Efforts to counter the orthodoxy of the OBR are growing. 46 Tory MPs and four peers, including Jacob Rees-Mogg, Priti Patel, and Suella Braverman, wrote to Jeremy Hunt on Sunday and have now published a report into the OBR’s wildly inaccurate forecasts. Their analysis has found:
The Conservative Way Forward group says that Hunt should end the Treasury’s “unhealthy dependence” on the OBR and “allow a diverse range of perspectives to provide scrutiny of the government’s budget and fiscal events”. The Tories will have to kill their own baby…
In the OBR’s first ever analysis of its long-term performance last summer the quango finally admitted it tends “to overestimate real GDP growth and underestimate government borrowing”. Meanwhile its continued failure to use dynamic modelling in its forecasts means it always concludes tax cuts are doomed to fail…
Read the group’s report and their letter to Hunt below:
“Dear Chancellor,
The UK economy has been beset by external challenges in recent years. The conflict in Ukraine and subsequent spike in energy prices came on the coattails of a once-in-a-generation pandemic.
Our constituents are continuing to grapple with a cost-of-living crisis and in the autumn statement you took some vital steps to rekindle growth in the economy, to back British business, to make work pay and to alleviate the cost-of-living crisis.
This agenda was accompanied with an economic and fiscal forecast produced by the Office for Budget responsibility, and your statement to the Commons showed that the Treasury has, at all times, been guided by its forecasts.
It is clear that the OBR plays a key role in the government’s efforts to achieve its economic priorities of boosting growth, halving inflation, and reducing debt. The country’s success relies upon the OBR getting things right.
We would therefore like to draw your attention to a working paper published by the OBR itself earlier this year, entitled The OBR’s Forecast Performance. In the paper the OBR says that since 2010 it has made many miscalculations about the state of the British economy, including a tendency “to overestimate real GDP growth and underestimate government borrowing”.
In a new report, The OBR: A Straitjacket of Failure, the Conservative Way Forward group has calculated that since 2010, the combined total of these errors in growth aggregates to a figure of over £500bn. Similarly, the OBR’s mistakes in forecasting public sector net borrowing have been wide of reality by over £600bn in total.
These figures are deeply worrying, and sensible economic management cannot continue on this basis. At a time when the British public are having to make every penny count, more must be done to ensure that the OBR’s errors are not holding back the country’s recovery.
Ahead of the Spring Budget we would encourage you to engage with the findings set out in both the OBR and Conservative Way Forward reports and take steps to remedy the forecasting failings that are highlighted. The centrality of the OBR to economic decision-making makes it vital that its systemic issues are resolved as a matter of urgency.
Yours sincerely,
Greg Smith, Chair CWF
Dame Priti Patel
Sir Jacob Rees-Mogg
Suella Braverman KC
Sir John Redwood
Sir Iain Duncan Smith
Sir Simon Clarke
Sir Jake Berry
Sir John Hayes
Dame Jacqueline Doyle-Price
Dame Andrea Jenkyns
Sir Alec Shelbrooke
Sir Bill Wiggin
Ben Bradley
Lia Nici
Philip Davies
Richard Drax
Jonathan Gullis
Karl McCartney
Rob Butler
Sarah Atherton
Sally-Anne Hart
Adam Holloway
Elliot Colburn
David Jones
Chris Green
Nick Fletcher
Nigel Mills
Paul Bristow
John Stevenson
James Grundy
Craig Mackinlay
Craig Tracey
Damien Moore
Danny Kruger
Henry Smith
Andrew Lewer
Marco Longhi
Marcus Fysh
Heather Wheeler
+6 private MPs
Lord Dobbs
Lord Trenchard
Lord Frost
Lord Hannan“.
