Former chancellor Jeremy Hunt has accused the Office for Budget Responsibility (OBR) of shielding the Labour Party from scrutiny as it prepares to announce tax hikes.
In a letter to OBR chair Richard Hughes, Mr Hunt criticises the organisation for preparing to release a report timed with his successor Rachel Reeves’s first Budget, which addresses a £22bn financial gap attributed to Tory policies. The report is likely to be critical of the last government.
In the letter, Mr Hunt described the timing of the report alongside the Budget as suggesting “political intervention”.
“I do not believe publishing a review with criticisms of the main opposition party on the day of a Budget is consistent with political impartiality,” he said.
“Nor is doing so without asking for views on its contents from the people with whom political responsibility lay at the time.
“Proceeding in this way would cross a line which would be impossible to defend as anything other than a political intervention.”
Ms Reeves is expected to tackle what she is calling a “fiscal reckoning” by instituting tax increases, including a potential 2 per cent rise to employers’ national insurance (NI) contributions, as well as lowering income thresholds for contributions – a move projected to generate £20bn to stabilise public finances.
Labour maintains that its new taxes are necessary to manage what it describes as a financial “black hole” left by the Conservatives, driven by underreported liabilities like public sector pay increases, asylum costs, and military aid for Ukraine.
Ahead of the Budget, Sir Keir Starmer is expected to warn the public to prepare for the “harsh light of fiscal reality” in an upcoming address, citing Labour’s responsibility to tackle “unprecedented challenges” amid what he described as the previous government’s financial obfuscation.
While Mr Hunt previously defended the OBR as an independent and essential economic forecaster, he now believes its impartiality is under threat.
The OBR said in response: “The findings and recommendations solely concern the institutional relationship between the OBR and Treasury. It does not disclose advice provided to ministers nor comment on, or refer to, the conduct or decisions of ministers.
“In light of the above, and after taking advice from the Cabinet Office, we therefore do not consider it necessary, or appropriate, given the possible market sensitivity of some of the information contained therein, to provide ministers of the previous government with access to the contents of the report and its conclusions before publication.”
His critique comes as Lord Mervyn King, the former governor of the Bank of England, cautioned that working people are likely to feel the strain of upcoming tax hikes, despite Labour’s pledges to shield them from increases on income tax, VAT, and NI.
Among the expected Budget measures, Ms Reeves is set to prolong the freeze on income tax thresholds, which would push millions into higher tax brackets, a tactic often dubbed a “stealth tax”.
The chancellor is also eyeing changes to inheritance tax, specifically targeting exemptions for businesses and agricultural land.
Labour’s tax plans hinge on what it claims was an inheritance of deteriorating public finances, laying partial blame on Mr Hunt’s Treasury for hidden liabilities.
The OBR’s report will offer a closer look at departmental forecasts under the Tories and examine the assurances provided to the watchdog at the time.
In his upcoming address, Sir Keir is expected to say Labour faces an “unprecedented” combination of a weakened economy and public services “on their knees,” a far cry from the climate of previous handovers.
“But I won’t offer it as an excuse,” he’ll say, stressing the need for hard choices and fiscal transparency over “populist” solutions.
“It’s time we ran towards the tough decisions,” he’ll add, arguing that Labour’s plan will ultimately offer “stability, investment, and reform” for the working public.
