The OBR scrutinises the tax and non-departmental spending (e.g. welfare spending) measures that the Chancellor is thinking of including in the statement. First the Treasury shows us a draft ‘scorecard’ – an initial list of possible measures. We then discuss the scrutiny we think each measure would require with the Treasury and the responsible department, based on its complexity and similarity to previous measures. The Treasury will then send a ‘costing note’ to the OBR, setting out the details of the policy and estimating the amount of money it will raise or cost in each year of the forecast. The OBR discusses the analysis with the department and the Treasury, suggesting changes and iterating until we are happy to endorse the estimates as ‘reasonable and central’ or until the Treasury and we agree to disagree (which has not happened yet). In the case of tax measures, these discussions focus on identifying the relevant tax base and judging the potential behavioural impact of the measure from the experience of similar measures or from estimates of relevant elasticities. For further detail, see Briefing Paper No.6: Policy costings and our forecast.
"It is the duty of the Office to examine and report on the sustainability of the public finances"