The OBR and the budget

As readers of this website could see, I took many ideas to the government in the run up to the budget. Accepting the government was staying with the OBR controls in place and prepared  to  cut taxes if they could  keep borrowings down, I set about showing them how there was more headroom within those constraints to cut taxes. In particular I identified three large areas of spending in their accounts that could be reduced. They were the missing productivity of the public services, the large losses on the Bank of England bonds, and the high costs of bringing in low paid migrants whilst supporting many already in the UK to be without jobs instead of helping some of them to take the jobs available..

The government liked the idea of tackling the lost productivity. It now seems from  the budget figures that they also accepted my general delineation of the problem. I had drawn from ONS figures a lost 7.5% 2020-2023. The government now says there is a lost 6% to today. I estimated this as around £30 bn, in annual cash cost a low end figure from my calculations based on the published public spending figures. The Chancellor said tackling a 5% fall in productivity as he wishes to do would gain him  £20bn. This was surprisingly right in line with my £30bn for 7.5%. I am pleased he is seeking to unlock £20bn of the losses and this contributed to the so called headroom to allow some tax reductions.

In contrast my public comments on the Bank of England bond losses, £34 bn to date this year, did not result in any action to rein them in. I recommended that the portion of the losses that result from selling bonds at depressed prices on the market should be ended, as there is no need to sell these bonds. The ECB that made the same mistake as the Bank of England in buying too many bonds at very high prices and sparking an inflation is not foolish enough to now sell them at lower prices for a loss. They can be held to maturity when they repay with a lower level of loss. I assume the Chancellor did not do this obvious thing based on a misunderstanding over Bank of England independence. The Bank is independent to set the base rate that controls other short dated interest rates. The bond portfolio required government sign off and guarantee and was always a joint policy. The  Bank says it acts as agent of the government for the bonds.

The government was well apprised of the need to do more to help people out of long term unem0ployment into work, and developing good programmes to assist people in need of extra help to do so. I urged them to speed them up. They also came round to the idea of cutting back sharply on legal migration. I await official figures to show just how expensive to taxpayers it is to invite in low wage employees who usually need subsidised housing NHS care, school places if they have children and a full range of free public services. Invite in one such migrant and the facilities can be found. Invite in 1 million and you need to build several new cities for them. I continue to follow up to see what progress the government is making with cutting the numbers and relieving the pressures on homes and services. I have in the past set out my own rough estimate, based on the old EU one of 250,000 euros for set up capital costs and early years for one migrant.


  1. Mark B
    March 8, 2024

    Good morning.

    How many months from the next General Election ? And now they decide to listen !

    Too late mate !

    1. Ian wragg
      March 8, 2024

      A liebour budget by a limp dumb Chancellor. I’ll say it again. VAT on energy, tourist tax and VAT on public chargers. All ignored because Brussels permission needed.

    2. Ian wragg
      March 8, 2024

      £60 per MWH carbon tax on CCGT stations and we wonder why we cant compete. Windmill owners then allowed to charge the same as inflated CCGT prices.

    3. Hope
      March 8, 2024

      They simply do not understand. Sunak and Hunt act on what they are told by civil service as long as it suits their general left wing socialist tendencies. You are wasted on your party. They do not listen to but want you for presentation purposes for election to falsely claim they are conservatives.

  2. Lynn Atkinson
    March 8, 2024

    In real terms this was a tax-increasing budget. There is simply no getting away from this fact. The State sector is protected with high pay increases, which increases the stresses in the wealth creating sector.
    It is a massive vote loser, and just to rub salt into the wound, we find a Moslem war memorial!
    Parliament should reject and vote down this budget!

    1. Hope
      March 8, 2024

      Nothing at all about cutting welfare spending, or state spending. Taxpayers are funding mass immigration welfare claimants, why are they not sent back? Other countries would not allow immigrants if they are not self supporting. Why does JRs party insist on importing low paid or welfare claimants.

      We even had no increase in military spending but within a day £365 million given to Ukraine! The country is of no strategic or national interest. It is a proxy war for regime change by US in the hope to oust Putin. It failed find peace for Ukraine people. They suffered enough.

      1. Lynn Atkinson
        March 8, 2024

        +1. NATO is beaten and will be seen to be beaten – to misquote the worst PM we have ever had!

    2. Ian B
      March 8, 2024

      @Lynn Atkinson +1

    3. Jim+Whitehead
      March 8, 2024

      L.A. , Agreed on every point, especially the last.

  3. Peter
    March 8, 2024

    ‘ The government liked the idea of tackling the lost productivity’

    Except they did nothing about it. They just set up a ‘programme’ which is the same thing as doing nothing.

    The government don’t care about the Bank of England. They are a useful scapegoat in any case.

    Long term unemployment can be talked about until the clock runs down and there is a general election.

