OBR Forecasts

Baroness Kramer Excerpts

Monday 1st December 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by noting the resignation of Richard Hughes from his position as chair of the OBR and thank him for his service in that role, which he has occupied since 2020. We in the Opposition will carefully study the contents of the report that has been issued today into the highly regrettable early release of the economic and fiscal outlook. We welcome the seriousness with which the OBR has treated this matter.

We expect those in positions of power to act with transparency, openness and integrity. The only person who has shown any integrity in this process has demonstrated it by resigning. Perhaps the Chancellor might want to follow his example.

We must not let today’s report be a convenient distraction from the matter we are discussing, namely the accusations that the Chancellor misled the Cabinet, the markets and the public in the run-up to the Budget. On 4 November, three weeks before the Budget, the Chancellor held an extraordinary press conference to warn that a downgrade in the public finances meant that taxes would have to rise. She pointed to a supposed collapse in productivity and said this had consequences for working people and for the public finances too. No one compelled her to make that announcement. She chose to do so. She signalled openly that she was preparing to break the Labour manifesto by raising the basic rate of income tax, presenting this as unavoidable.

Yet we know that the picture she painted was not the full truth. There was a sin of omission. What she did not tell the public, Parliament or even her own Cabinet was that the public finances had actually improved. Higher than expected tax receipts had offset most of the productivity downgrade. By 31 October, four days before her press conference, the OBR had informed her that she in fact had a £4.2 billion surplus against the main fiscal rule and not a black hole. The omission of material fiscal information during the most sensitive period of the economic calendar is extraordinarily serious. The OBR was so concerned by the misconceptions circulating before Budget day that its chair took the highly unusual step of writing publicly to the Treasury Select Committee to correct the record. He confirmed that the Chancellor had been informed as early as 17 September that improved tax revenues largely wiped out the productivity downgrade. Yet on 4 November she chose to speak only of gloom, and working families, savers and businesses all made decisions as a result. People judged their financial futures based on those statements. The markets reacted; journalists reported. Those words and the briefings and selective leaks that followed came from the Chancellor, her officials and her Government, and they were incomplete, confusing and misleading. They came on top of weeks of U-turns, backtracking, redrafting and contradictory briefings. I think I have recalled this chaos in earlier debates.

What makes the whole saga even more inexplicable is this: if the Chancellor genuinely wanted more fiscal headroom, if she wanted to raise taxes in the name of prudence, then why on earth did she not simply say so? Instead, we had misreporting, mixed messages and false presentations of the facts, and for what? There is no obvious strategy, no coherent political rationale and no fiscal logic. It simply looks like serious, consequential incompetence at the very top of the Treasury. Let us be clear: this would be unacceptable at any time, but in the run-up to a Budget, when the markets are watching with greater intensity than at any other point, when households and businesses make real decisions based on what they believe the Government are telling them, when the entire country waits to hear how their taxes will be collected and their money will be spent, this is unforgivable.

In the light of the chaos the Government have created around this Budget, can the Minister answer three simple questions? Can he confirm that the Chancellor was aware of a £4.2 billion surplus against the main fiscal rule on 31 October? Can he tell the House, if the Chancellor wanted to increase tax to improve headroom and fund extra spending on welfare, as he suggested, why she did not simply say so in her scene-setting speech? Finally, will the Government finally subject themselves to an investigation by the Financial Conduct Authority and the Permanent Secretary to the Treasury into possible market abuse by all those in No. 10 and at the Treasury who would have had access to relevant confidential information? If the Government have nothing to hide, they will have nothing to fear from such an investigation.

[Baroness Kramer (LD)]

My Lords, this really has been a bit of an omnishambles with announcements, scene-setting musings, U-turns, misstatements and leaks—speculation that, for a time at least, spooked the markets, raising interest rates on government debt and causing such uncertainty that businesses and individuals delayed or abandoned decisions. We in this House have felt for the Minister, who has tried to hold the line by refusing to speculate despite being inveigled by pretty much all of us to try to make him do so. Frankly, all around him, others were simply flying kites.

On the issue of the OBR, Richard Hughes has taken the honourable step of resigning. Like others, I agree that he is very much the embodiment of a dedicated civil servant and has contributed much to the economic welfare of this country. Can the Government tell us, now that they recognise the seriousness of the breach, whether it is possible that attempts to access this information actually rise to the level of criminality? Are we looking at a possible issue around that? Also, is the security review being extended to other entities at arm’s length from the Government that might also have significant information but not the security that is necessary?

On the Chancellor, we need to understand much better why statements about tax receipts were omitted from the discussion on 4 November. This sits within the context of the omnishambles that I described. I am very concerned, for the future, that this form of extreme kite-flying—not just on this Budget; we have certainly seen it on earlier Budgets—has become so normalised that it has, in effect, killed off purdah. I am not sure that that is good for either the economy or how the markets behave.

