The Treasury is being urged to reveal whether it is preparing for Liz Truss’s “emergency budget”, in the growing row over whether the Tory leadership favourite is dodging scrutiny.
The likely next prime minister has signalled she will not ask an independent watchdog to give its verdict on the £30bn-plus package of tax cuts she plans within weeks of taking office.
Mel Stride, the Tory chair of the Commons Treasury Committee, has warned she would be “flying blind” without fresh forecasts from the Office for Budget Responsibility (OBR) – which are likely to be highly gloomy about the UK economy.
Now Mr Stride has gone further by writing to both the Treasury and the OBR to argue a new official forecast is badly needed – and to establish whether such work is being carried out.
“OBR forecasts provide transparency and reassurance to the markets on the health of the nation’s finances,” the Rishi Sunak supporter said.
“As a Committee, we expect the Treasury to be supporting and enabling the OBR to publish an independent forecast at the time of any significant fiscal event, especially where, unlike other recent fiscal interventions, this might include significant permanent tax cuts.”
Ms Truss has quietly backtracked on her emergency budget – now preferring to call it a “fiscal event” – but Mr Stride added: “Whether such an event is actually called a budget or not is immaterial.”
A downbeat OBR forecast could embarrass Ms Truss, who has built her leadership bid on pledges to reverse the National Insurance rise and abandon corporation tax hikes on big business.
They are based on outdated OBR projections of £30bn of “headroom” in tax-and-spend plans – now blown away by rocketing inflation tipped to peak at more than 18 per cent.
The Truss campaign has suggested it is swerving a fresh analysis because the OBR needs 10 weeks to conduct its work, which would delay a crisis budget until November.
However, the watchdog has suggested it could turn around forecasts within a few weeks in exceptional circumstances, as it did during the Covid emergency in 2020.
Mr Sunak’s campaign has claimed Ms Truss is dodging scrutiny because she does not want to be confronted with warnings that her tax cuts are unaffordable.
There is no formal definition of an “emergency budget” and the government can announce fiscal measures at any time – as Mr Sunak did, as chancellor, several times.
But there is a parliamentary process that must be followed when a Budget is announced which means that the resolutions are debated on for a set number of days.
At the start of August, Ms Truss said: “As prime minister, I’d use an emergency budget to kick-start my plan to get our economy growing and offer immediate help to people struggling with their bills.”
Mr Stride added: “The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.”
