Letter from the Economic Secretary to
the Chairman of the Committee
OFFICE FOR
BUDGET RESPONSIBILITY
I would like to thank you and the Treasury Select
Committee for the constructive role that you have played in the
creation of the Office for Budget Responsibility (OBR). Your report
provided a very useful contribution to the final design of the
OBR and the Government was pleased to be in a position to agree
with the majority of the report's recommendations.
At Third Reading of the Budget Responsibility and
National Audit Bill debate you raised concerns over the process
for reviewing the OBR's work and the underpinning model.
Specifically, you were concerned about the arrangements
for reviewing the OBR and its work, and the role that your committee
might play. As you will be aware, the Act requires the non-executive
directors to commission, at least every five years, an independent
review of the OBR's analytical and forecasting reports. The reports
will be laid in Parliament, with a copy sent to the Treasury.
I believe there is considerable scope for Parliament to ensure
accountability for the review and I would expect the nonexecutives
to take account of the views of key stakeholders, such as your
committee, in commissioning such reports.
Moreover, by requiring the reports to be published
we intend to ensure scrutiny and engagement in this process. Your
committee will, of course, be able to the call nonexecutive directors
or external peer reviewers to give evidence to the committee in
relation to their work.
While the expert review will consider the work of
the OBR, there will also be a process for reviewing the OBR as
a public body, in line with Cabinet Office guidance which requires
a regular review of non-departmental public bodies.
You also raised the matter of the OBR retaining the
ability to assess the fiscal plans of major political parties,
in the run up to an election. I recognise your argument that this
independent scrutiny would be valuable. However, I remain concerned
that such analysis in the UK context would draw the OBR into political
debate, potentially undermining its independence and credibility.
I therefore fully support the provisions in the Act, which require
the OBR to consider the impact of Government policy on the sustainability
of the public finances, but not alternative policies.
Finally, I would like to thank you and your Treasury
Committee colleagues for your ongoing support and constructive
challenge of the OBR and its performance. I warmly welcome this
and see it as being central to us ensuring that we have a high
performing and effective OBR today and in the future.
26 March 2011
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