Functions Office for Budget Responsibility

1 functions

1.1 forecasts of economy , public finances
1.2 evaluation of government’s performance against fiscal targets
1.3 scrutiny of government’s policy costings
1.4 assess long-term sustainability of public finances
1.5 other functions

functions

the obr created uk government in 2010 purported goal of offering independent , authoritative analysis of uk s public finances. end produces 2 5-year-ahead forecasts economy , public finances each year, alongside budget , autumn statements.

in role in providing independent analysis obr has 4 main duties:

forecasts of economy , public finances

the obr produces five-year forecasts economy , public finances twice year. forecasts accompany chancellor’s budget statement , autumn statement , incorporate impact of tax , spending measures announced chancellor. details of forecasts set out in economic , fiscal outlook (efo) publications. annual forecast evaluation report (fer) published each autumn, examines how efo forecasts compare subsequent outturns. obr has published briefing papers describing approach forecasting economy , public finances, , macroeconomic model uses.

evaluation of government’s performance against fiscal targets

the obr uses public finance forecasts assess government’s performance against fiscal targets. government has set 2 medium-term fiscal targets: first, fiscal mandate balance cyclically-adjusted current budget 5 years ahead, , second, supplementary target have public sector net debt falling in 2015-16. in economic , fiscal outlook, obr assesses whether government has greater 50 per cent probability of hitting these targets under current policy. given uncertainty inherent in fiscal forecasts, obr tests how robust judgement using historical evidence, sensitivity analysis , alternative scenarios.

scrutiny of government’s policy costings

the obr conducts scrutiny , analysis of hm treasury’s costing of tax , welfare spending measures. during run-up budget , autumn statement, obr subjects government’s draft costings of tax , spending measures detailed challenge , scrutiny. these stated in efo , treasury’s policy costing documents obr stating whether endorses costings government publishes reasonable central estimates. obr has published briefing paper describing role in policy costings , how fit forecast process.

assess long-term sustainability of public finances

the obr assesses long-term sustainability of public finances. annual fiscal sustainability report sets out long-term projections different categories of spending, revenue , financial transactions , assesses whether imply sustainable path public sector debt. fiscal sustainability report analyses health of public sector’s balance sheet using both conventional national accounts measures , whole of government accounts prepared using commercial accounting principles.

other functions

in addition these core responsibilities, government has asked obr forecast scottish receipts 4 taxes plans devolve scottish government 2015 onwards; scottish rate of income tax, stamp duty land tax, landfill tax , aggregates levy. obr has published these forecasts since march 2012 alongside uk revenue forecasts. autumn 2014, obr publish similar forecasts welsh taxes.

in march 2014, charter budget responsibility modified include new cap on welfare expenditure alongside government’s fiscal mandate. welfare cap puts limit on amount government can spend on social security benefits in years 2015/16 2018/19. obr charged assessing government’s performance against cap @ each autumn statement. part of assessment, obr required produce forecast welfare spending in scope of cap in economic , fiscal outlook. welfare cap means if spending exceeds limit, policy action must taken, or cap level must change, , parliamentary approval must obtained. cap features 2 per cent forecast margin above level of cap allows small fluctuations in forecast without corrective action being required. obr required assess whether welfare spending above cap caused movements in forecast or discretionary policy changes. obr has been tasked producing annual report on trends in welfare spending.

the obr undertakes variety of research projects through year. publishes briefing material inform public work, , provides same-day briefing on public finances statistics. budget responsibility committee members , obr staff give talks , presentations @ external events. robert chote has discussed role of obr, , difference made after first 3 years in existence, in lecture entitled britain’s fiscal watchdog: view kennel on 9 may 2013. activities summarised each year in annual reports.