The Office for Budget Responsibility (OBR) provides independent analysis of the UK’s public finances. The chancellor must request that the OBR produce forecasts at least twice a year. These often coincide with the spring budget and autumn statement.
The Budget Responsibility Bill has one substantive clause. It would amend the Budget Responsibility and National Audit Act 2011 so that a minister must ask the OBR to produce a report when making a fiscally significant announcement. If they do not, the OBR can decide to produce a report anyway. This is known as the ‘fiscal lock’. It would not apply to spending that is both temporary and in response to an emergency, like the Covid-19 furlough scheme.
Following the bill’s announcement in the King’s Speech, the initial Cabinet Office briefing notes stated that the bill’s purpose was “to capture and prevent those announcements that could resemble the disastrous Liz Truss ‘mini-budget’”. The briefing was republished with references to Ms Truss removed.
In September 2022, under the Truss government, then Chancellor Kwasi Kwarteng presented a growth plan, widely referred to in the media as the ‘mini-budget’. The statement included plans that would have resulted in a projected £45bn reduction in tax income. Mr Kwarteng had not requested an accompanying independent assessment from the OBR. He said that a medium-term fiscal plan was forthcoming, and the OBR would publish a forecast to include both sets of announcements before the end of the year. The absence of public OBR analysis is considered to be a factor in the negative reaction of the financial markets that followed.
After Mr Kwarteng’s statement, market volatility led to an increase in government borrowing costs and a devaluation of sterling against the US dollar and other international currencies.
The bill passed through the House of Commons unamended.