    1. Donna
      March 8, 2024

      The Government’s running scared of the B of E. They know full well what it did to destabilise Truss and Kwarteng in order to get their preferred puppets in Nos.10 and 11.

  4. Michelle
    March 8, 2024

    Any thoughts Sir John as to why there seems little to no appetite to rein in the Bank of England.
    £34 bn as per your estimate on losses to date, is no mere trifle to be shrugged off.
    If the systems and people that have enabled that loss are still in place, how can we expect to stop the ship from sinking?

  5. DOM
    March 8, 2024

    Richard Hughes, Anti-Brexit. The OBR’s forecasts or a deliberate tissue of deceitful lies designed to damage Brexit. Say no more.

    There’s no political will from the leaders of the Tory party to attack what’s been created since nineteen ninety seven. The party has accepted Blair’s entire political culture based on lies, Quango politics and a hatred of accountability and personal responsibility

    People who vote Tory are as dangerous deluded as those who vote Labour which explains why this country is heading in the wrong direction in so many ways.

    1. THUTCH
      March 8, 2024

      George Osborne created the OBR!

    2. MPC
      March 8, 2024

      I don’t think voters are as stupid as you think. Most people see what’s going on in politics and those who’ve turned against the Tories have no enthusiasm for Labour, which is why I expect a very low turnout at the election – following which anything may be possible. Even a fast realignment of the Right, and a surely inevitable confrontation with reality (Net Zero induced power cuts, farmer protests, direct action from migrant crime and crumbling public services) by a presumably Labour led government.

    3. Hope
      March 8, 2024

      A bit like Guido highlighting the anti Tory Ofcom editor’s tweets. Another quango ripe for overhaul or scrapping.

    4. Lynn Atkinson
      March 8, 2024

      You think voting for ‘Electoral reform’ aka ‘suicide’ is better?

  6. agricola
    March 8, 2024

    OBR forecasting is so dire, I asume they are only there to make the government look good when results are better than forecast.

    One budget failure you have not highlighted is the VAT threshold for the self employed. Apparently limited because the Windsor Framework does not allow it in NI. It only serves to emphasise what a pigs ear your government made of the negotiation. The EU should not be allowed at this stage to interfere with the financial running of the UK. If the EU want a border in Ireland let it be on their own territory, at their instigation.

    Sadly government look upon you as an irritant, your vision for the UK,and ours, is not compatible with their consocialism.

    1. Berkshire Alan
      March 8, 2024

      Yep, the possible advantages of Brexit wasted again, the Politicians think they know best, but they will find out differently when the public are given the choice later this year.
      At the moment we seem to be taking on the worst of both Worlds, we have not properly left the EU, and our Politicians seem incapable of running our Country properly or sensibly.
      We survive (just about) in spite of them

  7. Donna
    March 8, 2024

    Another £6 billion thrown down the bottomless pit of the NHS and another £1 million thrown down the drain of yet more Muslim appeasement.

    I switched off right there.

  8. Hat man
    March 8, 2024

    The OBR was created by two Tory politicians (Cameron and Osborne) a dozen or so years ago. It could surely be disbanded by decision of the current PM and Chancellor to bring forward legislation abolishing it. They should. I gather that an incoming Labour government would make its recommendations obligatory for the government to follow, whereas at present its statutory charter says ‘the government retains the right to disagree with the OBR’s forecasts’. Evidently, it doesn’t want to use that right. The Sunday Times reported that in the weeks prior to the budget OBR forecasts successively reduced the ‘headroom’ the Chancellor had for making tax cuts, and each time Hunt bowed to what the OBR’s ‘experts’ said. This timid and largely pointless budget has shown that international banking-background Rishi Sunak is happy to see a team of international bankers have the final say on this country’s finances.

    1. Mickey Taking
      March 8, 2024

      So who is running the country and making decisions? Certainly not the Sunak/Hunt duo.

  9. Ian Jacobs
    March 8, 2024

    ” They were the missing productivity of the public services, ”

    ” The Chancellor said tackling a 5% fall in productivity as he wishes to do would gain him £20bn. ”

    Hello John,

    Can you spell out and explain what you ( and HMG ) are referring to when mentioning “missing productivity ” or a ” 5% fall in productivity ” ?

    This ” 5% ” is not recent- is it ?

    For how long has this low productivity in the public services been recorded- and how many times have efforts been. made by UK Govt’s to produce ” efficiency savings ”

    Please can you explain where you are seeing a lack of productivity – and what is the baseline or assumption as to what ” average ” productivity is ?

    And why are you concentrating on UK public services as being inefficient ? Productivity is apparently a deeply entrenched issue within the UK economy and despite numerous measures taken over long periods of time
    productivity in the UK is and has been poor- and shows no sign of increasing or improving.

    The expression ” cut to the bone ” applies very well to health services as well as education.

