Alarm mounts as Chancellor delays hunt for brand spanking new OBR chief

The future of the Office for Budget Responsibility is in fresh doubt after it emerged that the watchdog responsible for checking if the Chancellor’s sums add up could remain without a leader for the rest of this year.

Fears that Rachel Reeves wants to weaken the OBR are growing after one of her ministers revealed that the search to find a replacement for Richard Hughes hadn’t even begun.

Hughes quit as OBR chairman in December over an accidental leak of Budget details that infuriated Reeves, though Labour itself was widely accused of ‘trailing’ several policies to test public opinion. The Government promised to start looking for his successor ‘within weeks’.

But Chief Treasury Secretary James Murray said last week that ‘external recruitment has not been launched yet’ and would ‘take place in the months ahead’.

It means the OBR will be without a chairman when the independent forecaster delivers its latest verdict on the public finances on March 4.

Lower tax receipts from sluggish growth, rising unemployment and falling inflation threaten to blow a hole in the Chancellor’s numbers after she left herself with a historically small buffer of just £21.7 billion to balance the books.

The OBR is itself under fire for effectively having a veto over the Government’s flip-flopping tax-and-spend policies that critics say is hampering growth.

Reeves has already moved to reduce the watchdog’s influence, despite giving it more power over the nation’s finances when Labour took office in 2024.

The OBR will now only assess performance against the Chancellor’s ‘non-negotiable’ fiscal rules once a year – at the autumn Budget – though it will still produce two sets of economic forecasts, including next month’s.

The watchdog’s wider role is now also under review – potentially prolonging the power vacuum at the top of the body.

Asked if the OBR’s remit would be reviewed in advance of a new chairman being appointed, Murray told peers on the House of Lords Economic Affairs Committee: ‘It wouldn’t be right for me to speculate on Government policy over the legislative remit of independent bodies.’

But any move that is seen to sideline the official forecaster risks spooking the markets by reviving memories of the Liz Truss mini-Budget crisis of 2022 when her package of unfunded tax cuts was announced without the OBR’s blessing.

An MP on the Treasury Select Committee, which vets any appointment and is also reviewing the OBR’s mandate, told The Mail on Sunday that it was ‘surprising’ the process of finding a new OBR chair had yet to start.

‘If it drags on much longer it would make us concerned there would not be someone in place by the next major fiscal event in the autumn which would be key,’ the MP said. ‘They should get going, because these appointments do take time.’

A ‘nuclear option’ would be to scrap the watchdog altogether.

‘The Government could simply junk the OBR and bring all forecasting and analysis back within the Treasury,’ said independent economist Julian Jessop, as New Zealand does.

‘The Chancellor would still be subject to the discipline of the markets and ballot box, and the independent scrutiny of think-tanks, international organisations, parliamentary committees, and the media.

‘As it stands, the OBR is in danger of becoming the economic equivalent of football’s VAR (video assisted referee) – overly fussy and constantly second-guessing the decisions of those who are supposed to be in charge.’

Following his resignation, Hughes told MPs that Reeves’ rolling fiscal rules, which allow the Government to keep postponing its target year for balancing the books, only made sense if the Chancellor wasn’t borrowing so much money.

He also warned that Britain was ‘increasingly vulnerable’ to future shocks unless more headroom was built into the public finances.

The OBR was contacted for comment. A Treasury spokesman said: ‘We will update in due course when the recruitment process for a new chair has commenced.

‘The Government is committed to the independence of the OBR and the integrity of our fiscal framework which is why the very first bill introduced the fiscal lock to ensure the OBR can never be sidelined.’