UK’s economic watchdog to review Tories’ March budget preparations

The UK’s economic watchdog has announced a review into how the former government prepared its forecasting for the spring budget, as it raised concerns over the “transparency and credibility” of spending plans.

A letter published by the Office for Budget Responsibility (OBR) followed the Chancellor saying she had identified £22 billion of overspending this financial year.

Rachel Reeves told the House of Commons that she had uncovered a black hole in public finances left by the previous Conservative government.

This includes unfunded spending on the asylum system and transport which she said the OBR did not know about.

Richard Hughes, chairman of the OBR, confirmed that it was only made aware of the extent of pressures on departmental budgets after meeting with the Treasury last week.

“The Treasury document also sets out its plans for further managing down these pressures over the remainder of the financial year,” he said.

“If a significant fraction of these pressures is ultimately accommodated through higher DEL (department expenditure limits) spending in 2024-25, this would constitute one of the largest year-ahead overspends against DEL forecasts outside of the pandemic years.”

The OBR is set to examine the information about departmental spending that the Treasury provided to the public body prior to March’s budget statement.

The review is expected to be completed ahead of its next forecast for a Budget on October 30.

Mr Hughes said he was concerned about the “transparency and credibility” of existing forecasting and spending plans.