Britain's Office for Budget Responsibility (OBR) has shifted from an approach of trust toward the finance ministry to a "trust but verify" stance after receiving inaccurate spending forecasts prior
to March's budget statement under the previous Conservative government.
Last week, the OBR reported that the Treasury had withheld information on significant day-to-day spending pressures and unusually high emergency reserve expenditures.
OBR Chair Richard Hughes told the House of Commons' Treasury Committee on Tuesday, "We are moving from a system of trust to a system of 'trust but verify.' We want to ensure that the oversight failures seen in March are not repeated."
New Labour finance minister Rachel Reeves stated that the previous government had left a £22 billion ($29 billion) deficit, forcing her to consider larger tax increases than anticipated before July's election. In response, Conservatives argue that much of this shortfall stems from Labour’s decisions on public-sector pay or temporary spending that is typically balanced within a standard financial year.
However, the OBR noted that if the finance ministry had been more transparent ahead of the March budget—consistent with past practices—it would have projected significantly higher spending for the current fiscal year.
"There were about £9.5 billion in net pressures on departmental budgets that were not disclosed to us during our budget preparation process, which by law they should have," Hughes said.
Going forward, the OBR plans to request a more detailed breakdown of the Treasury’s spending forecasts. Hughes also suggested lawmakers ask the finance ministry at an upcoming hearing why this information was withheld, noting a potential misunderstanding of legal obligations.
A Treasury spokesperson stated that, at the time of the spring budget, the ministry had informed the OBR of its plan to handle spending pressures by making offsetting savings, which they claimed was lawful. They added that all OBR recommendations from the March 2024 review were accepted.
The OBR clarified that its review focused on the actions of officials rather than ministers, so former finance minister Jeremy Hunt, who oversaw the March budget, was not consulted.