What is the OBR and why has its boss resigned?

OBR chairman Richard Hughes had been in post since October 2020

The Office for Budget Responsibility (OBR) monitors the UK government's spending plans and performance.

Twice a year, it releases forecasts on the state of the economy and the public finances.

Chairman Richard Hughes resigned after the OBR mistakenly released its analysis of the Budget before Chancellor Rachel Reeves had delivered the statement in the House of Commons.

What does the OBR do?

The OBR assesses the health of the UK's economy. It is independent of government but works closely with the Treasury.

Its reports are usually released alongside big government events such as the Spring Statement and the Budget.

Before these announcements, the government gives the OBR details of its plans to raise or lower taxes and how it intends to spend public money.

The OBR checks the information and makes economic forecasts covering the next five years.

These forecasts cover things such as whether the government will spend more money than it raises, and whether the UK's economy will grow or shrink.

The OBR's next forecast will be published alongside the Spring Statement in 2026. However, in future the Treasury will only respond to the OBR's forecasts once a year, at the Budget.

Why do OBR forecasts matter?

The OBR uses its forecasts to assess whether the government is likely to meet the rules it has set for managing the economy.

Its judgement on whether the government's plans are sound is important to financial investors. They help fund government spending by buying its bonds - which are a type of IOU.

This means some of the government's borrowing costs are determined by how the financial markets respond to the OBR's assessments and forecasts.

• Can we trust economic forecasts?

Why did OBR boss Richard Hughes resign?

The OBR document analysing the impact of the 2025 Budget was published nearly an hour before Reeves delivered the Budget to MPs.

The document was not listed on the OBR website, but journalists - including those at the BBC - were able to access it by guessing its URL, which was very similar to those used for previous official documents.

It effectively confirmed a number of new Budget measures - including a three-year freeze on income tax and National Insurance thresholds - before the chancellor had announced them.

BBC political editor Chris Mason said the "absurdity" of the mistake was "mind-blowing".

Richard Hughes announced his departure after the OBR's investigation into the document's early publication found the "ultimate responsibility" for the error lay with senior leadership.

The OBR's wider role in the run-up to the Budget has also come under scrutiny.

In the weeks before the statement, it produced a series of forecasts which were adjusted as it examined the tax and welfare spending measures that were under consideration.

During this period, Reeves repeatedly talked about a downgrade to the UK's predicted economic productivity that would make it hard for her to meet her spending rules.

But it emerged that OBR forecasts had indicated that government finances were in a better shape than had been thought.

Reeves has therefore been accused of giving a misleading picture of the government's finances, which she denies.

OBR senior official Prof David Miles told MPs that her comments were "not inconsistent" with the situation she faced.

Does the government have to follow OBR advice?

In July 2024, the incoming Labour government said it would pass a new law designed to prevent any future administration sidelining the OBR.

The law was passed in September 2024, giving the OBR powers to make judgements on any major taxation or spending announcements, to provide "stability", the Treasury said.

The decision to bolster its status came after Liz Truss's government put forward a set of unfunded tax cuts in its mini-budget in September 2022 without first consulting the OBR.

The value of the pound crashed and borrowing costs surged, signalling that international investors had no confidence in the government's measures, and the Bank of England was forced to step in to protect pension funds.

Truss and her chancellor, Kwasi Kwarteng, had rejected the OBR's offer to prepare a draft economic forecast.

Many said the decision not to consult the OBR was a key reason for the lack of investor confidence.

Then Chancellor Jeremy Hunt - who replaced Kwarteng - said it was a mistake for the government to "fly blind" without the OBR's input.

• The inside story of the mini-budget disaster

Former PM Liz Truss and her then chancellor Kwasi Kwarteng were criticised for not working with the OBR

After Reeves's first major speech as chancellor, the OBR suggested there were billions of pounds of spending pressures that it did not know about when it prepared its March 2024 forecast, although the Conservatives repeatedly insisted they had provided all necessary information.

In a letter to chairman Richard Hughes in July 2024, Reeves said that the OBR would be able to question government assumptions about departmental spending, and demand more details on possible over or under spends.

However, some have questioned whether the body has too much power, given the level of influence it has over economic policy.

When and why was the OBR created?

The OBR was set up in 2010 under the Conservative-Liberal Democrat coalition government.

Before that, the government produced its own economic forecasts.

The OBR was designed to provide independent analysis of the UK economy that was not influenced by party politics.

It also assesses some aspects of the financial policy decided by the Scottish and Welsh governments.

Who runs the OBR?

The OBR is led by a Budget Responsibility Committee.

It has three members, including a chairman.

When he stood down, Richard Hughes was several months into his second five-year term as chairman, having been renominated by the chancellor in May.

He first took up the job during the Covid pandemic in October 2020.

His successor has not yet been announced.