The OBR was built for austerity Britain – not a country that needs to grow
4 min read
Britain’s economic system is broken.
It doesn’t work for the small business owners, high-street traders and hardworking households who are putting in the graft to keep the country running. But it works perfectly well for those who have learned how to game it. This means growth has become something talked about on spreadsheets, not as something people can actually feel. Until that changes, every budget will just shuffle the same problems around rather than fixing them.
The Office for Budget Responsibility (OBR) was created to enforce austerity. But in its attempt to restore credibility, it has pushed us further down the spending-cut rabbit hole without an end in sight. A body designed to police cuts is now being asked to referee a strategy for growth, and it simply isn’t built for the task.
No one should be shocked that an institution hardwired to view spending as a problem can’t recognise the economic value of investing in people, skills and reducing inequality. But that blind spot now matters more than ever, because those are the very things that will get Britain out of this doom loop of low growth, low confidence and low living standards. Not least due to the upcoming downgrade in productivity, a blow that will ripple through every element of the economy. The Good Growth Foundation recently made the case for the OBR to score skills investment properly, recognising life-long learning for what it is – a driver of long-term growth that people can genuinely see and feel.
Ever since the Liz Truss mini-budget, criticising the OBR has been seen as foolhardy and perhaps even obscene. “Truss questioned the OBR, and look what happened,” is often the response. But Trussonomics was not a disaster because she questioned the OBR. It was a disaster because she ignored it entirely. Reforming the watchdog and binning the rulebook are not the same thing. One is shockingly reckless. The other is long overdue.
Inside Westminster, Labour MPs know it. They might not say it in broadcast interviews, but the frustration is real. The OBR’s narrow modelling is the hand that guides government spending, and right now it is in a death grip. So many policies that would boost productivity, raise incomes and get people off the sidelines and back into work, are simply not scored due to its tight framework. And this permeates every fiscal conversation in government, creating inertia, promoting short-termism and warping how investment is perceived.
Given this context, and with the fiscal situation tightening, there is no doubt that substantial tax rises are coming. The question then becomes, what will they be used for? The public will not tolerate being separated from their hard-earned cash to simply plug an infinite black hole. Tax rises must clearly translate to improving public services, advancing skills and training and backing our businesses if they are to be begrudgingly shouldered by the public.
Because the budget must reward the grafters: those who are ambitious for growth, bringing people back into the workforce, breathing life into high streets and scaling up their operations. If we don’t support them we might as well shut up shop because it will be clear Britain isn’t open for businesses.
There is some cause for optimism. The OBR has already shown signs of tentative progress, scoring the government’s changes to planning policy last year. But this approach needs to be expanded further, across housing but also other areas like devolution. A modern economy needs a modern scorecard, one that counts skills, participation and regional strengths as core drivers of growth, not nice-to-haves.
Updating the OBR isn’t an attack on fiscal discipline, it’s an acknowledgement that 2010-era tools no longer work (or never did in the first place). If the government wants a decade of national renewal, it needs an independent watchdog that can actually measure it correctly. The grafters are still doing their bit. It’s the economic institutions that now need to catch up.
Praful Nargund is director of the Good Growth Foundation