In that case, will the Government recognise that they need to overhaul the whole Budget process? In the Swedish example, the Parliament gets to debate the Government’s Budget before it is set in stone, to propose alternatives and to make amendments; that is then followed by a period of scrutiny and accountability. Will the Government now bring forward a new approach to this process—one that enhances accuracy and transparency and properly restores both public trust and the role of Parliament?

[Lord Livermore (Lab)]

I am very grateful to both noble Baronesses for their contributions and questions.

The noble Baroness, Lady Neville-Rolfe, began by paying tribute to Richard Hughes, his actions today and his record of public service. I was very fortunate to work with him while I was a special adviser in the Treasury; he was my private secretary while I was a special adviser. I absolutely know what the noble Baroness said about his commitment to public service, so I join her in those words. The Chancellor said earlier today:

“I want to thank Richard Hughes for his public service and for leading the Office for Budget Responsibility over the past five years and for his many years of public service”.


This Government are committed to protecting the independence of the OBR and the integrity of our fiscal frameworks and institutions.

The noble Baroness, Lady Neville-Rolfe, spoke about misleading. I fundamentally reject that. The Chancellor has been completely honest and consistent with the public in everything she has said. On 4 November, the Chancellor said that her priorities were cutting the cost of living, NHS waiting lists, debt and borrowing. The Budget delivered precisely on those priorities. The Chancellor was clear that, if there were a productivity downgrade, that would mean lower tax receipts. The OBR confirmed that tax receipts are £16 billion lower than they otherwise would have been. The Chancellor said that she intended to build more headroom, and she did—to £21.7 billion. The Chancellor was clear that policy choices would need to be paid for; the Budget shows that those cost £6.9 billion. The Chancellor was clear that challenging decisions would need to be taken on taxation and spending, and she froze thresholds for a further three years. So, as I say, the Chancellor was completely honest and consistent with the public in everything she said.

I note that the noble Baroness, Lady Neville-Rolfe, spoke of a “supposed” productivity collapse, as if she were trying to make light of the fact that the OBR looked back at the past 14 years and revised its view of what the previous Government had done to the economy downwards. It looked at the chronic lack of investment, Brexit, the mini-Budget and all of the other things the previous Government had done, and it was forced to downgrade productivity—the performance of the economy—as a result. It put that forward and said that that did lasting damage to the economy. The noble Baroness described that as “supposed”, so I would like her to acknowledge that that was real and has real, lasting consequences.

The noble Baroness also said that public finances had “improved”. I do not understand how going from a headroom of £9.9 billion at the Spring Statement to a headroom of £4.2 billion before any measures were taken into account is an improvement in the public finances. It is important to point that out.

The noble Baroness said that there is no “fiscal logic” to this Budget. Is she saying, therefore, that she thinks that the headroom of £4.2 billion is sufficient? Is she saying that, if the Chancellor had come before Parliament and announced £4.2 billion of headroom, that would have been an acceptable level of headroom, given the global uncertainty that we face? So, no—there was very clear fiscal logic to this Budget.

The noble Baroness asked me three specific questions. Did the Chancellor know that there was a £4.2 billion surplus on 4 November? Yes, she did. On 4 November, the Chancellor had £4.2 billion of headroom before those policy choices were accounted for, meaning that, once those policy choices were accounted for, there would be a deficit of £2.7 billion before any additional headroom was built. The Chancellor was extremely clear that she intended to build more headroom. The noble Baroness also asked: if the Chancellor wanted more headroom, why did she not say so? I suggest that the noble Baroness goes back and reads her speech from 4 November, because she specifically said that she wanted to build more headroom to create a greater margin against events. The noble Baroness also asked me about the FCA but, frankly, that is a matter for the FCA to decide.

I am grateful to the noble Baroness, Lady Kramer, for her comments. She said that this Budget process had perhaps been dominated by more process questions than normal. I totally agree with her; it has been dominated by process before, during and after the Budget speech. I have some sympathy with her pleas for a return to purdah; it would certainly make my life more easy, and would have made life easier for me in the run-up to the Budget. She also praised Richard Hughes for his record of public service; I entirely agree with her.

The noble Baroness asked whether the contents of this review rise to the level of criminality. As the Statement that my right honourable friend the Chief Secretary gave in the other place says, we have only just received this report; we and the Treasury Committee should take time to consider it.

The noble Baroness gave some suggestions about how other countries run Budget processes. I am not sure that we will be reforming the process to quite that extent, but I have full sympathy with what she says. It is important that we take the Budget process and Budget secrecy extremely seriously—and we do.