Sunday, December 4, 2022

Labour woos Tory rebels in push to speed up publication of OBR forecasts

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Labour is seeking support from rebel Tory MPs to force Liz Truss’s government to speed up the release of the independent fiscal watchdog’s assessment of the impact of the recent “mini” Budget.

Britain’s main opposition party is hoping to use an arcane parliamentary device known as a “humble address” — typically used to compel the government to produce certain documents — to accelerate the latest projections from the Office for Budget Responsibility.

Last week chancellor Kwasi Kwarteng refused an offer from the OBR to produce forecasts to accompany his £45bn tax-cutting “mini” Budget, a move that was widely cited as a factor in the subsequent crisis in financial markets as government bonds sold off sharply and sterling became extremely volatile.

The Bank of England has since launched a £65bn emergency intervention to buy government bonds, which aims to prevent a crisis in the pensions sector, but it ends on October 14.

Kwarteng said he would announce his medium-term fiscal plan on November 23 alongside new OBR forecasts, even though he will receive a first iteration of the new projections on October 7.

Labour figures told the Financial Times that the party was in talks with other opposition parties and dissident Tory MPs about using parliamentary procedure to force the release of the updated OBR forecasts before November 23.

Labour hopes to carry out the manoeuvre as fast as possible when the House of Commons reopens after the coming week’s Tory party conference in what would be its first parliamentary move against the new administration.

Labour leader Sir Keir Starmer is waiting for the government to schedule an “opposition day debate” — an opportunity for Labour to hold a debate of its own choosing in the Commons.

Labour will use the “humble address” to seek the publication of whatever OBR documents are ready and available to be released for public consumption, as long as this would not jeopardise the body’s independence, according to people with knowledge of the plans.

The most notable use of a humble address in modern British politics was in 2019 when former Tory attorney-general Dominic Grieve used the device to force the government to publish documents relating to a no-deal Brexit. It passed by 311 votes to 302.

Although the Truss government has a majority of 80, Labour is hoping that sufficient Conservative MPs would vote for the early release of the OBR guidance to allay the financial markets.

Mel Stride, chair of the House of Commons Treasury committee, called the sidelining of the OBR “a great mistake”. Colin Ellis, chief credit officer for Europe at Moody’s, the credit rating agency, said: “Credibility is easy to lose and can be hard to rebuild. The role and strength of independent institutions is one of the key factors we consider in assessing sovereign ratings.”

Separately, Labour is also talking to some Tory MPs about seeking rebel votes against the tax cuts — in particular the abolition of the 45 pence upper rate of income tax. But there is a tradition of backbench MPs of a governing party rarely, if ever, voting against financial measures, an act seen as a vote of no confidence in their own administration.

Kwarteng and Truss met officials from the OBR on Friday in an attempt to reassure markets that they are serious about reducing debt and open to outside scrutiny.

OBR chair Richard Hughes confirmed in a letter to the Scottish National party that the OBR sent a “draft economic and fiscal forecast” to Kwarteng on September 6 on his first day in office.

“We offered, at the time, to update that forecast to take account of subsequent data and to reflect the economic and fiscal impact of any policies the government announced in time for it to be published alongside the ‘fiscal event’,” he wrote.

Instead, he confirmed, the OBR was not asked to produce an updated forecast — despite its belief that it would have been able to do so to a legally satisfactory standard.



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