Trade Union Leader Questions Role Of OBR After Rachel Reeves Spring Statement
Paul Nowak (left) is the general secretary of the Trades Union Congress (Alamy)
3 min read
Union leader Paul Nowak has questioned the role of the independent Office for Budget Responsibility following Chancellor Rachel Reeves' Spring Statement, saying long-term government decisions should not be based on "short-term changes in forecasts".
Reeves on Wednesday set out forecasts by the OBR on how the government's policies in areas like planning and welfare will impact economic growth in the coming years.
The OBR also forecasts future levels of inflation, as well as whether the government is on track to meet its self-imposed fiscal rules.
The Chancellor today said the government's planning reforms had led the independent body to upgrade its growth forecasts, describing it as "the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost".
According to the OBR, changes to the planning system are set to permanently increase the level of real GDP by 0.2 per cent by 2029-30 and by 0.4 per cent of GDP within the next 10 years – an additional £15.1bn in the economy.
However, Reeves also admitted that according to the OBR, she would have broken her own fiscal rules had she not announced further public spending cuts late in the day.
The late cuts have fallen on welfare, on top of reductions to the benefits system already announced by Work & Pensions Secretary Liz Kendall last week.
According to a Department for Work and Pensions impact assessment, the total package of welfare cuts will move an additional 250,000 people into relative poverty.
Nowak, General Secretary of the Trades Union Congress, said it was "time to review both the role of the OBR and how it models the long-term impacts of public investment".
"Short-term changes in forecasts should not be driving long-term government decision-making," he said.
Nowak added that ministers "need to rethink" their plans to reform the welfare system.
"Decisions that affect millions of people’s lives must be made with care – not as a last-minute response to changed fiscal forecasts," he said.
“These changes mean many disabled people – whether they are in work or not – will be pushed into hardship. And removing support could even make it harder for some people to stay in their jobs."
One backbench Labour MP told PoliticsHome they agreed with the union leader that the government "needs to do something about the OBR’s remit and forecasting".
"It’s forcing elected politicians to follow its lead, for fear of falling foul to spooking the bond markets," the MP said.
"Cuts tend to lead to more cuts, and the OBR forecasts are only exacerbating the difficulties of growing our economy in an increasingly volatile world.
"The Treasury team need to be bolder on this, and figure out a way of breaking the stranglehold of an austerity-obsessed Whitehall department."
The Institute for Government think tank also questioned the role of OBR forecasts, but said that the issue lies in how the government approaches them, not the body itself.
Thomas Pope, deputy chief economist at the IfG, said: "Rushing out policy decisions to chase small forecast revisions is no way to make stable long-term policy.
"[Rachel] Reeves was right to aspire to only one fiscal event a year and should resist the temptation to deviate from this again."
