The Office for Budget Responsibility (OBR) is looking for a new chairman after Richard Hughes announced his resignation. His departure follows an internal investigation into the untimely publication of a key Inspector General’s report. The initial purpose of the OBR was to provide independent scrutiny of the UK government’s spending plans. It further measures economic performance, serving a critical function in judging fiscal policy and economic projections. Hughes’s departure is a watershed moment for the organization. Yet in recent years, it has significantly increased its jurisdiction and mission.
Richard Hughes became head of the OBR in October 2020. He was questioned after the OBR opened an inquiry into the premature release of a document designed to shape government’s long-term financial commitments. This inquiry comes just in time with the OBR’s new powers. These powers were given through a bill passed at the end of September 2024 aimed at providing fiscal discipline for the UK. The Treasury framed these shifts as positive measures meant to restore confidence in the government’s economic management.
The OBR is fundamentally important to predicting whether the UK economy will prosper or go into recession. The second gauges if government spending exceeds income. The three-member independent body has a rotating chair. Combined, they look at the transparency and accountability of states’ fiscal policy from various angles. In recent months, the OBR’s assessments have taken on added weight, particularly after the fallout from Liz Truss’s administration, which proposed unfunded tax cuts without prior consultation with the OBR. This event led the Council on this reconsideration of the body’s role in providing checks on foolish government expenditures.
In his tenure, Hughes was responsible for producing forecasts that guide government actions on taxation and public spending. His leadership gave the OBR the license to interrogate UK government economic plans. It increased its remit to cover fiscal policies set by devolved governments in Scotland and Wales. Until this year, Chancellor Rachel Reeves had her statement scrutinised by the OBR before delivering it to the House of Commons. This underscores the wonderful organizational importance of this age. Making basically any government accountable.
Hughes’s sudden departure has cast a pall over the mood inside the OBR and tensions evident between the OBR and government. This is a remarkable reversal given that the Chancellor re-nominated him for a second five-year term in May. During his time, the organization had offered to prepare a draft economic forecast for then-Chancellor Kwasi Kwarteng, which was ultimately rejected, further complicating the narrative surrounding its operational independence.
The OBR’s new functions were a direct result of rising public and legislative demands for greater transparency and accountability in long-term government financial planning. The role the organisation plays in analysing UK’s fiscal and budgetary space and producing evidence is invaluable. It constantly generates projections that respond to the evolution of macroeconomic conditions and tests new tax and welfare reforms.