Truss under fire for keeping watchdog verdict on mini-budget a secret

Watchdog verdict on mini-budget next week after crisis meeting
Watchdog verdict on mini-budget next week after crisis meeting

LIZ Truss is under fire for refusing to publish the Office of Budget Responsibility's verdict on Kawsi Kwarteng’s disastrous mini-budget for almost two months, amid fears of continued market turmoil.

The Prime Minister and her Chancellor held an emergency meeting the independent forecaster in Downing Street this morning.

The OBR confirmed it would give an initial budget response to the Chancellor on October 7, however the Treasury is refusing to publish it.

It said it would wait until the OBR produced a fuller forecast of tax, spending and the public finances for the fiscal statement on November 23.

The delay could mean continued turmoil in the financial markets, which were spooked by the lack of detailed OBR forecasts when Mr Kwarteng set out his mini-budget a week ago.

UK Liberal Democrat leader Sir Ed Davey said Ms Truss and her Chancellor were "allowing the economy to fly blind for two months".

SNP Westminster leader Ian Blackford said the wait was unacceptable and calledfor Mr Kwarteng to quit or be sacked.

The OBR stressed its work would “as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies”.

The Government said it continued to "value its scrutiny".

The OBR's full report normally covers growth, which Ms Truss is focused on, inflation, the deficit and debt relative to GDP.

The Prime Minister and Chancellor had a 48-minute meeting with the OBR’s chair Richard Hughes and two members of its Budget Responsibility Committee, Andy King and Professor David Miles.

It emerged yesterday that the OBR had offered Mr Kwarteng a report to coincide with last Friday’s mini-budget, but the Chancellor had refused.

In a letter to the SNP Westminster leader Ian Blackford and MP Alison Thewliss, Mr Hughes said the body sent “a draft economic and fiscal forecast to the new Chancellor on September 6, his first day in office”, but the Chancellor did not publish a version with his mini-budget.

The lack of a report contributed considerably to the mini-budget backfiring, as financial markets took fright at the Government’s unfunded plans for £45billion of tax cuts.

That led to a record slump in the value of the pound, a jump in predicted interest rates, a mass withdrawal of mortgage products, and a solvency crisis in the pension fund market which forced the Bank of England to intervene and spend £65bn on buying Government debt to stave off a “material risk to UK financial stability”.

The International Monetary Fund also took the unprecedented step of criticising the UK’s plans for worsening inequality and urged the Chancellor to reverse course.

In a statement, the OBR said: “The OBR’s Budget Responsibility Committee met with the Prime Minister and Chancellor this morning.

“We discussed the Economic and fiscal outlook and the forecast we are preparing for the Chancellor’s Medium-term Fiscal Plan.

“We will deliver the first iteration of that forecast to the Chancellor on Friday 7 October and will set out the full timetable up to 23 November next week.

"The forecast will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies."

A Treasury readout of the meeting said: “This morning the Prime Minister Liz Truss and Chancellor Kwasi Kwarteng met with the OBR’s Budget Responsibility Committee, including the Chair Richard Hughes, at No10 Downing Street.

“They discussed the process for the upcoming economic and fiscal forecast, which will be published on 23 November, and the economic and fiscal outlook.

“They agreed, as is usual, to work closely together throughout the forecast process and beyond. The Prime Minister and Chancellor reaffirmed their commitment to the independent OBR and made clear that they value its scrutiny.”

Sir Ed said: "Delaying this forecast means shutting the door long after the horse has bolted.

"Liz Truss and Kwasi Kwarteng are allowing the economy to fly blind for two months while their reckless plans cause pension and mortgage misery for millions of British people.

"Families and businesses can’t afford to wait any longer for this government to fix their botched, unfair budget.

"Truss and Kwarteng must cancel the Conservative conference, recall parliament and propose a new budget now, before any more people lose their homes or close their business."

SNP Westminster Leader Ian Blackford said: “It’s time for this clueless Chancellor to pack his bags and go.
 
“Alongside the Prime Minister, Kwasi Kwarteng have taken a wrecking ball to the UK’s finances – leaving millions of families across the UK in deep distress.
 
“And now we are being told that despite the OBR publishing their forecast to the UK government, the Treasury will delay the publication until November 23rd. This is simply unacceptable. 
 
“Within days of taking office, we have once again seen the devastating consequences of Scotland being shackled to this outdated, corrupt Westminster system. People’s mortgages, pensions and savings are all being badly hit – and yet the Tories have no plan to fix it. 
 
“Instead of trying to dodge accountability, the Chancellor must do the honourable thing and resign – and if he doesn’t he should be sacked.
  
“There can be no doubt that the only way to keep Scotland safe for good from the long-term damage of Westminster control is by becoming an independent country.”

Treasury and Downing Street sources earlier hit back at suggestions it was an emergency meeting, even as Tory MPs called for the Chancellor’s promised plan to be brought forward to calm jittery markets.

Treasury minister Andrew Griffith played down the significance of the meeting, telling Sky News: “It seems to me a very good idea that the Prime Minister and Chancellor are sitting down with the independent OBR. Just like the independent Bank of England, they have got a really important role to play.

“We all want the forecasts to be as quick as they can, but also as a former finance director I also know you want them to have the right level of detail.”

The decision to hold a meeting was welcomed by Conservative MPs and senior party figures, including former chancellor George Osborne, who oversaw the creation of the independent spending watchdog in 2010.

Calling it a “welcome move”, he said: “Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics.”

Tory MP Mel Stride, chairman of the Commons Treasury Select Committee,said the meeting should be a “reset moment”.

November 23 is when the Chancellor is due to set out his medium-term fiscal plan explaining how he would get debt falling as a percentage of GDP..

On BBC Newsnight, veteran Tory MP Sir Geoffrey Clifton-Brown said he feared further “turmoil” in the markets if the date of the statement was not brought forward.

It comes as a YouGov poll for The Times showed Labour opening up a 33-point lead over the Conservatives, raising further questions about Ms Truss’ leadership a few weeks into the job and days before the Tory party conference in Birmingham.

Sir Charles Walker, a Tory MP commenting on the poll, admitted his party could be “wiped out” if an election was called tomorrow.

Former Cabinet minister Julian Smith also urged the Government to reverse course on the cut to the top rate of tax, saying it must “take responsibility” for the markets’ reaction.

Despite the growing unease, both the Prime Minister and Chancellor defended the mini-budget on the media yesterday, saying it was the “right plan” for the economy.