In a bold move to cement her economic credibility, Shadow Chancellor Rachel Reeves has announced plans to grant the Office for Budget Responsibility (OBR) unprecedented veto power over significant government tax and spending decisions.
The proposed reforms would mark a dramatic shift in UK economic governance, requiring the independent fiscal watchdog's approval before any major budgetary announcements could proceed. This commitment comes as a direct response to the market turmoil that followed Liz Truss's infamous 2022 mini-budget, which was unveiled without OBR scrutiny.
Learning from Past Mistakes
Reeves emphasised that her approach would prevent any future chancellor from repeating what she described as the "disastrous economic experiment" of the Truss era. "I'm determined to ensure that no future government can attempt such reckless policies without proper independent oversight," she stated.
The shadow chancellor's announcement positions economic stability and fiscal responsibility as central pillars of Labour's offering to voters. By embracing the OBR's role as an independent guardian of fiscal discipline, Reeves aims to draw a clear distinction between her approach and the Conservative Party's recent economic management.
Restoring Market Confidence
Financial markets reacted positively to the proposal, with analysts suggesting that enhanced OBR powers could provide greater certainty about UK fiscal policy. The 2022 mini-budget crisis, which saw borrowing costs soar and the pound plummet, demonstrated the critical importance of independent economic validation.
Reeves's plan would effectively create a constitutional safeguard against unfunded tax cuts and spending promises, requiring governments to submit their plans to the OBR for comprehensive assessment before implementation.
A New Era of Economic Transparency
The proposed reforms represent the most significant enhancement of the OBR's powers since its establishment in 2010. Under the current system, the watchdog provides forecasts but lacks any formal power to prevent governments from proceeding with fiscally questionable policies.
This commitment forms part of Labour's broader strategy to position itself as the party of economic competence and fiscal responsibility. With the next general election approaching, Reeves is making clear that economic stability will be non-negotiable under any Labour government she leads.
