Thinktanks Demand OBR Reform Ahead of Chancellor's Spring Forecast
Chancellor Rachel Reeves is facing mounting pressure to reform the Office for Budget Responsibility (OBR) as a coalition of influential thinktanks argues that the watchdog's current framework is stifling long-term public investment. This call comes just ahead of Reeves' highly anticipated spring forecast, scheduled for Tuesday, where she is expected to highlight signs of a nascent economic recovery under Labour's stewardship.
A Coalition for Change
The alliance, which spans the political spectrum, includes the Labour-aligned group Progress, typically seen on the party's right, alongside leftwing thinktanks such as the New Economics Foundation (NEF) and Common Wealth, as well as the feminist Women's Budget Group. They have collectively issued a stark warning, stating that the existing fiscal oversight system is contributing to instability, promoting short-termist underinvestment, and neglecting long-term risks and opportunities.
Louisa Dollimore, Director of Strategy at the Good Growth Foundation, which convened the group, delivered a pointed critique: "The OBR is a backseat driver with out-of-date maps: it obstructs long-term planning and investment at a moment when Britain needs both." This sentiment was echoed by Hannah Peaker, Deputy Chief Executive of the NEF, who emphasized that while independent scrutiny is crucial, the current setup leads to "kneejerk policy changes of huge consequence" based on minor fluctuations in uncertain forecasts.
Context of Political Pressure
This push for reform arrives at a politically sensitive juncture. Keir Starmer's government is under intense scrutiny following Labour's unexpected defeat by the Greens in the recent Gorton and Denton byelection. The thinktanks are urging Reeves to review the OBR's remit as part of a broader strategy to bolster public confidence and enable more ambitious fiscal policies.
Reeves has already initiated some changes, including requesting that the OBR—established in 2010 by then-Chancellor George Osborne—deliver its verdict on fiscal rules only once annually at the autumn budget, rather than more frequently. However, the coalition insists she must go further to unlock greater investment in critical areas like healthcare, housing, and transport infrastructure.
Debate Over Fiscal Caution and Investment
Adam Langleben, Executive Director of Progress, articulated the core argument: "The OBR was created for an era defined by austerity, and while it can clearly count the upfront cost of investment, it too often misses the long-term value, whether that's a healthier workforce, better housing or modern transport." He added that the watchdog's judgments should guide decisions rather than stifle ambition, warning that the real risk lies in maintaining the status quo.
Despite Reeves' efforts to adjust fiscal rules to permit more borrowing for investment and her significant tax increases to fund public services, some Labour MPs remain concerned that the party has been overly cautious on tax and spend. This internal tension highlights the balancing act Reeves faces between fiscal responsibility and the demand for transformative public investment.
Counterarguments and Broader Economic Concerns
Not all voices align with the thinktanks' critique. Former OBR directors Richard Hughes and Robert Chote recently testified before the Treasury select committee, cautioning that successive governments have historically overspent. Hughes, who resigned last year after an accidental early release of budget forecasts, noted that governments often face negative surprises, leading to a persistent upward drift in deficits and debt if not properly accounted for.
This debate is part of a wider conversation about economic governance. Last week, the Institute for Fiscal Studies also called for an overhaul of fiscal rules, underscoring a growing consensus that the current system may need refinement to better support sustainable growth and resilience.
As Rachel Reeves prepares to deliver her spring forecast, the spotlight is firmly on how she will navigate these competing pressures. Will she heed the call for OBR reform to pave the way for more robust public investment, or will she prioritize stability in a volatile economic landscape? The outcome could significantly shape Britain's fiscal trajectory in the coming years.
