The Office of Budget Responsibility (OBR) said it will deliver an “independent” forecast of the Government’s controversial economic plan following a meeting with the Prime Minister and Chancellor.
The unusual meeting between Liz Truss, Kwasi Kwarteng and the independent spending watchdog, which appeared to last under 50 minutes, came amid market turmoil following last week’s mini-budget.
Richard Hughes, Andy King and Professor David Miles CBE – all members of the OBR’s budget responsibility committee – arrived at 11 Downing Street at 9.45am on Friday.
In a statement published shortly after the meeting, the OBR said it will deliver an initial forecast – which “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies” – to the Chancellor on October 7.
It said it will set out the full timetable up to November 23 next week, when the Chancellor is due to reveal his highly-anticipated medium-term fiscal plan.
Treasury and Downing Street sources earlier hit back at suggestions it was an emergency meeting, even as Tory MPs called for the Chancellor’s promised plan to be brought forward to further calm jittery markets.
Treasury minister Andrew Griffith had played down the significance of the meeting, telling Sky News: “It seems to me a very good idea that the Prime Minister and Chancellor are sitting down with the independent OBR. Just like the independent Bank of England, they have got a really important role to play.
“We all want the forecasts to be as quick as they can, but also as a former finance director I also know you want them to have the right level of detail.”
The decision to hold a meeting was welcomed by Conservative MPs and senior party figures, including former chancellor George Osborne, who oversaw the creation of the independent spending watchdog in 2010.
Calling the decision to hold a meeting a “welcome move”, he said: “Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics.”
Other sitting MPs expressed hope the meeting will mark the start of a process to win back the confidence of the markets, after the £45 billion tax-cutting package announced by the Chancellor last Friday plunged the pound to historic lows and forced the Bank of England to intervene to calm the markets.
It launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
Chairman of the Treasury Select Committee Mel Stride, one of a growing caucus of Conservatives with concerns about the Government’s plans, urged the meeting to be a “reset moment”, echoing earlier calls from fellow Tory MPs for a “plan B” from the Government.
Mr Stride was also among those calling on Mr Kwarteng to bring forward his planned statement setting out how he intends to get the public finances back on track after the OBR said it could produce a preliminary set of forecasts by October 7.
The Chancellor is scheduled to deliver his medium-term fiscal plan – explaining how he would get debt falling as a percentage of GDP, alongside the updated OBR forecasts – on November 23.
On BBC Newsnight, veteran Tory MP Sir Geoffrey Clifton-Brown joined those calls, saying he fears further “turmoil” in the markets if the date of the statement is not changed.
It comes as a YouGov poll for The Times showed Labour opening up a 33-point lead over the Conservatives, raising further questions about Ms Truss’ leadership a few weeks into the job and days before the Tory party conference in Birmingham.
Sir Charles Walker, a Tory MP commenting on the poll, admitted his party could be “wiped out” if an election was called tomorrow.
Former Cabinet minister Julian Smith also urged the Government to reverse course on the cut to the top rate of tax, saying it must “take responsibility” for the reaction to Friday’s mini-budget.
Despite the growing unease, both the Prime Minister and Chancellor said they are still committed to the economic plan, arguing their £45 billion package of tax cuts is the “right plan” for the economy.
But the Chancellor has come under fresh pressure to explain why his mini-budget was delivered without an up-to-date forecast from the OBR – after the watchdog said it prepared a draft forecast for the new Chancellor on his first day in office.
The lack of such a forecast was one of the issues reportedly troubling the City after the Chancellor’s announcement.
In a letter to the Scottish National Party’s Westminster leader Ian Blackford and the party’s shadow chancellor Alison Thewliss, Mr Hughes said the body sent “a draft economic and fiscal forecast to the new Chancellor on September 6, his first day in office”.
He wrote: “We offered, at the time, to update that forecast to take account of subsequent data and to reflect the economic and fiscal impact of any policies the Government announced in time for it to be published alongside the ‘fiscal event’.”
He said the OBR was not commissioned to produce an updated forecast but said it would have been in “a position to do so to a standard that satisfied the legal requirements of the Charter for Budget Responsibility”.
The details prompted renewed criticism from opposition parties, but on Friday Mr Griffith appeared to stick with the Government’s claim there was not enough time to produce a sufficiently detailed forecast.
“That forecast wouldn’t have had the growth measures in that plan. They were being finalised in the hours before the Chancellor stood up,” he told Sky News.
Pressed again during an appearance on BBC Breakfast about why the OBR was not given the opportunity to make an assessment of the plan, Mr Griffith said there was a “lot of detail” in the document.
Welcome move by No10 today. In the space of 1 week we’ve gone from the OBR being dismissed to the PM turning up to its meetings. Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics
— George Osborne (@George_Osborne) September 30, 2022
“This growth plan is full of detail about how this Government is going to grow the economy. Forty pages. Details of infrastructure plans that have been long held up that we are going to crack through. Detail about how we are going to bring forward the new clean energy revolution.
“It is for the OBR to ultimately decide how they reflect that in their plans.”
Meanwhile, on the back of favourable polling, Labour said the Prime Minister and Chancellor have lost the faith of the markets and the public.
Shadow business secretary Jonathan Reynolds claimed people and businesses are looking at the “entire approach” of the Government and “saying, ‘We have no faith in these institutions’”.
“I will be frank,” he said. “I don’t think either the Prime Minister or the Chancellor will ever get that back.”