There’s been so much talk of black holes in recent months, it’s felt like we’re in an episode of The Sky at Night on repeat. Only these black holes are of the financial kind, yet still involve astronomical numbers.
The Office for Budget Responsibility could have done with a one heck of a powerful telescope, it seems, to have seen into the Treasury to gather the key information it needed ahead of the March Budget.
Only, it wasn’t the OBR’s job to go looking for data on departmental spending, it should have been the other way round. That matters as the OBR relies on full disclosure from civil servants when doing its number crunchers, the outcome of which has huge implications.
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A breakdown of trust between the OBR and the Treasury risks undermining investors’ confidence in its official forecasts. That said, the head of the OBR, Richard Hughes, was keen to stress its normally strong dealings with the Treasury, though it does raise the question about whether the failure to disclose £9.5billion of departmental spending was a mistake, or something else.
Whether it be the £9.5billion, or the £22billion that Labour claims it grew to, the shortfall in the coffers lays bare the challenge facing Chancellor Rachel Reeves.
The OBR, giving evidence to MPs, made clear that about half the £40billion a year in tax rises can’t be guaranteed. But it also raised hope that its forecasts for lacklustre economic growth in the latter part of the decade could be upgraded if supply side reforms, including planning, bear fruit.