UK Treasury committee rejects calls to reform budget forecaster OBR

MPs recommend adding 10-year forecast to watchdog’s existing models

The UK Treasury committee has rejected calls from across the political spectrum for fundamental reform of the Office for Budget Responsibility (OBR), describing criticism of the government’s independent economic forecaster as akin to “shooting the messenger.”

In a report published Wednesday, the committee of MPs said the OBR should not be blamed when policymakers face tough decisions because of tight public finances. Parliament should also set aside time to debate the OBR’s annual fiscal risks and sustainability report, which sets out threats to the stability of public finances over the next 50 years, the committee said.

Dame Meg Hillier, chair of the Treasury committee, said critics of the OBR had sought to characterise it as “a wielder of dark powers with a stranglehold on Treasury ministers and officials.” But she said a review by the committee had found “it’s simply not true.”

“The fiscal rules, and therefore the OBR’s forecasts, become more important when government spending operates on razor-thin margins. That is a feature of decision-making by chancellors, not overreach by the OBR,” Hillier said.

The committee was, however, persuaded that ministers should consider instructing the OBR to adopt a 10-year economic forecast alongside the five- and 50-year forecasts it already publishes. Hillier said longer-dated projections could help start “a debate on how to break the cycle of short-term thinking, which so often holds this country back.”

The OBR was established in 2010 by the then-chancellor George Osborne to provide independent forecasts of economic growth and to assess the impact of the government’s tax and spending policies. Since then, the forecaster has been criticised for allegedly underestimating the impact of successive austerity budgets under Osborne’s chancellorship, and more recently for overestimating the growth potential of the economy.

Prof Jo Michell of the University of the West of England and Dr Robert Calvert Jump of the University of Greenwich told the committee that the OBR’s forecasts of “headroom” — spare financial capacity at the end of a five-year forecast — have come to dictate government spending policies.

“The OBR has evolved into a body that determines the bounds of permissible fiscal policy, despite lacking the democratic mandate to fulfil such a role […] It does not merely produce forecasts; it determines whether the government passes or fails its fiscal rules. As a result, its ‘headroom’ figures have become the binding constraint on policy,” they said.

The latest committee review followed the resignation in December 2025 of OBR chair Richard Hughes, after the body’s assessment of the previous budget was leaked.

Hillier said: “Now is the time to preserve the independent voice within our economic debate, not attempt to undermine it. I would like to hear our new chancellor and the wider administration make that point clearly and regularly.”