New Office of Budget Responsibility chairman must be independent
The Office of Budget Responsibility was established as an independent assessor of the economy but the independence of Sir Alan Budd is debatable, so his unexpected departure is an opportunity to find a chairman whose impartiality is beyond question.
Budd became the OBR’s chairman after it was established by George Osborne following the May election. There was no talk then of quitting after three months: indeed, the chancellor talked of reappointing him after two years. But in his short time in office, Budd has produced reports on the state of the economy the Tories inherited and the effect of the budget. Had he stayed he would have commented on the autumn spending review too.
The OBR’s independence has been questioned. Not only because Budd’s team works inside the Treasury building and works on the Treasury’s own models, but for supplying information to the prime minister to use at question time.
However, Budd’s own independence is not beyond debate. The economist has a fine track record, working at the Treasury during the 1970s’ Tory government and returning as chief economist from 1991 until the Labour election victory in 1997, when he became a founding member of the Bank of England’s independent Monetary Policy Committee setting interest rates.
But he was named as the proposed chairman of Osborne’s planned OBR in 2008, a position clarified when the Conservatives set out further details of this body last December. Budd had thus allied himself to an Opposition political party long before the general election. There is no suggestion that his pre- or post-budget reports are biased but it would have been better if an OBR chairman had been named after the election rather than selected as a supporter before.
Osborne now has that chance to appoint a chairman who is not associated with him, his policies or his party.
But with the OBR’s other two members also on three-month contracts, the chancellor has several positions to fill and needs to fill them carefully. There is a danger that the OBR becomes the Tories’ equivalent of UKFI, the body Labour created to hold shares in the nationalised banks. UKFI’s initial chairman lasted just two months and there has been a revolving door of top positions, including the chief executive. If the OBR is to have any value it needs not only independence but continuity too.
