always get to play politics on easy mode.**
​
You just wait until Keir Starmer eats a bacon butty wrong and plummets 20 points in the polls.
“There’s no magic money tree” – unless it’s to pay for some crackpot or corrupt Tory idea.
Brexit, Rwanda, Covid PPE, crap trad deals with distant places, that mad idea of creating our own GPS system,…