OBR Forecasts

Debate between Lord Sentamu and Lord Livermore

Monday 1st December 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for the points and questions he raises. I had the great privilege of working with him in the Treasury at a time when Richard Hughes was working for us, so we both know the commitment that Richard Hughes has to public service.

My noble friend asked about the relationship with the OBR. I start by saying how strongly we support the Office for Budget Responsibility and its ongoing independence. The first piece of legislation passed by this Government after winning the election was to strengthen the role of the Office for Budget Responsibility, because we had seen, during the Liz Truss mini-Budget, what happens when it is cut out of the process. We saw how damaging that is to the living standards of working people and we are determined that that never happens again. We have absolute commitment to the ongoing independence of the Office for Budget Responsibility.

My noble friend asked about the letter from the OBR to the Treasury Select Committee. We put the utmost weight on Budget security. The OBR chose to publish some further information, which is set out fully in Richard Hughes’s letter to the Treasury Committee. The Treasury agreed in advance to its publication. However, it is important to maintain a private space between the Treasury and the OBR for the exchange of forecast information and Budget policy development, so we welcome the OBR’s statement that this is not intended to become usual practice.

[Lord Sentamu (CB)]

My Lords, I am very grateful to get a copy of the Chief Secretary to the Treasury’s Statement. He paints a chronology of events and how they happened, regardless of any speculation about this. For me, what is important is that he says that the Chancellor

“was clear on 4 November that a lower productivity forecast would mean lower tax receipts. The OBR confirmed at the Budget that tax receipts are £16 billion lower as a result of the reduced productivity forecast”,

and that the Chancellor said at the last Budget that the decisions the Government took on welfare would have to be paid for in this Budget, which she has done, although that will not happen until 2029-30. What will the Government do not to be bounced into the decisions they took on welfare, which then created difficulties for the Chancellor?

Secondly, the OBR’s report has revealed that it is quite possible that other Chancellors faced the same kind of leakage. The OBR has been in place for 15 years, during which all those Chancellors faced the same, especially Kwasi Kwarteng.

[Lord Livermore (Lab)]

I am grateful for that question. The noble and right reverend Lord quite rightly says that the Chancellor was very clear that the productivity review would mean lower tax receipts, and the OBR confirmed that they are £16 billion lower. The OBR’s productivity review lays bare the economic consequences of the past 14 years. The OBR looked back at the productivity performance of the previous decade and concluded that austerity, Brexit and the pandemic have weakened the economy by far more than previously thought. That has an impact on the public finances and growth for the remainder of the forecast period.

Public Spending: Inheritance

Debate between Lord Sentamu and Lord Livermore

Tuesday 30th July 2024 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Earl for that question. He is absolutely right: productivity must be increased because growth is a central mission of this Government, and we will not increase growth sustainably unless we increase productivity. Growth will not, of course, happen overnight. He asked for a timescale. It is difficult to judge, but we have already made significant progress—probably more progress on growth measures—in the first three weeks of being in government than were made over the past 14 years. They include planning reforms to get Britain building; a national wealth fund to catalyse private investment; a pensions investment review to unlock capital; skills England to boost skills across our country; and work across government on a new industrial strategy.

[Lord Sentamu (CB)]

My Lords, I declare an interest. My title is Lord Sentamu, of Lindisfarne, which is in Northumberland. In Berwick, where I live, a hospital is being built. Will the building continue, or is there a question mark because of the finances? Secondly, I want to return to the question of the noble Baroness, Lady Kramer, and the Minister’s colleague, regarding the health service. The Secretary of State for the Department of Health and Social Care said that social care is not fit for purpose. How long are we to wait for the implementation of Dilnot? If social care really is not fit for purpose, I did not hear in the Chancellor’s statement what is going to be done about that challenge to a lot of our citizens. Over the past six months, I have attended a lot of hospitals. The challenge for those who are sick is so big that somebody has got to do something about it.

[Lord Livermore (Lab)]

I am grateful to the noble and right reverend Lord for his question. As was set out yesterday, we will conduct a complete review of the new hospital building programme, with a thorough, realistic and costed timetable for delivery. I cannot give him any specific information on the project he mentioned. As I said to other noble Lords, we are absolutely committed to reforming adult social care to create a sustainable system that delivers for the people who draw on that care, their families and the social care workforce. We will work to build consensus for the reforms needed to build a national care service.