Since its creation, the OBR has scrutinised over 250 policy costings relating to changes in the benefits and tax credits systems. This paper looks back at how our scrutiny of those policy costings has evolved by reviewing ten case studies of major welfare policy changes taken from the 41 welfare policy announcements made by the Coalition Government in 2010 and included in our first two forecasts. We evaluate how these costings performed against our original expectations and explain where and why they deviated. In doing so we highlight some of the challenges we face when scrutinising welfare policy costings, and indeed costings more generally.
We also assess the aggregate fiscal impact of all the welfare policy announcements made in the June 2010 Budget and the November 2010 Spending Review and show that the expected reduction in welfare spending was around a third lower than we originally forecast.
We conclude the paper by highlighting the lessons we have learned over the intervening period and how those can be applied to improve our scrutiny of costings in the future.