On December 12, 2025, the UK’s fiscal landscape was thrown into the spotlight as the Commons Treasury Committee launched a sweeping parliamentary inquiry into the Office for Budget Responsibility (OBR), the government’s economic forecasting watchdog. The move came in the wake of a series of controversies surrounding Chancellor Rachel Reeves’ November 26 Budget, including a high-profile resignation, damaging leaks, and fierce political recriminations.
The OBR, established in 2010 to provide independent analysis of the government’s finances, found itself at the center of a storm after its chairman, Richard Hughes, resigned following the inadvertent early publication of the Budget’s key forecasts. According to BBC News, the body accidentally released its assessment of the Chancellor’s autumn statement an hour before Reeves had a chance to deliver her speech to Parliament. The blunder, coupled with weeks of speculation and media leaks about the Budget’s contents, prompted lawmakers to question the reliability and independence of the institution charged with keeping government spending in check.
Dame Meg Hillier, Labour MP and chair of the Treasury Committee, did not mince words in her assessment of the situation. Writing in The i Paper, she described the government’s pre-Budget maneuvering as “less a rolling of the pitch and more akin to throwing several grenades onto the pitch.” Hillier singled out Chancellor Reeves for making a “glaring error” by publicly suggesting she would raise income tax, only to reverse course days before the Budget. “In itself, this isn’t what the process for a Budget should ever be, but what’s worse is the Government then changed its mind, which left everyone either confused or annoyed. This was a glaring error and one from which all at the Treasury must learn,” Hillier wrote.
The Committee’s newly launched inquiry will scrutinize the OBR’s performance over its 15-year history, focusing on the accuracy of its forecasts, its impartiality, and the quality of its communications. MPs will also consider whether reforms are needed to improve the watchdog’s processes, methodology, and resources. As reported by The Guardian, the inquiry will examine whether the OBR’s relationship with the Treasury “could be reformed in order to ensure that it helps to deliver positive economic outcomes for the UK.”
Hillier emphasized that the probe is not intended as a punitive measure against the OBR but as an opportunity for honest evaluation. “This inquiry is not a stick to beat the OBR with. What my Committee intends to do is have an honest conversation about what the watchdog does well and where it needs to do better. I hope this will provide a useful foundation for the new chair when they are appointed,” she stated, as noted by City A.M. and BBC News.
The backdrop to the inquiry is a period of turmoil for both the Treasury and the OBR. In the weeks leading up to the Budget, speculation and unauthorized leaks about potential tax and spending changes swirled through the media. Reeves herself admitted to MPs that “there were too many leaks, and much of that, those leaks and speculation, was inaccurate, very damaging... I want to state on the record how frustrated I am and have been by these incidents and the volume of speculation and leaks, and that is why I'm doing something about it, because we cannot allow this to happen again.” She confirmed that a leak inquiry was underway, led by the Treasury’s Permanent Secretary, and that a review of security processes was also in progress (Evening Standard).
One of the most damaging leaks involved the suggestion—reported by the Financial Times—that Reeves had reversed plans to raise income tax due to a “change in economic circumstances.” Reeves forcefully denied authorizing any such briefing, declaring, “It was not a briefing that was signed off by me, any of my ministers or officials...It was unacceptable.”
Underlying the political drama were deeper questions about the accuracy of the government’s fiscal projections. Reeves repeatedly warned the public that “tough decisions” were necessary because the UK faced a £30 billion gap in the public finances—a claim she used to justify proposed tax rises. However, the OBR confirmed that, as of September 17, 2025, the real shortfall was just £2.5 billion—less than a tenth of what Reeves had claimed. By October 31, the OBR said the shortfall had disappeared entirely, replaced by a £4.2 billion surplus. In a letter to the Treasury Committee, then-chair Richard Hughes stated that “at no point” did the Chancellor face a black hole larger than £2.5bn. These revelations led to accusations from Conservative leader Kemi Badenoch, who called Reeves “shameful” and accused her of “lying to the public” (Evening Standard).
The OBR’s own role has also come under the microscope. While its remit is to produce forecasts, cost government policies, and assess whether the Chancellor is meeting self-imposed fiscal rules, some experts and politicians have argued the institution wields too much influence over tax and spending decisions. As BBC News reports, critics contend that the OBR’s assessments, though technically not binding, can unduly constrain government action. Nevertheless, Hillier and other MPs have pointed to the disastrous fallout from Liz Truss’s 2022 mini-Budget—when the OBR was sidelined—as a cautionary tale about the dangers of ignoring independent fiscal oversight.
Professor David Miles, a senior OBR official, told the Treasury Committee that the watchdog was not “at war” with the Treasury, but acknowledged concerns about leaks and the need for improved communication. He also defended Reeves, saying her comments about the fiscal outlook were “not inconsistent” with the situation she faced at the time.
Looking ahead, the Treasury Committee will play a pivotal role in appointing a new OBR chair following Hughes’s resignation. Hillier has warned that the next head must be “fully independent from the Treasury,” or the cross-party committee will veto the Chancellor’s choice. A Treasury spokesperson reiterated the government’s commitment to protecting the OBR’s independence, highlighting the recent fiscal lock legislation designed to prevent the body from being sidelined.
As evidence is gathered and public hearings loom, the inquiry promises to spark robust debate about the future of Britain’s fiscal watchdog and the delicate balance between political accountability and independent oversight. For now, the OBR’s fate—and its relationship with a chastened Treasury—hangs in the balance, with the eyes of Parliament and the public keenly fixed on what comes next.
With the Budget process under greater scrutiny than ever, the coming months will test whether lessons have truly been learned—or whether the cycle of leaks, confusion, and controversy will continue to haunt Westminster’s most important fiscal decisions.
