Ramsden Review recommends measures to strengthen OBR, supporting fiscal credibility.
The Chancellor today (Thursday 3 September) nominated Robert Chote for re-appointment as chairman of the Office for Budget Responsibility (OBR) for a second term of office.
The first permanent chairman of the OBR, Robert Chote has led the OBR throughout its first successful five years.
Bringing many years of previous experience as Director of the Institute for Fiscal Studies, Robert has an established track record of being one of the most credible independent voices on the UK economy, which he has continued to demonstrate as chairman of the OBR.
The creation of the OBR in 2010 has brought independence, transparency and credibility to UK economic and fiscal forecasts.
Five years on, and now a core part of the forecast and budget process, the OBR’s successes to a date are a testament to its independent and impressive leadership, spearheaded by Robert Chote and ably supported the other members of the Budget Responsibility Committee and wider OBR staff.
Due to the importance of independent leadership of the OBR, the Treasury Select Committee (TSC) have a unique role in approving all appointments of the Budget Responsibility Committee, including that of chairman.
Following the Chancellor’s announcement today, Robert will appear before the TSC for a pre-appointment hearing in due course.
Accompanying this announcement, the Treasury have also published today the Ramsden Review of the OBR.
This follows the first external review in 2014 led by Kevin Page, former Parliamentary Budget Officer in Canada, which judged that “the OBR’s initial successes are laudable” and their work could “fairly be viewed as ‘best in class’” compared to similar organisations around the world.
Building on this, in June 2015 the Chancellor asked Sir Dave Ramsden, Chief Economic Adviser to the Treasury, to carry out a Treasury review of the existing regime and framework of the OBR focussing on its role in enhancing UK fiscal credibility.
Reflecting the importance of an independent and transparent OBR that can genuinely hold the government to account, the review recommends certain changes to the OBR’s core duties and governance framework, including:
The OBR produce a new report on fiscal risks, in line with international best practice and meeting in full the IMF’s fiscal transparency code recommendations
To free up resources to produce more in-depth analysis on fiscal sustainability issues, the OBR’s annual fiscal sustainability report will only be required to include long-term projections on a bi-annual basis, mirroring the timetable for population estimates
The OBR should work systematically with forecasting departments on model development, building on existing practice to ensure key models are fit for practice
The OBR and all relevant departments should review the existing Memorandum of Understanding by September 2016 to strengthen existing governance processes and support where necessary the effective delivery of forecast and policy costings
The Treasury and the OBR should work together to put in place a succession plan for the turnover of BRC members and long-standing staff members
The review also considered whether the OBR’s remit should be expanded, such as having a formal role in auditing or costing opposition policies.
Balancing wider recommendations to develop the OBR’s current duties, as well as considering risks to the OBR’s independence; potential burden on resources; and constitutional issues - including the impartiality of civil servants - the review concluded not to expand the OBR’s remit at this time.
Supporting the conclusions of the review, the government accepts all recommendations in full and agrees that the OBR should be adequately resourced to carry out its remit over the Parliament.
The detail of this will be agreed as part of the Spending Review process in coming months.
Welcoming the appointment announcement, the Chancellor said:
I am delighted to nominate Robert Chote for re-appointment. In its successful first five years, Robert has admirably led the OBR with intelligence, independence and integrity.
Undoubtedly the best person for the job I hope that the Treasury Select Committee will approve Robert’s re-appointment so that he can continue to lead the OBR for many more successful years to come.
I am also grateful to Sir Dave Ramsden for leading this comprehensive review and welcome the Review’s assessment of the OBR’s impressive achievements to date.
The government’s creation of the OBR has meant that for the first time policy is now based on an unbiased view of future prospects.
It is a credit to the OBR’s leadership that in five years it has become an example of best practice that is praised not just in Britain but across the world.
Robert Chote, chairman of the OBR, said:
I am delighted to have been asked to continue as chairman of the OBR, should the Treasury Committee wish me to do so.
It has been an enormous privilege to succeed Sir Alan Budd and to lead the organisation through its first five years in operation.
In doing so I hope that we have been able to shed light on the darker recesses of the public finances, helping Parliament and civil society to hold the government to account for its management of fiscal policy.
Looking forward, I am very pleased that the government has put forward an ambitious set of recommendations to strengthen our current operations and to widen and deepen our scrutiny of the public finances.
I hope very much that the government will provide us with the resources that we would need to deliver on them.