What lies ahead for Robert Chote’s successor under a new chancellor?by Paul Wallace / February 19, 2020 / Leave a comment
Robert Chote and the Office for Budget Responsibility have been virtually synonymous in its decade-long life. But before long the OBR’s chairman will be moving on—his second five-year term ends this October—and the Treasury is looking for someone to replace him. That decision will now be taken by Rishi Sunak rather than Sajid Javid, following Boris Johnson’s ruthless power grab over the Treasury. So what lies ahead for the fiscal monitor under its new chair and a chancellor who has been appointed in so controversial a fashion?
Would-be candidates have until 20th February to apply for the role. According to the Treasury’s job advert, they must have “deep expertise in economic and fiscal analysis” and be “independently minded.” They must “command broad respect for their objectivity in dealing with issues of political sensitivity” while also possessing “outstanding communications skills.”
Assuming such a Chote-like surrogate exists (it would be even better if that person is as level-headed and approachable as Chote), he or she will inherit an outfit that has already made its mark. George Osborne’s creation of the OBR (temporarily headed by veteran economist Alan Budd) in May 2010 was in some respects the fiscal equivalent of Gordon Brown’s decision 13 years earlier to make the Bank of England free to set interest rates. Both institutions are independent, though in a crucial distinction the OBR does not have the power over fiscal policy that the Bank has over monetary policy.
The formation of the OBR was part of a wave of budgetary watchdogs established in the wake of the global financial crisis of 2007-08, as public deficits and debt swelled. Until then there had been only a handful, the oldest of which was a Dutch body set up in 1945. But now there are around 40 worldwide, predominantly in Europe where fiscal councils multiplied in response to the financial and ensuing euro crisis. As they spread, the Organisation for Economic Cooperation and Development (OECD), a club of mainly advanced economies, set up a coordinating network, which Chote has chaired since 2018.
What makes the OBR distinctive as a fiscal monitor, he said when I interviewed him on 10th February (before Thursday’s dramatic cabinet reshuffle), is that it alone provides the official economic and fiscal forecasts that underpin budget-making. A quarter of…