The UK Treasury may have broken the law by withholding £9.5bn of spending pressure ahead of Jeremy Hunt’s final Budget in March, according to Richard Hughes, head of the Office for Budget Responsibility (OBR).
Hughes suggested vital financial data relating to departmental budgets, required by the OBR under the Budget Responsibility and National Audit Act 2011, had not been shared, resulting in a “fundamentally different” view of public finances.
Hughes told MPs that this undisclosed information affected the Office for Budget Responsibility’s ability to provide accurate forecasts, describing it as a “systemic failure” within the Treasury. Although Hughes did not suspect malicious intent, he noted that this lapse affected trust, shifting its relationship with the Treasury from “trust” to “trust but verify.”
The revelation comes in the wake of Chancellor Rachel Reeves’ claim that she inherited a £22bn budget “black hole”, a figure disputed by the Office for Budget Responsibility but partly substantiated by hidden costs of £9.5bn. However, former chancellor Jeremy Hunt criticized the timing of the report, suggesting it risked it being used as a “political weapon”.
Adding to the controversy, Hughes warned that the government’s shift towards electric vehicles, with fuel excise revenue falling as petrol and diesel cars are phased out, could leave a huge hole in the public finances, similar to recent tax rises. Fuel duties, which are expected to bring in £27.2bn in this Parliament, will fall steadily as the UK approaches its 2035 ban on new petrol and diesel car sales.