    What I am seeing when I look at these 2 services is extremely low morale , staff working under significant pressures which have increased over the last 3-4 years , poor retention of staff and difficulties
    recruiting them. Manpower and teaching in (non-private ) schools as well as throughout many (?most ) areas and departments within the NHS is critically low. The pressures on the current staff are often intolerable and they receive little in the way of thanks or appreciation for their work. Levels of sickness absences have soared causing already depleted staff further pressures. Job satisfaction is very low. Criticism of these services in the media and from UK Government /Parliament and the civil service are frequent and demoralising.

    Your ” maths ” and calculations may have some numbers that reveal what you are pointing out- but in no way is that going to turn around the level of provision of these services and the improved outcomes that everyone in the UK should be hoping for and expecting.

    There is talk of the NHS being on the verge of collapse . That is ridiculous- as in many ways the NHS has already collapsed as shown by waiting times in A&E, waiting times for GP appointments, waiting lists for out-patient appointments , investigations , procedures and operations. The starkest indicator of this collapse is the queuing
    of ambulances at A&E Depts waiting to have critically ill patients admitted and meanwhile being prevented from attending to other emergency calls.

    Measures are needed urgently to address this chaos- any increase in productivity- if it is achievable – is a long way off and it will take years for that to have any noticeable effect as regards recruitment , retention , raised and high morale , shorter wait times and shorter waiting lists.

    A large proportion of these failures have either worsened , or occurred during the last 14 years of Conservative Governments. It is a disgrace – and these failures have a disproportionate effect on the poor, the vulnerable, the under privileged and the unwell – so any talk of levelling up is really just a nonsense.

    Reply These are ONS figures which show after a long period of little or no productivity growth 2020 to 2023 saw a plunge in public service productivity which has not been recovered yet. Private sector productivity has recovered.

    1. Mickey Taking
      March 8, 2024

      My guess would be a reducing productivity rate of 5% at least every year.

  10. James Freeman
    March 8, 2024

    The government could make considerable additional savings by doing less.

    1. They could return the functions of many regulatory quangos to the private sector. Organisations like trade associations could take over the setting of product and service standards. These would replace EU laws and provide a sounder base for industry to thrive.

    2. In addition to providing front-line services, public bodies are asked to adhere to numerous other laws and rules that have nothing to do with their core functions. Some of these requirements get passed onto third parties (government-funded or outsourced services). An example is the public sector equality duty, which has spawned an industry of Equality Officers. Other regulations introduced in the distant past are no longer needed.

    3. The remaining regulations could be less proscriptive, focusing on outcomes rather than rules. This approach would provide maximum scope for innovation to achieve the same or better outcomes at less cost.

    4. They could review the statutory services local authorities must provide and make many of them non-mandatory, leaving it to local politicians to decide whether to offer them in their area or choose a private-sector solution.

    5. The government should be more robust in managing outside organisations, like outsourcing providers and their employees. Government commercial teams are well known to be soft, and their offices have a holiday camp feel. There would still be a duty to be fair, but they should balance this with a tougher approach.

    6. Finally, there should be a bottom-up approach to saving money. Front-line employees and managers know where to make local savings, but they need to be empowered to suggest and implement them. Support services within government areas should focus on servicing front-line staff and the public rather than having a life of their own.

  11. Bloke
    March 8, 2024

    Keeping Jeremy Hunt as Chancellor is like relying on an old worn out car that keeps developing expensive faults. His performance is slow to start, overheats, skids off the road or is stuck in the pits waiting to be dragged off for repairs. There is no sentimental value in keeping something so atrocious. Dump him, and hire an efficient model to go direct to where our country needs.

  12. Jude
    March 8, 2024

    Think it would be way better for us all. If you were Chancellor, Sir John. That alone could ensure the Tories survival.
    But why oh why does our Treasury worship at the feet of OBR & BoE? For years they have been continuously wrong in their forecasts & actions. Stifling growth & actually ruining GB economy.

  13. THUTCH
    March 8, 2024

    Sir John, if the government is so serious about tackling the chronic problem of getting people out of long term unemployment and into work, why no action on universal credit taper?
    Under-employment is as least as serious , and with the current taper rate at least 55% and sometimes higher is it any wonder why millions of welfare claimants don’t strive to do more?
    In addition, the 16 hours rule keeps people down and doesn’t encourage seeking out more hours because you don’t want your benefits cut. Why not increase this to 30?

  14. Dave Andrews
    March 8, 2024

    The best way to cut public sector productivity failings is for it to stop doing the things it doesn’t need to. For example, I don’t dispute the emotional stress of a woman trying and failing to conceive, but I don’t see that I and every other taxpayer should have IVF costs demanded of us. Let them pay for it themselves or GoFundMe.

