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Economics editor Faisal Islam reports on the unexpected resignation of Richard Hughes from his role at the Office for Budget Responsibility (OBR), which stemmed from a very specific incident but also signals ongoing challenges for the Chancellor in appointing his successor. The Chancellor now faces the critical task of selecting a respected economist who can maintain the OBR’s reputation for independence and credibility. This forthcoming appointment is being closely observed by financial markets, especially amid political pressures that may push for a departure from the traditional, autonomous nature of the office.
A significant point of contention leading up to Hughes’s departure was his refusal to attribute government credit for so-called “pro growth” policies. Hughes maintained a strict standard, stating he would only score policies that had a material economic effect – set at a threshold of 0.1% of national income – and none of the government’s recent measures met this criterion. This highlights the delicate balance the OBR must strike, since any indication of political interference could undermine market confidence and potentially drive up borrowing costs for the UK government.
Hughes was visibly distressed following an error involving the premature release of Budget information, which was ultimately attributed to a junior staff member. Despite this, he chose to resign honorably, though this incident was not his sole source of concern. Known for a staunch defense of the OBR’s independence from political influence across the spectrum, Hughes had weathered controversies including the fallout from the Liz Truss mini-budget as well as recent criticisms. The OBR had become a focal point of debate, with some accusing it of forming part of a “woke deep state” and others of being an austerity enforcer, reflecting the polarized opinions around its role.
Further tensions arose concerning the handling of Budget forecasts. The Chancellor announced changes curtailing the frequency of government responses to OBR forecasts, shifting from twice yearly to an annual engagement. Hughes explained that while two detailed five-year economic and fiscal forecasts would still be produced each year, the government’s response would now primarily occur once annually as a “health check” on the economy and public finances, with no reduction in transparency for the forecast documents. The exact implementation of this new approach remains significant—for instance, whether improved public finances reported in spring would tempt the Chancellor to increase spending before important local elections. Hughes also emphasized the OBR’s continuing authority and impartial role, underscoring that while they provide forecasts and cost government policies, it is ultimately the Chancellor who sets fiscal targets and controls spending decisions
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