MPs get veto over tax and spending watchdog

Chancellor George Osborne was giving evidence to the Treasury committee

The Treasury select committee will have the power to veto the appointment of the new chairman of the Office for Budget Responsibility (OBR), Chancellor George Osborne has said.

Mr Osborne said he hoped it would remove any doubt about the independence of the new body after its interim chairman Sir Alan Budd quit.

The OBR was set up to end political meddling in official forecasting.

But it was accused of altering job loss figures to put a positive spin on cuts.

Sir Alan firmly denied any political interference when he appeared before the Treasury committee recently, although he has said the OBR should be moved out of its current office in the Treasury and staffed with more outside experts to remove any suspicions about its independence.

Sir Alan grabbed headlines when he announced he was quitting as head of the OBR after just three months in the job.

'Regret'

Labour critics claimed Sir Alan had fallen out with ministers over the degree of independence given to the OBR but the government said he had always planned to leave after it had produced his first set of figures.

But Mr Osborne said he hoped Sir Alan's evidence to the committee had gone "some way towards putting to rest the conspiracy theory that some people have wanted to cook up", adding that "the whole purpose of creating the OBR is to give confidence in the statistics produced by the government".

He said he was now advertising on the Treasury website for a replacement for Sir Alan, who he hoped would be in place by the end of September.

Whoever is chosen by Mr Osborne will face a confirmation hearing in front of the Treasury committee before taking up the job.

A Treasury spokesman said this was in response to Sir Alan's recommendations to ensure independence of the OBR, and make it accountable to parliament.

Mr Osborne told the committee: "This is the first time any select committee ever had a veto on an appointment.

"I want there to be absolutely no doubt this is an independent body and this person has the support and approval of the Treasury select committee.

"I also agree with Sir Alan Budd that the office (OBR) should move out of the Treasury".

He said the committee and the chancellor would not be given the power to sack the head of the OBR, so that they could be free to "make things difficult for the serving chancellor or indeed difficult for Parliament". He said he wanted the OBR chief to have a "fixed five-year term".

Mr Osborne also defended David Cameron after it emerged unemployment figures he used to rebut Labour accusations over job losses at prime minister's questions had been published minutes earlier by the OBR.

Sir Alan brought forward the publication of the data following an earlier leak to a newspaper, but said this week that Mr Cameron's use of the figures was "not appropriate".

Mr Osborne told the committee: "I don't think you can fault the prime minister for reading out public statistics."

He added that it was a "matter of regret" that the independence of the OBR was called into question, but it had been "made absolutely clear" to officials that it was entirely up to the watchdog to decide what was published and when.