The head of the UK’s Budget watchdog has been forced out of his position after he contradicted the Chancellor’s claims over the state of the country’s finances, The i Paper can reveal.
Richard Hughes, chairman of the Office for Budget Responsibility (OBR), announced on Monday he was stepping down from his position due to a data breach that published the full contents of the watchdog’s economic outlook a full hour before Rachel Reeves stood up to deliver her Budget.
While this was a significant and embarrassing breach The i Paper understands that Hughes’s position was initially thought “survivable”. But relations between the Treasury and OBR had sunk to an all time low after Hughes took the unusual step of publishing a timeline of its economic forecasts last week, casting doubt on whether Reeves was being straight with the public over the state of the country’s finances.
“The discussions over the weekend were more about that row than over the data breach,” an insider said. “Had all other things been equal Richard could have survived with an apology and a resolution to change some systems. What would’ve been survivable in peacetime was no longer survivable.”
The i Paper also understands that there was a “robust” discussion between the Treasury and the OBR about the timing of the publication of the findings of the watchdog’s investigation into last week’s data leak.
According to insiders, the Treasury had wanted 24 hours advance sight of the investigation but in the end were afforded just two. The Chancellor and her team were given the report at 10.30 on Monday morning.
‘Worst failure in OBR history’
In its findings, the OBR report described the leak as “the worst failure in the 15-year history of the OBR” and strongly criticised the watchdog’s processes for protecting sensitive information.
In a letter to the Chancellor and the chairwoman of the Commons Treasury Committee, Mr Hughes said he took “full responsibility” for “the shortcomings identified in the report”.
While senior government sources insisted Hughes took the decision to resign himself, pressure from Downing Street had dramatically ramped up on the OBR’s leadership over the leak.
The Prime Minister gave his backing to the OBR during a speech in central London on Monday morning, but he pointedly stopped short in doing so for Hughes, as he branded the leak a “serious error”.
Sir Keir Starmer said: “I’m not going to suggest that what happened last week, which was the entire Budget being published before the Chancellor got to her feet, was not anything other than a serious error.
“This was market sensitive information. It was a massive discourtesy to Parliament,” he added.
Later in the day Treasury Minister James Murray refused to say whether Reeves had full confidence in Hughes when facing questions from MPs in the Commons chamber just moments before news of the resignation broke.
Row over whether Reeves misled the public
It comes as the watchdog had become drawn into the centre of a bitter row engulfing the Chancellor as to whether she had misled the public over the state of the country’s finances in the lead up to the Budget.
It followed the OBR’s unusual decision to publish the full timeline of economic forecasts that it delivered to the Treasury, which appeared to question whether Reeves was being straight with the public over the state of the country’s finances.
Reports had also emerged of Cabinet ministers accusing her of misleading the Cabinet.
OBR chief Richard Hughes is seen leaving BBC after appearing on Today show. Photo: Tayfun SalciThe Prime Minister was forced to deny that Reeves had lied to the public by overstating the scale of the fiscal challenge in the run-up to the Budget, in which she announced £26 billion worth of tax rises.
In the run up to the Budget the Chancellor had suggested the nation’s finances were so parlous tax rises were necessary.
But it has since merged the OBR had forecast a £4.2 billion surplus against her borrowing rules. Reeves has argued these did not take into account the welfare reform U-turn or the abolition of the two-child benefit cap.
Starmer insisted: “There was no misleading, and I simply don’t accept, and I was receiving the numbers, that being told that the OBR productivity review means you’ve got £16 billion less than you would otherwise have had shows that you’ve got an easy starting point.
“Yes, of course, all the other figures have to be taken into account.But we started the process with significantly less than we would otherwise have had.”
Human shield
Conservative leader Kemi Badenoch accused the Chancellor of “trying to use the Chair of the OBR as her human shield” to distract from the accusations of lying to the public.
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The ongoing spat has led to jitters within the Labour Party ranks, with one MP raising concerns that the Chancellor could look “vindictive” over Hughes’s departure.
“Of course Rachel couldn’t look like she’d pushed him as the two stories have got tangled up together,” the MP said in reference to both the OBR leak and the accusations of misleading the public. “She’d have looked vindictive that he contradicted her over the budget black hole timeline.”
Another Labour MP voiced fears that the accusations of deceiving the public to allow the Chancellor to raise taxes is “going to be on every opposition leaflet for three and a half years”.
OBR officials are also said to be irritated their independent organisation- with a budget of £6.4 million and run ‘by a handful of economists’ is expected to have the same systems in place as the gov.uk domain name protected by a trillion-pound organisation.
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