Ahead of the spring forecast, Chancellor Rachel Reeves faces mounting pressure to reform the Office for Budget Responsibility (OBR) to allow for greater public investment.
A coalition of thinktanks, spanning the political spectrum, has argued that the OBR’s current framework is overly restrictive and outdated, acting like a “backseat driver with out-of-date maps.”
Who’s Calling for Reform
The coalition urging change includes:
- Progress – a Labour-aligned group considered on the party’s right
- New Economics Foundation (NEF) – left-wing thinktank advocating for progressive economic policy
- Common Wealth – left-leaning public policy organization
- Women’s Budget Group – feminist thinktank focused on gender and fiscal equity
Together, they argue that the OBR’s current remit encourages short-term thinking and underinvestment in critical public infrastructure and services.
Criticism of the OBR
The thinktanks highlight several issues with the watchdog:
- Promotes short-termism over long-term strategic planning
- Constrains public investment that could benefit infrastructure, healthcare, and education
- Fails to adequately assess long-term risks and opportunities for the economy
Their critique frames the OBR as a limiting force on proactive government spending rather than a neutral observer.
Political Context
Labour’s government, led by Keir Starmer, is under pressure after losing the Gorton and Denton by-election to the Greens.
Thinktanks see this as an opportunity to push for reform:
- Strengthening fiscal flexibility to fund public projects
- Enhancing economic stability through longer-term investment planning
- Aligning government budgets with modern challenges, such as climate change, social care, and infrastructure
What Reform Could Look Like
The coalition suggests that a reformed OBR could:
- Expand its remit to consider long-term growth and sustainability
- Encourage more public investment rather than simply enforcing austerity-minded rules
- Provide independent analysis without constraining government innovation in fiscal policy
Reeves’ response in the upcoming spring forecast may set the tone for Labour’s approach to economic strategy in 2026.
The debate over the OBR underscores a wider discussion about the role of fiscal watchdogs versus government autonomy in public investment. With cross-party thinktanks united in calling for reform, Chancellor Reeves faces both political and technical pressure to modernize the OBR and open the way for strategic spending that addresses long-term national priorities.
