2.3.1 – The structure, role, and powers of the Executive
The Office for Budget Responsibility (OBR) is a Non-Departmental Public Body (NDPB), sometimes informally described as a quango (quasi-autonomous non-governmental organisation). It was first established in May 2010 by the incoming Conservative–Liberal Democrat Coalition government under David Cameron.
Its purpose is to provide independent and authoritative analysis of the UK’s public finances. This includes producing the official forecasts for economic growth, government borrowing, debt and tax revenues, and assessing whether government policy is likely to meet fiscal rules. The OBR was put on a statutory basis by the Budget Responsibility and National Audit Act 2011.
Following the change of government in 2024, the new Labour administration introduced the Budget Responsibility Act 2024, designed to strengthen the role of the OBR. The Act requires the government to seek an OBR assessment for any fiscally significant policy change ahead of a major fiscal event. This reform followed the experience of the 2022 ‘mini-budget’, when Liz Truss’s government chose not to request an OBR forecast—leading to severe financial market instability.
Before the creation of the OBR, HM Treasury produced the UK’s official forecasts for growth, borrowing, debt and revenues. Because the Treasury both made fiscal policy and assessed its own performance, Chancellors were often criticised for overly optimistic forecasting, especially in the run-up to elections. With only informal external scrutiny, it was widely felt that the system lacked transparency and risked politically biased projections.
In its most recent assessment of the Budget, the OBR concluded that:
- Short-term economic growth would remain subdued, though it was expected to strengthen later in the Parliament.
- Borrowing was projected to fall, with the public finances improving over the decade, although long-term sustainability remained challenging.
- The UK economy remains vulnerable to major shocks, including global economic disruptions or other large-scale risks.
Importantly, OBR forecasts can shape government decisions even before a Budget is delivered. In the run-up to the most recent Budget, there was speculation that Labour might break its manifesto pledge not to raise Income Tax, VAT or National Insurance. Media reports suggested that ministers were testing market reaction (“pitch-rolling”) to possible tax rises. However, these rises were not introduced. Commentators argued that this was partly because the OBR forecast a smaller-than-expected fiscal shortfall, reducing the pressure for immediate tax increases.