  15. Nigl
    March 8, 2024

    Thank goodness there is at least one sane and equally important knowledgeable person prepared to push back. Nice touch calling the Chancellor thick without actually saying so.

    Theresa May standing down. Thank goodness. A moralising virtue signalling anti democratic failure. Ideal qualities for the House of Lords were no doubt she will continue to,work against the wishes of much of the electorate.

    I hope you are not thinking of doing the same. We need people like you to recreate whatever ashes are left into a great right of centre party as an alternative to the unstoppable, so far, tide of liberal elite driven, anti U.K. social democracy.

  16. Ian B
    March 8, 2024

    “the large losses on the Bank of England bonds” I note that all the official published figures on expenditure, borrowing etc now specifically exclude the cost to the Taxpayer of BoE activity.

  17. Ian B
    March 8, 2024

    “Productivity lost” the problem there is that it also makes an assumption that the levels of activity, employment, staff growth etc. are all necessary and couldn’t be serviced by other means.
    The ONS states there 5.90 million employees in the public sector in September 2023 which is 200,000 more than when this version of the Conservative Party took office(2019). That’s approx. 17% of the UK workforce

  18. Ian B
    March 8, 2024

    Sir John
    I note today there one of you constituents is standing down from being a Conservative MP. Are we observing the desertion of a sinking ship?
    The real horror is that it is the PM and CCHQ that select who will be parachuted into the now 60+ vacant slots. They have already punished the Country enough by pulling in die-hard extreme Socialists – can the UK cope with more? Or was that the plan to destroy the Conservative Party and therefore the UK

    1. Ian B
      March 8, 2024

      From the MsM
      “The icing on the cake would be if someone spread a rumour that Boris will be fast tracked as the new Maidenhead constituency candidate.”
      juts to prove the point of worse or worse – not a Conservative in the PM’s or CCHQ’s vocabulary

      1. Lynn Atkinson
        March 8, 2024

        ‘Boris’ is too busy at the Ukraine washing machine to bother with Parliament. He has a whole load of new rolls of gold wallpaper to finance – and the new walls on which to paste it.

  19. Bert+Young
    March 8, 2024

    The Sunak/Hunt team lack experience and capability ; it shows both in their budget approach and in response to the points Sir John made . The budget is a vote loser ; pensioners such as myself are hit yet we are a group that have always mainly supported the Conservatives in the past . I cannot believe how stupid the present No. 10 team are to ignore the obvious ; stimulus is something they don’t seem to understand and allowing the OBR and the BoE to influence their decisions exposes their incapability ; they not only have lost the plot but also the upcoming election .

  20. Bryan Harris
    March 8, 2024

    Another wasted opportunity to do something really worthwhile.

    Far too many subsidies given out to the wrong causes including devolution.

    The memorial money didn’t go down well with many people – It does confirm and prove one thing though, that the government has totally surrendered our country to those that are flooding to our shores.

    Within a very few years will white indigenous people be anywhere in government?

  21. glen cullen
    March 8, 2024

    The day the Tories disband the OBR, the CCC and leave the ECHRs ….is the day I’ll consider voting Tory again

  22. Ralph Corderoy
    March 8, 2024

    ‘I assume the Chancellor did not do this obvious thing based on a misunderstanding over Bank of England independence.’

    That seems unlikely since you have explained the point to him and other Treasury ministers repeatedly, in detail.
    More likely is they have a motive which they won’t make public.
    Most likely is they’re told this is the wrong thing to do by Treasury and Bank of England officials and aren’t willing to argue back. Despite all Sunak’s finance experience, Hunt’s business experience, … Have they gone native. After all, look what institutions put Sunak where he is today.

  23. Ian B
    March 8, 2024

    From the MsM

    “This is how Tories fall: by promising tax cuts while doing the opposite
    Some ministers even seem to believe they’re cutting taxation. Voters are more likely to trust their payslips
    The welfare budget isn’t just growing – it’s surging.
    The tax burden is now set to be the highest ever enforced by any government since 1948. All by ministers who say – and even seem to believe – that taxes are actually going down.”

    Fraser Nelson, The Daily Telegraph.

    Every one sees it and knows it but those in this Conservative Government

  24. Ian B
    March 8, 2024

    Sir John
    With all due respect to you as far as the image and dialogue goes are a Conservative. But your Leaders are not, they are paying lip service to your Conservative views as it appears an expedient thing to do. Then they pick up and thrust their indoctrinated banner of Socialism and do the complete reverse. Talk Conservative, but be and act like an extreme Socialist.
    Immigration could and should have been reduced many, many years ago, but they instead encourage it and embellish it at the Taxpayers expense. We could have a thriving economy to create the funds that would grow the country and its wealth to be able ride out everything that is thrown at us – but this Government refuse, prefers to punish and tax. That is pure Socialism sucking the life blood from those that have a natural instinct to succeed.

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