Fiscal Watchdog Chair Says Treasury Waded Into Legal Obligations Over £9.5bn Overspend

UK Treasury breached legal obligations when it did not disclose a £9.5bn overspend before the March Budget, that affected the Office for Budget Responsibility’s forecasts.

According to Richard Hughes, chairman of the Office for Budget Responsibility (OBR), the UK Treasury has been accused of failing to perform its legal duties by hiding the possible overrun of £9.5bn by government departments ahead of the March Budget.

Hughes appeared before the House of Commons Treasury Select Committee on Tuesday, revealing that the Treasury failed to disclose the financial pressures on Whitehall departments, violating the 2011 Act of Parliament and Charter for Budget Responsibility. This lack of transparency led to incomplete budget forecasts by the OBR, as they were unaware of the full extent of the pressures faced by departments.

The legal framework requires all government actions impacting finances to be reported to the OBR. Gaps between actual and predicted expenditure were not reported, leading to a shift in the OBR's relationship with the Treasury. The focus now is on concrete systems and processes rather than trust.

Even with the violation, however, the Treasury managed to stay on offense by claiming that its plans to curb spending were clear and were in its plans, through savings that would be achieved elsewhere. A spokesperson maintained that this was permissible under the law. The department added that it would comply with the all the recommendations of the OBR going forward so as to avoid similar occurrences.

Consequently, this begs the question as to what safeguards exist in law to promote good value for money when spending public money, especially with the current erosion of the fiscal fire power in the UK.