Sir Alan Budd quits spending body

Sir Alan Budd is leaving his post after only three months

The head of the government's new spending watchdog is to step down after only three months in the job.

Sir Alan Budd was appointed in May 2010 as the first chairman of the Office for Budget Responsibility (OBR).

The function of the office is to provide the government with independent forecasts of UK economic growth and public deficits.

Its first report was relied upon by Chancellor George Osborne in the preparation of his June Budget.

Sir Alan, who is 73 years of age, had always said privately that he would leave after the first set of forecasts.

A Treasury spokesperson said there was nothing unexpected in the move: "He was appointed to provide forecasts for the June Budget and advice on the creation of the permanent OBR.

"He has established the OBR as a credible and independent forecaster and the Chancellor is grateful for his contribution.

"The Treasury will seek to ensure continuity in recruiting his successor."

It has also become clear that the two other outside experts at the OBR, Geoffrey Dicks and Graham Parker, are also on three month contracts.

The Treasury could not confirm whether they would be staying beyond August.

Pending the introduction of legislation by the new government, the OBR is operating on an interim basis with the support of staff seconded from the Treasury.

Under its Terms of Reference, the OBR is itself responsible for proposing how it should be organised and funded on a permanent basis. This aspect of Sir Alan's work has not yet been completed.

'No disagreement'

Labour peers suggested in parliament that Sir Alan had fallen out with ministers over the degree of independence given to the OBR.

One, Lord Eatwell, alleged a "disagreement" had lead to Sir Alan's departure.

The Labour peers also asked why no successor had been named.

But Commercial Secretary to the Treasury Lord Sassoon denied any breakdown in relations.

"There has been no disagreement. Nothing has happened. It has always been the case that Sir Alan Budd planned to leave in the summer. That is exactly what he is going to do."

He added: "The application process for his successor will take full account of the need for continuity."

Andrew Tyrie, the elected chairman of the Treasury Select Committee, also underlined the importance of making the OBR accountable to parliament.

"The OBR's credibility for quality and independence of judgement is still to be fully established. Its degree of independence is already a matter of concern to some," he said.

"Sir Alan's departure means that getting the structure of the OBR right, and placing it on an effective statutory basis with a proper system of parliamentary accountability in place, is particularly important."