Office for Budget Responsibility – or National Association of Fiscal Foolery?

As Sam Coates, deputy political editor of The Times put it:

“Extraordinary. Today’s windfall to pay for tax credits / police is almost entirely due to a gross OBR error in July.”

Here’s the graph to prove it. The money in pink is added due to a ‘modelling error’, according to the OBR:


This is the organisation that has revised its estimates for Universal Credit takeup – no less than seven times:


And of course there’s the huge success of the OBR’s predictions for the Conservative-led Government’s deficit reduction:


… No. Wrong again (and again and again).

Office for Budget Responsibility? More like National Association of Fiscal Foolery.

The Treasury’s independent forecaster has conceded there are big uncertainties in its predictions for higher tax revenues after the chancellor used the prospective windfall to justify a softer pace of cuts in his autumn statement.

The Office for Budget Responsibility said it now expects more money to flow into government coffers from income taxes, corporation tax and VAT than it did at the time of its last forecasts, at George Osborne’s summer budget just four months ago. The OBR also expects the government to gain some fiscal headroom thanks to lower interest payments on its debts.

Together, the higher tax revenue and lower interest payments amounted to a £27bn improvement in the public finances compared with July’s budget, Osborne said as he presented his autumn statement to parliament.

Source: OBR admits uncertainty over £27bn windfall behind tax credit U-turn | Business | The Guardian

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2 thoughts on “Office for Budget Responsibility – or National Association of Fiscal Foolery?

  1. shaun

    With respect to the last graph, Public Sector Net Borrowing, the discrepancies appear to be getting wider with each year that passes. So their reliability is decreasing with time. That must make them just the type of organisation a prudent Chancellor would choose to build his future economic strategy around! Of course the OBR is George’s baby, his brainchild, which may be why the Chancellor and OBR are so mutually reliant on each other. It may also explain why its first chief, Sir Alan Budd, jumped ship when his initial three-month contract expired?

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