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The UK budget watchdog has denied being ‘at war’ with the Treasury after the resignation of its boss Richard Hughes. Hughes quit as chair of the Office for Budget Responsibility, OBR, after its assessment of Chancellor Rachel Reeves’ plans was inadvertently made available online before she had delivered her speech last Wednesday. His resignation came with the relationship between the OBR and the Treasury under strain after a budget process characterised by leaks and briefings about the state of the public finances. Budget responsibility committee member Professor David Miles described the relationship with the Treasury as ‘very close’ but hoped for a ‘smoother’ process next year. He told the Commons Treasury Committee: ‘I wouldn’t say we were at war with the Treasury. ‘I mean, we have a very close relationship with the Treasury. In fact, we rely not just on the Treasury but other departments in government for analysis of many sorts of measures.’ He said the OBR had raised concerns with Treasury officials about leaks, adding: ‘I think it was clear that we didn’t find this helpful. We made that clear.’ In the run-up to the budget, Reeves had repeatedly warned that the OBR’s downgrading of productivity would have an impact on the public finances fuelling speculation that she would break Labour’s manifesto commitment not to increase income tax rates. The chancellor in part blamed the £26 billion of tax rises in the budget on the downgrade, which delivered a £16 billion hit to tax revenues. Although an increase in tax receipts due to inflation and higher wages cancelled some of this out, the chancellor said a forecast showing a £4.2 billion surplus against her borrowing rules did not include policies such as the abolition of the two-child benefit cap. Professor Miles said Reeves’s unusual pre-budget speech and press conference was not ‘inconsistent’ with the figures she had been given by the OBR. The November 4 speech was viewed as an attempt to roll the pitch for manifesto-busting tax hikes. Miles said: ‘My interpretation was, and others might interpret differently, that the chancellor was saying that this was a very difficult budget and very difficult choices needed to be made. ‘And I don’t think that that was in itself inconsistent with the final pre-measures assessment we’d be made which, although it showed a very small positive amount of so-called headroom, it was wafer thin.’ On November 10, Rachel Reeves told the BBC that sticking to the manifesto commitment not to increase income tax rates would only be possible with ‘deep cuts’ to public investment. But by the end of the week the plan to hike income tax had been dropped, with Treasury sources indicating an improvement in the OBR’s forecasts, even though there had been no change. Miles said: ‘It’s certainly true that there wasn’t any immediately good bit of news in that particular window.’ Giving his personal view, he added: ‘I don’t think it was misleading for the chancellor to say that the fiscal position was very challenging at the beginning of that week. ‘Whether a message was then put out to say ’well, it’s less challenging by the end of the week’, I don’t know, and I don’t know where that message would have come from. ‘It certainly didn’t reflect anything that was news from the OBR being fed into the government.’ By David Hughes and Christopher McKeon, Press Association Political Staff Press Association: Finance source: PA Copyright 2025 Alliance News Ltd. All Rights Reserved.
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