Labour vows to strengthen fiscal watchdog ‘to bring stability back to Britain’s economy’

Keir Starmer and Rachel Reeves will today [Friday 22 September] vow to strengthen the Office for Budget Responsibility as part of Labour’s plan to “bring growth and stability back to Britain’s economy.”

The Labour leader and Shadow Chancellor will pledge legislation guaranteeing that that any future government making significant tax and spending changes will be subject to an independent forecast of its impact by the Office for Budget Responsibility.

The intervention comes ahead of the anniversary of the Conservatives’ mini-budget that crashed the British economy and left working people worse off, with households coming off fixed rate mortgages paying an average of £220 more a month and inflation forecast to be the highest in the G7.

Last year, Liz Truss and Kwasi Kwarteng blocked the Office for Budget Responsibility from auditing their fiscal decisions, which fuelled market turmoil and triggered an economic crisis that families and businesses are stilling paying the price for. It was reported this week that Boris Johnson had also sought to ignore the watchdog’s fiscal forecasts before his first budget.

Under Labour’s proposals legislation would be introduced to strengthen the UK’s economy to help protect national and family incomes. This would include:

• Amending the legal framework governing the OBR to guarantee that where a fiscal event makes permanent tax and spending changes over a certain threshold, the fiscal watchdog can independently publish a forecast of the impact.

• Setting out in a revised charter of budget responsibility the threshold and any associated changes to the working relationship between the Treasury and the OBR that would be voted on in Parliament. 

• Ensuring that in the event of an emergency where changes must be introduced at speed and a forecast cannot be produced in time, the OBR would be allowed to set a date for when it can publish its forecast.

• For the first time, setting out a fixed timetable for budgets that would say major fiscal decisions announced by the end of November each year, allowing businesses and families four months to prepare for the new tax year and avoiding major changes to policy at the last minute. Annual Autumn Budgets would be followed by a Spring update in early March providing an updated forecast and minor policy changes.

The changes would bring about “a new fiscal lock” to strengthen the UK’s financial stability and guarantee that “never again can a Prime Minister or their Chancellor repeat the disastrous mistakes of the Conservatives’ mini-budget.”

The proposals would sit alongside Labour’s fiscal rules that were agreed by the party’s National Policy Forum in July. 

Speaking ahead of a visit with the Labour leader Keir Starmer to the London Stock Exchange on Friday, Labour’s Shadow Chancellor, Rachel Reeves, said:

“The economic damage done by the Conservatives’ mini-budget was nothing short of disastrous and Britain is still paying the price, with higher mortgages, higher energy bills and higher prices in the shops. 

“As Chancellor, my mission will be to bring stability back to our economy because that is the only way we can bring growth back. Never again can a Prime Minister or Chancellor be allowed to repeat the disastrous mistakes of last year’s mini-budget.

“Labour will introduce a new fiscal lock to strengthen the UK’s financial stability to prevent the turmoil we witnessed this time last year. Labour will ensure stability returns to our economy and on that rock of stability working people will be better off.”