The OBR is an independent body, which takes full responsibility for the content of all its publications and other pronouncements.
To fulfil our remit of analysing and reporting on the sustainability of the public finances, we need to work closely with the many government departments that are responsible for forecasting the different revenues, spending streams and financial transactions that affect the public finances. We also have an executive responsibility to the Chancellor of the Exchequer to deliver the fiscal and economic forecasts he needs to take tax and spending decisions.
To ensure that our independence is not called into question, we believe that it is important to be transparent about the way in which we interact with government.
The Memorandum of Understanding sets out the agreed working relationship between the OBR, HM Revenue and Customs, the Department for Work and Pensions, and HM Treasury. It sets out the arrangements needed for effective working, covering each institution’s key responsibilities, coordination of the forecast process, and the process for information sharing.
We also work closely with devolved administrations and the relationship is set out in more detail on Scotland, Wales and Northern Ireland page.
Producing our forecasts
Our briefing paper describes how we work with departments to produce the different elements of our fiscal forecasts.
The OBR uses a large-scale macroeconomic model for the production of the economic forecast, which is jointly maintained and developed by the Treasury and the OBR. A framework for the joint governance, management and development of the macroeconomic model is set out in a Memorandum of Understanding – the macroeconomic model.
The Scottish Parliament’s Scottish Fiscal Commission Act 2016 established the Scottish Fiscal Commission (SFC) to scrutinise the Scottish Government’s forecasts for devolved tax revenues and social security spending. We work closely with the SFC to ensure that we can bring all relevant information to bear in producing our Scottish tax forecasts and have published the principles we use to guide engagement between our two organisations. In January 2019 the SFC and OBR signed a Memorandum of Understanding to formalise how the two organisations work together.
In accordance with the fiscal framework agreed by the Welsh and UK Governments, we were formally commissioned in April 2019 by the Welsh Government to produce independent forecasts for devolved Welsh taxes alongside each Draft Budget. Further detail of this arrangement is set out in the related Terms of Reference. The Memorandum of Understanding sets out the working arrangements between the OBR and Welsh Government.
Our budget is £4.38 million in 2021-22, with indicative funding for two further years in anticipation of the forthcoming Spending Review. This is set out in a letter on 17 June 2021 from HM Treasury Permanent Secretary to Chair of the OBR regarding the OBR funding allocation. We have also agreed a revised funding allocation for 2020-21 and indicative funding to 2022-23.
The OBR buys some administrative support services from the Treasury, for example human resources and finance. These arrangements are set out in a Service level agreement.
The OBR shares its accommodation at 102 Petty France, and buys some services (such as IT support), from the Ministry of Justice.