‘A worrying decision’: Truss planning to hold budget without official forecast if she becomes PM

Liz Truss is preparing to hold a budget next month without an official economic forecast – despite one being ready should she ask for it.

Having an emergency budget in September – in which she will make long-term funding pledges – has been a key part of the frontrunner’s campaign to get into Number 10.

The move has been branded “worrying” by an economist and expert in government finance.

The Office for Budget Responsibility (OBR) provides forecasts for all budgets as part of the founding law of the body, enacted in 2010.

Despite being funded by the Treasury, it is fully independent.

And while the OBR is ready to provide an analysis for Ms Truss if she asks for it, the former Treasury minister – who counts the chancellor and chief secretary to the Treasury among her supporters – wants to go ahead without it.

A Truss spokesperson said: “The cost of living crisis means immediate action is required. A Truss government would seek to act as soon as possible to help people across the UK, by cutting taxes and introducing a temporary moratorium on energy levies.”

A source in the Truss campaign told Sky News that a forecast wasn’t necessary for a “targeted fiscal event”.

However, any plan involving long-term measures like the tax cuts Ms Truss promised would be larger than such an event.

Ms Truss has come under criticism for a perceived lack of clarity over her money promises.

She wants to spend £30m on cutting taxes – like reversing the National Insurance rise and cancelling the uplift in corporation tax – using money that economists no longer think exists due to inflation. Her opponent in the Tory leadership race, Rishi Sunak, has repeatedly criticised her for the lack of clarity in her proposals.

Ms Truss has also hinted she may spend more money by providing further help to people this winter, despite previously saying she would not.

Not consulting the OBR for short-term financial measures, like giving help to people over the winter, is not unreasonable, according to Thomas Pope, the deputy chief economist at the Institute for Government.

However, enacting tax cuts without a forecast – especially when one is ready – is a “worrying decision”, he said.

“If the OBR is ready to provide a forecast in September, I struggle to see the case for not requesting one,” Mr Pope said.

“It would be reasonable to make some short-term announcements to alleviate the energy bills crisis without an OBR report because the immediate support package is not so dependent on the long-term outlook.

“But there should be no rush to announce any permanent tax cuts, and any such decisions should be accompanied by the best possible information, which the OBR would provide.”

Read more:
Inflation fuels 63% hike in UK debt costs as borrowing outstrips forecasts
Liz Truss set to win Tory leadership race by decisive margin
Truss hits back at ‘portents of doom’ after Dominic Raab says her tax plans would be ‘electoral suicide’

He added: “Deliberately choosing to announce permanent measures without an OBR report would be a worrying decision.

“The OBR has been a great success since it was set up in 2010, providing unbiased forecasts that mean successive chancellors have had to reckon with fiscal reality when making announcements.

“Any move away from that scrutiny of government tax and spend policy would be a backwards step.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, has estimated that if Ms Truss wins, Britain’s budget deficit is likely to hit about £170bn in the current financial year, about three times its size before the pandemic.